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Financial Reporting > Class Test > Flashcards

Class Test Flashcards

1
Q

IAS 16

A

PPE

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2
Q

To be tangible asset must (2)

A
  • Be used within business

- Held for more than 12 months

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3
Q

Can settlement discount be capitalised?

A

No

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4
Q

IAS 37

A

Costs relating to dismantling assets

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5
Q

Straight line depreciation

A

Cost - residual value / UEL OR cost x %

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6
Q

Reducing balance depreciation

A

NBV x %

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7
Q

Double entry depreciations

A

DR Depreciation expense

CR Accumulated depreciation

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8
Q

Subsequent expenditure expensed if improves: (3)

A
  • UEL
  • Capacity
  • Quality
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9
Q

Change in depreciation method/ UEL steps

A

1) Calculate NBV

2) Apply the change

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10
Q

Revaluation double entry (Step 1)

A

DR NCA Cost
DR Accumulated Depreciation
CR Revaluation Reserve

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11
Q

NCA cost revaluation =

A

Difference between revalued amount and original cost

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12
Q

New depreciation expense revaluation (Step 2)

A

Revalued amount / Remaining UEL

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13
Q

Annual reserve transfer revaluation (Step 3)

A

New depreciation expense X
Less old depreciation (X)
Excess depreciation = X

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14
Q

Double entry annual reserve transfer revaluation

A

DR Revaluation reserve

CR Retained earnings

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15
Q

IAS 38

A

Intangible assets

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16
Q

Intangible asset is..

A

Not physical substance, but something that owned by company and generates cash. Must be internally generated

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17
Q

Goodwill..

A

Not internally generated > arises from business combinations

18
Q

Research costs

A

Expensed in the P/L

19
Q

Can intangibles be revalued?

A

Only if active market exists

20
Q

Development expenditure can be capitalised if meets critera:

A 
P > Probable
I > Intention to complete
R > Resources
A > Ability
T > Technical resources
E > Expenditure measured reliably
21
Q

Amortisation commences on intangibles

A

Once brought into use, NOT during development

22
Q

IAS 36

A

Impairment of assets

23
Q

What is impairment?

A

When carrying value exceeds recoverable amount

24
Q

Recoverable amount =

A

Higher of:
Fair value less selling costs
OR
Value in use

25
Q

Value in use =

A

Future cash flows derived from an asset

26
Q

Double entry for impairment

A

DR Impairment expense > P/L

CR Carrying Value of Asset > SFP

27
Q

Impairment of previously revalued asset

A

)Carrying value
DR Revaluation Reserve

Depreciated historic cost (CV @ date of revaluation)
DR P/L expense (Impairment)

Recoverable amount
CR Carrying value asset > SFP0

28
Q

Cash Generating unit

A

Group of assets that together generate cash

29
Q

Impairment of CGU

A

Step 1) Write off goodwill

Step 2) Write off impairment remaining on pro-rata basis of remaining assets

30
Q

Do not impair asset below

A

Recoverable amount

31
Q

If indication of impairment..

A

Must test for it

32
Q

IAS 10

A

Events after reporting date

33
Q

Events after reporting date =

A

During period between YE and when accounts signed off

34
Q

Adjusting events

A

Existed at YE date therefore included in financial statements

35
Q

Non-adjusting events

A

Arose after YE. If material, included in notes of accounts (nature of event and likely cost)

36
Q

IAS 20

A

Government grants

37
Q

Revenue grant

A

Match against expenditure

38
Q

Capital grant

A

On an asset

39
Q

Capital grant method 1

A

Offset grant value against value of asset

40
Q

Capital grant method 2

A 
Deferred income:
DR Bank 
CR Deferred Income > SFP Liability
Release grant over life of the asset:
Grant / UEL = Amount each year
DR Deferred Income
CR P/L
41
Q

Must split deferred income into

A

Current liability - released in less than 12 months

Non-current liability - released in more than 12 months

Financial Reporting (3 decks)

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