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SBR > Chapters 3-5 > Flashcards

Chapters 3-5 Flashcards

1
Q

what is the definition of income

A

Increase in economic benefits during the accounting period in the form of inflows, enhancements of assets of decreases of liabilities that result in an increase of equity

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2
Q

what is a performance obligation

A

a promise in a contract with a customer to transfer the customer either :

a) a good or service
b) a series of goods or services which are substantially the same and that have the same pattern of transfer to the customer

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3
Q

what is the 5 step approach to revenue recognition

A

1) identify contract
2) identify performance obligation
3) determine transaction price
4) allocate transaction price
5) recognise revenue when performance obligation is satisfied

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4
Q

what is the revenue recognition iFRS

A

IFRS 15

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5
Q

what is the criteria for a contract to be recognised

A

the parties have approved the contract
the entity can identify each partys rights
the entity can identify payment terms
contract has commercial substance
its probable that the entity will collect the consideration

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6
Q

what should an entity do if consideration has been received but the contract should not have been recognised

A

they should only recognise revenue when all consideration has been received and it cant be refunded.
or when the contracts terminated and it cant be refunded

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7
Q

how should you allocate transaction price to multiple deliverables

A

as a percentage, not the stand alone price

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8
Q

one of what 3 criterias must be met to satisfy a performance obligation over time

A

a) when the customer simultaneously recieves and consumes the benefits as the entity performs
b) the entity creates or enhances an asset that the customer controls as it happens
c) the entity has an enforceable right to payment

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9
Q

what are the 5 criterias to determine the point in time a customer obtains control of an asset

A

a) the entity has a present right to payment
B) customer has a legal title
c) entity has transferred physical posession
d) customer has risks and rewards
e) customer has accepted the asset

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10
Q

when should costs to fulfill a contract be recognised as an asset

A

if all of the following is met
costs relate directly to a contract
costs generate or enhance resources
costs are expected to be recovered

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11
Q

how do you recognise sales with a right of return

A

recognise revenue that the entity expects to be entitled
a refund liability
an asset for right to recover products if they return

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12
Q

what is principal vs agent

A

if the entity controls the asset before the customer its a principal
if the entity arranges for goods or services to be provided by a third party, its an agent

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13
Q

what are the two different models an entity can choose to measure a NCA

A

Cost model

revaluation model

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14
Q

what must happen if a revaluation model is applied

A

revaluations must be regular depending on volatility
the asset must be valued to fair value
all assets must be revalued if one is

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15
Q

where does an increase in value go

A

OCI

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16
Q

What is IAS 36

A

Impairment of assets

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17
Q

how do you measure the recoverable amount of the asset

A

higher of:
fair value - costs of disposal
value in use

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18
Q

what is value in use of an asset

A

present value of estimated future cash flows generated by the assets

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19
Q

what is a cash generating unit

A

smallest identifiable group of assets that are different to the main group of assets

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20
Q

definition of fair value

A

the price that would be recieved to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date

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21
Q

how many levels to fair value hierarchy

A

3

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22
Q

what is level 1 on the fair value hierarchy

A

quoted prices in active markets for identical assets or liabilities that the entity can access at the measurement date

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23
Q

what is level 2 on the fair value hierarchy

A

inputs other than quoted prices such as quoted prices for similair assets in active markets or identical in non active markets

24
Q

what is level 3 on the fair value hierarchy

A

unobservable inputs for the assets and liabilities ie discounting estimates of future cash flows

25
Q

definition of active market

A

a market in which transactions for the asset or liability take place with sufficient frequency and volume

26
Q

how do you measure an intangible asset that was separately acquired

A

cost

27
Q

how do you measure an intangible asset that was acquired as part of of a business combination

A

fair value

28
Q

how do you measure internally generated goodwill

A

you dont

29
Q

how do you measure a internally generated intangible asset

A

Recognised when PIRATE is met

30
Q

how do you measure an acquired goverment grant

A

asset and grant at fair value or nominal amount + expenditure

31
Q

is a property held for sale in the normal course of business or in construction for the same an investment property?

A

no

32
Q

is owner occupied property an investment property

A

no

33
Q

is property leased to another entity under a finance lease an investment property

A

no

34
Q

what is IAS is investment properties

A

IAS 40

35
Q

What IAS is government grants

A

IAS 20

36
Q

what IAS is borrowing costs

A

IAS 23

37
Q

what IAS is agriculture

A

IAS 41

38
Q

What does IAS 20 gov grants state

A

cant be recognised until reasonable assurance that grant will be recieved

grants relating to assets can be recognised as deferred income or deducting the grant from the carrying amount of the asset

grants relating to income should be shown as other income and net of expenses

39
Q

What does IAS 23 Borrowing costs state

A

borrowing costs directly attibutable can be capitalised

40
Q

when does capitalisation begin from (ias 23)

A

expenditure for assets are being incurred

borrowing costs are being incurred and activities that are necessary for the asset are in progress

41
Q

what needs to be disclosed (ias 23)

A

amount of borrowing costs are capitalised

capitalisastion rate

42
Q

what is agricultural produce

A

harvested produce of an entitys biological assets

43
Q

what are biological assets

A

living animals or plants

44
Q

what are the 2 types of pension plans

A

defined contribution and defined benefit

45
Q

whats a defined contribution plan

A

percentage of annual salary

46
Q

whats a defined benefit plan

A

fixed output plan based on salary

47
Q

whats a curtailment

A

a significant reduction in the number of employees covered by the plan

48
Q

what does IAS 19 require

A

Risk based disclosures must be indentified and how risks must be managed

49
Q

what types of risks come with a pension

A

longevity risk
interest risk
salary risk
investment risk

50
Q

where is a remeasurement gain or loss recorded for pensions

A

OCI

51
Q

where are remeasurement gains for other benefits recorded ( not pensions)

A

P/L

52
Q

What are termination benefits

A

redundancy payments

53
Q

when should termination benefits be recorded

A

at the earlier of
the company cant withdraw the redundancy

when a company recognises a restructuring provision

54
Q

if a redundancy agreement includes a service based payment ie 10k for an additional months work, is it a termination payment

A

no

55
Q

what is a criticism of IAS19

A

Not all pensions fit into either defined plan or defined contribution

SBR (8 decks)

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