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SBR > Chapters 7-11 > Flashcards

Chapters 7-11 Flashcards

1
Q

what does tax base mean

A

the amount attributed to that asset or liability for tax purposes

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2
Q

what is deferred tax

A

the tax attributable to temporary differences

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3
Q

how do you calculate a DT Asset or a DT liab

A

temp diff x tax rate

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4
Q

how do you calculate the temp diff

A

carrying amount of an asset or liab - the tax base

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5
Q

when is DT a liability

A

tax you will need to pay in the future, ie accrued income

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6
Q

what is DT an asset

A

when the entity has recorded a provision but they dont have to pay the tax until they spend on the provision

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7
Q

what journal would need to occur for a FV Gain

A

Dr Goodwill

Cr DT Liability

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8
Q

what journal would need to occur for a FV loss

A

Dr DTA

Cr Goodwill

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9
Q

what happens if there is a gain on an asset but it is not taxable until the asset is sold

A

the gain is ignored for tax purposes therefore creating a DTL

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10
Q

what happens if there is a loss on an asset but it is not taxable until the liability is transferred

A

DTA is created

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11
Q

when can a DTA be recognised until

A

it can be carried forward to the extent that its probable that a future tax profit will be available

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12
Q

what is a financial instrument

A

any contract that gives rise to both a financial asset of one entity and a financial liability or equity instrument of another entity

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13
Q

whats a financial asset

A

cash
an equity instrument of another entity
a contractual right to receive cash or another asset from another entity
to exchange financial assets or liability with another entity

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14
Q

whats a financial liability

A

to deliver cash to another entity

to exchange financial assets or liabilitys

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15
Q

acronym for derivative

A

Future
Underlying
No initial investment

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16
Q

what makes something a liability over equity

A

there is a contractual obligation to deliver cash or another asset

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17
Q

what does classifying something as a financial liability mean from the stakeholder perspective

A

increased gearing

reduced profit due to finance cost

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18
Q

what does classifying something as equity mean from the stakeholder perspective

A

decrease gearing

no effect on profit

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19
Q

common example of an instrument being a liability and equity

A

convertible debt

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20
Q

how do you seperate the equity and liability parts of the debt

A

determine the carrying amount of the liability

assign residual amount to equity

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21
Q

what interest rate do you use in a convertible debt question

A

market interest rate

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22
Q

when do you derecognise a financial asset

A

when the cash flows have expired or the asset is transferred

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23
Q

when do you derecognise a financial liability

A

when the obligation is discharged

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24
Q

should you derecognise an asset if it will be returned

A

no

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25
Q

should you derecognise an asset if you have the right to repurchase

A

yes - its only an option

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26
Q

is a debt instrument held to collect cash flows debt or shares

A

debt

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27
Q

is a debt instrument held to collect cash flows AND SELL debt or shares

A

debt

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28
Q

are investments in equity instruments NOT held for trading debt or shares

A

shares

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29
Q

are any other financial assets that are not:
held for cash flows
held for cash flows and sale
investments in equity not held for trading,

debt or shares?

A

shares

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30
Q

initial measurement and subsequent measurement of held to collect cash flows

A

FV + Transaction costs
then
amortised cost

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31
Q

initial measurement and subsequent measurement of held to collect cash flows and to sell

A

FV + Transaction costs
then
FV to OCI then to P/L when derecognised

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32
Q

initial measurement and subsequent measurement of investments in equity not held for trading

A

FV + Transaction costs

FV to OCI and dividend income in P/L

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33
Q

initial measurement and subsequent measurement of any other financial assets that are not :
held for cash flows
held for cash flows and sale
investments in equity not held for trading,

A

FV only, transaction costs are expensed

FV to P/l

34
Q

how do you initially measure and subsequently measure most financial liabilities

A

FV - transaction costs

then at amortised cost

35
Q

how do you measure ( initially and subsequently ) a liability that is held for trading

A

FV - transaction costs expensed

FV through P/L

36
Q

when can assets and liabilities be offset

A

when an entity has a right to offset

they intend to settle on a net basis or realise the asset and settle the liability simultaneously

37
Q

what is a loss allowance

A

the allowance for expected credit losses on financial assets

38
Q

what is stage 1 of loss allowances

A

initial recognition of the asset will put a 12 month expected credit loss in - unwind this and difference will go to Finance costs

39
Q

when do you go to stage 2 of loss allowances

A

if there is an increase in risk

40
Q

what does stage 2 mean

A

increase the allowance and therefore finance costs for lifetime losses

41
Q

when do you go stage 3 loss allowance

A

there is objective evidence of impairment

42
Q

what does stage 3 mean

A

increase the allowance to lifetime losses and only calculate interest on net amount ( asset - allowance )

43
Q

what IAS is Leases

A

16

44
Q

definition of a lease

A

a contract, or part of a contract that conveys the right to use an asset for a period of time in exchange for consideration

45
Q

how to tell if the entity has control over the asset

A

if they can direct the use of the asset and if they can obtain substantially all of the economic benefits

46
Q

if the supplier has the right to substitute the asset, is it a lease?

A

no

47
Q

definition of a lease term

A

the non cancellable period for which a lessee has the right to use an underlying asset

48
Q

what does the lessee recognise at the commencement of a lease

A

a lease liability and a right of use asset

49
Q

how do you usually measure a right of use asset

A

cost less depreciation and impairment losses

50
Q

how do you depreciate a right of use asset

A

use the earlier of useful life or end of lease term

51
Q

what does the initial measurement of a right of use asset include

A

initial measurement of liability
direct costs
dismantling or restoration costs
payments made at or before the lease commencement date

52
Q

reasons to use exemption to include lease payments as an expense

A

short term or low value

53
Q

when is a lease liability remeasured

A

when lease payments have been revised

54
Q

for DT purposes, what is the carrying amount of the lease

A

the net of right of use asset - lease liability

55
Q

what is the tax base of the lease

A

0

56
Q

what is a finance lease

A

a lease that transfers substantially all of the risks and rewards to the lessee

57
Q

what is a operating lease

A

a lease that does not transfer substantially all of the risks and rewards to the lessee

58
Q

5 examples of what makes a lease a finance lease

A

transfer of ownership at the end of lease
option to purchase at end of lease for a cheaper price
lease term is a major part of the economic life
value of lease payments amounts to substantially all of the fair value
its specialised

59
Q

how does a lessor account for a finance lease

A

derecognise asset

recognise a receivable for the net investment in lease

60
Q

what is net investment for finance lease

A

present value of lease payments + unguaranteed residual value

61
Q

what is the grant date of a share based payment

A

the date the entity and another party agree to the share based payment arrangement

62
Q

2 types of share based payment

A

equity settled share based payment

cash settled share based payment

63
Q

what is an example of equity settled share based payments

A

share options

64
Q

what is an example of cash settled share based payments

A

share appreciation rights (SARS)

65
Q

how to recognise an equity settled SBP

A

Dr exp

Cr equity

66
Q

how to recognise a cash settled SBP

A

Dr Expense

Cr Liability

67
Q

whats a vesting condition

A

a condition that must be met before the SBP can be made

68
Q

if there is no vesting period how would we account for the SBP

A

full expense at grant date

69
Q

how to measure an equity settled SBP

A

use FV at grant date and do not update

70
Q

how to measure a cash settled SBP

A

Update FV at each YE with changes going to P/L

71
Q

how to calculate share based payment equity or liability value at YE

A

No of employees x no of instruments per employee x FV per instrument x proportion of vesting period elapsed at YE

72
Q

if the entity has the choice of SBP do you need to account differently?

A

no

73
Q

if the counter party has the choice of SBP do you need to account differently?

A

yes - measure debt as you would a cash settled scheme, then equity as a balancing figure

74
Q

what are the exemptions where a parent does not need to prepare consolidate accounts

A

it is itself a wholly owned sub

its debt or equity instruments arent publicly traded

75
Q

how does a parent have control over a sub

A

power to direct relevant activities
exposure or rights to variable returns
ability to use power to affect the amount of returns

76
Q

should you still consolidate if the subs activities are different to the group

A

yes - disclosure needs to be made under IFRS 8

77
Q

should you still consolidate if the subs was only purchased for resale

A

yes IFRS 5 Non current assets should be applied

78
Q

definition of a lease

A

a contract that conveys the right to use an asset for a period of time in exchange for consideration

79
Q

how can you tell how to identify a lease

A

whether the contract allows the lessee the right to control the asset

80
Q

how to tell when an entity has the right to control the asset

A

it can direct use of asset

the right to obtain substantially all of the economic benefits

81
Q

what do you recognise on commencement as a lessee

A

a lease liability

a right of use asset

SBR (8 decks)

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