Consoldiation and Single Full List of Adjustments Flashcards
Adding to share capital?
Credit
Adding to share premium?
Credit
Dividend paid treatment?
Deducted from retained earnings
Depreciation and amortisation treatment?
Debit to COS or administrative expense
Gain on revaluation treatment?
Credit OCI
Loss on revaluation treatment?
Debit OCI
Debit excess in SPL
Annual transfer of retained earnings treatment?
Debit RE
Credit Revaluation reserve
Disposal treatment?
Proceeds - carrying amount = gain/ loss
Debit loss (to other income)
Credit gain (to other income)
Final amount for investment entry? (IAS 40)
Debit SFP
Gain on investment property entry (IAS 40)?
Credit gain on sale in investment property
Recoverable amount?
Carrying amount - recoverable amount (SFP) = impairment (SPL)1
Lease liability interest cost?
Debit finance cost
Lease liability non-current?
Credit SFP
Lease liability current? (arrears)
Credit SFP (Next year - previous year)
Production costs of inventory?
Debit COS
Opening inventory?
Debit COS
Closing inventory?
Credit COS
Impairment loss accounting treatment?
Debit COS
Convertible loan note (equity component)?
Credit OCE
Debit Loan notes SFP
Convertible loan note (finance costs (interest - cash coupon)?
Debit: Finance cost
Credit Loan notes
IFRS 9 (Loan note not covnertible)
Debit finance cost
Proceeds + interest = Balance (SFP)
IFRS 9 FVTPL
Initial:
Debit Investment
Credit Bank
Debit Transaction costs
Credit Bank
Subsequent:
Initial investment - amount at FV
Debit Expense
Credit Investment
IFRS 9 FVTOCI
Initial:
Debit Investment
Credit Bank
Subsequent:
(FV - initial investment)
Debit Investment
Credit OCI (if gain)
IFRS 9 amortised cost (financial assets)
Initial:
Debit Investment
Credit Bank
Subsequent:
Interest received (SPL)
c/f (SFP)
IFRS 9 amortised cost (financial liabilities)
Initial: Get net proceeds
Debit Bank
Credit Financial liability
Subsequent:
Finance cost (SPL)
c/f (SFP)
Government grant (Initial)
Debit Bank
Credit Deferred income
Government grant depreciation?
Debit deferred income
Credit other income
What is deferred income?
A credit account
What if grant becomes repayable?
Credit Bank
Debit Deferred income
Debit Expense
Dismantling cost?
Debit PPE
Credit Provision
Unwinding discount IAS 37?
Debit Finance cost
Creidt Provision
Virtually certain contingent asset?
Recognised in financial statements
Removal of goodwill from a single entity?
Debit revenue
Credit goodwill
Unrealised profit (when parent is seller to subsidiary)?
Debit retained earnings (parent)
Credit group inventories
Unrealised profit (when parent is seller to associate)?
Debit: Retained earnings
Credit: Investment in associate
Goodwill impairment
Debit RE & expense account
Share of profit for associate?
Credit retained earnings
PURP if it’s for an associate?
Debit: PURP * associate %
Impairment loss if at FV in GRE (% of impairment)
Fv % of impairment
Impairment loss if at proportionate in GRE
Full impairment
Revaluation surplus?
Included in net assets (addition)
Unwinding of discount?
Debit retained earnings and finance costs
What is an example of a component of equity?
Revaluation
Pre-acquisition profit?
Included in retained earnings and recorded at acquisition date (profit earned before acquisition)
Post-acquisition profit?
Included in group profit for the year (profit earned after acquisition)
On 1 April 20X7, acquired 116 million of subsidiary’s shares and issued at par one 10% $100 loan note for every 200 shares acquired ?
116 * (100/200) = 58
Associate sells goods to parent?
Debit Group share of profit to associate * %
Credit: Group inventory * %
Parent sells goods to an associate?
Debit: Group inventory * %
Credit: Investment in associate * %
Retained earnings at 1 October 20X2: 35000
Profit for year 30 Sep 20X3: 6200
RE to be included at acquisition if at 1 January 20X3?
35000 + (6200 * 3/12) = 36550
Retained earnings at 30 November 20X7: 69000
Profit for the year 30 November 20X7: 9000
RE to be included at acquisition if acquisition at 1 May 20X7?
69000 - (9000 * 7/12 post-acq) = 63750
Loss in retained earnings and deduction in carrying value?
Deduction from NGVA. Above carrying value and increase in RE are added
What is included in net assets
Share capital
Retained earnings (adjustments for PFY)
FVA
Unwinding of interest time apportioned?
Yes
Calculate a bonus issue?
Equity share capital * (bonus issue, e.g. 1/5)
What happens to gain on disposal?
Credit to other income
What happens to other income?
Added to operating profit / PBIT
Share of profit for associate?
Credit
Investment in associate/
Debit
Credit in cash and cash equivalents in TB?
Represents a bank overdraft, which is a current liability
Where is a provision in TB?
NCL
If a question contains a onerous contract?
A provision is entered for both NCL and CL
Bank loan treatment in SFP?
Recorded as NCL
A provision put in notes for current tax?
Put immediately as current tax in SFP. No further adjustments
Where is NCI in CSFP?
Put in equity
PFY figure used for? (PFY and equity shares same reporting date)
For adjusting the retained earnings figure in workings
In NVA: Deduct post-acq amount
This gets post-acq RE
In GRE: Add back pre-acq amount
Share of profit of associate?
Credit entry
Goodwill impairment?
Deducted from group retained earnings
What does charged to SPL mean?
Credit
Held for sale impairment?
Debit
Agency transaction double entry?
Debit Revenue
Credit COS
Credit other income
Profit to date with contract satisfied over time?
Work certified revenue (credit revenue) - costs incurred (debit COS) - profit
Contract asset working section C?
Revenue recognised - amonuts invoiced = Contract asset ( NCA SFP)
Trade receivable working?
Amonuts invoiced to date - amounts received from customers
Intangible asset with indefinite life?
Credit SPL
Investment property gain?
Credit investment income
Get total number of shares when equity share capital in notes is 75c and share capital in TB is 50c and
Amount in TB / 75c = 18m
Share capital: 18m * 50c
Share premium: 18m * 25c
Caddy Co acquired 240000 of 800000 shares of Paddy Co. What is the %?
240000 / 800000 = 30%
Parent despatched goods to subsidiary, haven’t been included in the above inventory?
Parent => Sub
Debit Inventory
Credit Liability
Also take PURP as it’s inventory
Debit RE
Credit inventory
Parent is due a receivable from subsidiary, this is equivalent to payable in subsidiary records due to goods in transit?
Sub => Parent
Debit Payables
Credit Receivable
Investment in associate calculation?
Cost of investment + profit in associate - loss in associate - impairment loss - dividend received
Where is a decomissioning provision included in consolidation?
Total adjustment is deducted in adjusting and reporting
Interest deducted in reporting
Where is unrecorded share of associate recorded?
In RE
Where is outstanding loan interest recorded?
In RE
First line in RE?
Parent’s 100%
Contract asset?
Presented as current asset
How is a grant initially recorded?
As deferred income (a credit)
How is depreciation recognised in a grant?
Debit deferred income
Credit other income
Increase in provision?
Debit operating expenses
ALWAYS DONE BEFORE A FUCKING REVALUATION IN A FUCKING YEAR?
DEPRECIATION!!!!!
Lease liability in advance amortisation columns?
Balance b/f
Payment
Subtotal
Finance cost
Balance c/f
Lease liability in arrears amortisation columns?
Balance b/f
Finance cost
Payment
Balance c/f
Lease liability for the 20X2? (Arrears)
Calculate for 20X3
Calculate NRV?
(Selling price per unit - cost price per unit) * total number of units
IS A PURP FUCKING TIME APPORTIONED?
NO
FVA increase full debits and credits?
Debit RE
Debit NCi
Debit PPE
Credit Goodwill
What does net assets represent?
From the subsidiary which is consolidated into the company
What to look for in a FVA adjustment?
The difference between acquisition and reporting date. As it’s depreciation, it’s always time apportioned
Where is share of profit of associate recorded in CSPL?
Added to operating profit
Dividend paid treatment in consolidation?
Deducted from investment income * %
Right-of-use asset?
Lease liability + direct costs + amounts paid on commencement on date - incentives received
When are transaction costs included? IFRS 9
In FVTOCI
Release of grant?
Credit in SPL
Bill and hold arrangement double entry?
Debit cost of sales
Credit group of inventory
Bargain purchase?
Credited to SPL
WHEN ENTERING A SHITTING DEFERRED INCOME SPLIT INTO SFP?
Do current liability for a full year
Professional fees incurred during acquisition?
Debit to retained earnings
Revaluation surplus in NVA?
Positive amount in Acq and reporting date
Gain/(loss) on equity investments?
Subsidiary is included in NVA
Parent is included in GRE
Loss is debit (decrease)
Gain is credit (increase)
Is depreciation charged after asset is classified as held for sale?
No
Gain on disposal?
Credit other income
FVTPL entries
Debit: Investment
Credit Bank
Debit: Transaction costs (SPL)
Credit: Bank
Subsequent measurement:
Debit: SPL (if loss)
Credit: Investment (if loss)
FVTOCI entries
(INCLUDES TRANSACTIONS COSTS)
Debit: Investment
Credit Bank
Subsequent measurement:
Debit: Investment (if gain)
Credit: OCI (if gain)
Lease liability initial measurement?
PV, discoutned at rate implicit to lease
Right of use asset initial measurement?
Lease liability + other direct costs + payment at commencement date - incentives received
Are payments made annually in arrears included in right-of-use asset?
No
Rights transferred calculation?
FV-CV * (PV/FV)
Rights retained calculation?
Gain - transferred
Right of use asset in sale and leaseback calculation?
(Rights retained / Proceeds) * Carrying value
I buy a new i-Pat (!) for 600 and depreciate it over 4 years. The government likes the idea so gives me 50% towards the cost - udderly amazing I know.
How do I account for the i-Pat and its grant? (Approaches)
Deferred income or net off
(Discard)
(PV/FV) * CV
IFRS 5 NCA if FVLCTS < CA?
Credit PPE (e.g. 73000)
Debit NCA-HFS (e.g. 68000)
Debit Impairment (e.g. 5000)
Is residual value included in depreciation working?
Yes if straight line, but not in the original cost entry
Tax on a revaluation gain?
A debit entry (reduces OCI)
Is deferred tax liability a debit or credit?
Credit
Payments made in advance or arrears in RoU asset?
Not included in the initial measurement of RoU asset
P buys goods for 100 and sells them to S for 150. S has sold 2/5 of this stock? What is unrealised profit
150 - 100 = 50
50 * 3/5 = 30
If P buys goods for 100 and sells them to S for 150. S sells 4/5 of them to 3rd parties?
What is unrealised profit
150 - 100 = 50
50 * 1/5 = 10
WHEN DOES FUCKING IMPAIRMENT OCCUR?
CARRYING AMOUNT > RECOVERABLE AMOUNT
An example of contingent consideration?
A possible future payment of 1,000 if S’s profits increase by 10% each year (FV of this is 400)
FV recorded in the consideration
Cash treatment according to IAS 32?
Financial asset
Examples of an equity instrument of another entity?
Shares
Share options
Share warrants
Treatment of equity instrument of another entity IAS 32?
Financial asset
Example of a contractual right to receive cash or another financial asset from another entity?
Trade receivable
Treatment of contractual right to receive cash or another financial asset from another entity IAS 32?
Financial asset
Treatment of a derivative instrument standing at a gains?
Financial asset
What asset is most liquid?
Cash
What distinguishes equity from a liability?
There is no obligation to pay back investment
What is a financial instrument?
A contract that gives to both a financial asset of one asset and liability/equity of another
Financial asset to another entity examples?
Trade payable
Debenture loan
Redeemable preference shares
Treatment of a contractual obligation to deliver cash?
Financial liability
Treatment of financial asset to another entity?
Financial liability
Treatment of a derivative instrument standing at a loss?
Financial liability
Short-term lease expense double entry?
Debit: Lease expense (FS)
Credit: Accruals
Credit: Bank
Research costs
Debit SPL expense
Cash paid for an asset with an indefinite life?
Debit SPL expense
Asset with indefinite life?
Recognised in FSs but not amortised. If carrying amount > recoverable, it is impaired
Accrued expenses debit or credit?
Credit
What is expensed development?
Costs after research but before capitalisation
WHAT IS FUCKNIG IMPAIRMENT LOSS IN IAS 36?
Carrying amount - recoverable amount
What represents a change in accounting policy?
Where depreciation charges are included
Whether cost model or revaluation model is used
Change in inventory valuation method
What represents a change in accounting estimate?
Changes in depreciation estimates
Provision for warranty obligations
NRV of inventory
FV of assets or liabilities
Is impairment and depreciation the same treatment (e.g. debit or credit)
Debit
What is meant by relevance?
Relevant information capable of making difference in decisions made by users
What is meant by faithful representation?
Reflects economic substance faithfully and is therefore complete, neutral and free from error
What is meant by comparabiltiy?
Enables users to identify similarities and differences amongst items (e.g. change in accounting policy)
How can information be verified?
Model, formula or direct observation
What represents timeliness?
Balance between timeliness and provision of reliable information
What represents understandability?
Users who have a reasonable knowledge of business and economic activities
If income and expenses arise through change in current value?
It can be recognised through OCI
Bargain purchase treatment?
Credited to SPL
Impairment loss if impairment is at FV for group retained earnings?
% of impairment. Debit in GRE
Impairment loss if impairment is proportionate for group retained earnings?
Full impairment. Debit in GRE
Profit/loss from discontinued operation?
Proceeds - carrying amonut - selling costs
How is discontinued operations IFRS 5 shown in SPL?
Loss/profit from the operation deducted from continuing operations
Inventories purchased from suppliers (relevant ratio)
Payables
Dividend paid (CSPL)?
Deducted from investment income
FVA adjustment depreciation represents?
Movement negative under FVA both positive rep & acq
What always happens with PURP for sub?
Credit inventory
Goodwill impairment treatment in SPL/
Debit in SPL
What represents PURP?
What is left in inventory
Income tax refund credit and debit?
Credit SPL
Debit tax asset (current asset SFP)
Deferred tax liability double entry?
Debit: Income tax expense
Credit: DTL
When there are two loans for weighted average (IAS 23)?
Get weighted average % and then multiply by amount of loans time apportioned
Specific borrowing calculation (IAS 23)?
Expenditure (capitalised SFP) - investment income (credit SPL)
When are borrowing costs capitalised? (specific borrowing)
When they are capitalised
When is investment income recognised? (specific borrowing)
Before capitalisation
Does initial measurement of IP include transaction costs?
Yes
Calculate value in use with cost of capital of 8% year 1 and 2?
Cash flow * 1/1.08
Cash flow * 1/1.08^2
Cost of inventory manufacturing overheads based on?
Normal
Original cost (IAS 2)
Purchase price + costs bringing inventory into its present condition *e.g. (labour, materials, manufacturing overheads)
NRV (IAS 2)
Selling price - costs we might incur in the future (e.g. modifications, selling costs (e.g. advertisement))
How to record closing inventory (IAS 2)
Debit: inventory
Credit: COS
Provision for deferred tax (e.g. deferred tax liability)? (plus potential revaluation)
It is added to the current tax
(revaluation is deducted from this figure)
Provision for income tax?
Added to current tax
If cost > NRV?
There is a loss. NRV should always be higher
Inventory write down calculation?
NRV - cost
Debit: COS
Credit: inventory
Costs to complete?
Deducted from NRV
Settlement discounts and NRV?
Not deducted
Trade receivable balance?
Amounts invoiced - amounts received from customers
IAS 33 golden rule for rights issue
Market price/theoretical price
Cost in IAS 2 (before or after)
Before year end
NRV in IAS 2 (before or after)
After year end
Consolidated profit to single entity profit debits and credits?
Credits deducted and debits added
Is share for share exchange included in deferred consideration?
No
Net asset turnover?
Revenue / (Equity + Debt)
Goodwill impaired at reporting date?
Debit entry
Overstatement in opening inventory?
Increases COS and reduces gross profit
Do qualify as an associate?
20 to 50% and significant influence
If 50 cents share cpaital?
Convert in the NVA working
On acquisition the retained earnings of Weston showed a deficit of $10,000 (For NVA)
Sub RE at reporting date + 10000
A parent sold goods to its wholly owned subsidiary for $1,800 representing cost plus 20%. At the year-end two-thirds of the goods were still in inventory?
Selling price: 120%
Markup: (20%)
Cost: 100%
Is residual value included in revised amount (e.g. revaluation)?
Yes
What happens when management intend to use asset for more than a year?
There is no provision
Only underlying assumption for FSs?
Going concern
When should a provision only be made (for a contract?
It is onerous
Provision for trading losses? (Consolidation)
Excluded from consolidation
Provision for reorganisation costs
Included in consolidation
What is an onerous contract?
Recognised as a provision
Is warranty a legal obligation?
Yes
Intangible asset in net assets?
Positive amount, contingent liability is negative
Future operating losses?
No provision
Present value of decomissioning cost?
Added to purchase cost of equipment to get the total cost
What represents finance income?
Effective rate of interest
An equity share which is not redeemable and has no restrictions on receiving dividends
Equity
A preference share that is redeemable for cash at a 10% premium in five years’ time
Non-current liability
A loan note that is redeemable at par in seven years’ time
Non-current liability
An irredeemable loan note that pays interest at 7% a year
Non-current liability
Is deferred tax always a provision?
Yes
If question asks for balance on the deferred tax account
Opening balance is not relevant
Taxable temporary difference charge or credit?
Charge
Allocating the transaction price the same process as allocating goodwill?
Yes
Providing support services cost for more than a year?
Calculate two years for one year
Five equal annual payments (in a lease)
Payments in advance
Can goodwill be an intangible asset?
Yes
Assets held for research and development?
Are tangible non-current assets
What are treasury shares?
Equity
Subsequent measurement for FVTOCI?
Shares * FV price
Not including transaction costs
When calculating equity dividend?
if TB states 20c, always calculate to the $1.This is dividend paid, so debit in RE
Included in OCI for FVTOCI?
Gain on disposal
Increase in FV
Bill and hold arrangement double entry?
Debit cost of sales
Credit inventory
Prior period adjustment?
Debit RE (prior period)
Debit SPL (current year(
Is preference dividend deducted to get PFY?
Yes
Loss on inventory?
Deducted from closing inventory
Faulty goods returned to suppleir?
Treated same as revenue in an inventory calculation
If it states (work certified)?
This represents the revenue, not total contract
If investment property amonut needs correcting in TB?
Debit: Accumualted depreciation
Credit: depreciation
Provision reversal double entry?
Credit SPL
Debit Provision
Profit in contract?
Work certified revenue - costs to date
Sales of $7.8 million were made at a mark-up on cost of 30%
What is the markup cost?
7.8 / 1.3 = 6
An example of a present obligation?
Probable outflow
A provision for 100000 for year ended 20X4 was settled for 120000 during 20X5. Accounting entry for 20X5?
Debit provision 100000
Debit SPL 20000
Credit cash 120000
Investment gain (in consolidation)
Credit RE
Full impairment of goodwill?
Debit RE
Cash -in-transit adjusted for the parent?
Has no affect on current assets
If liabilities are overstated in consolidation?
net assets are understated and therefore goodwill is overstated
Depreciation an overhead for inventory?
Yes
Can goodwill be revalued?
No
Does historical cost overstate gearing?
Yes
Where is IFRS 5 asset put in FS?
In financial statements
IFRS 5 calculation
Lower of FVLCOD and carrying value - Depreciate to date of reclassification (this is lower of FVLCOD and carrying value)
Provision double entry?
Debit: SPL
Credit: Provision
Fully subscribed rights issue of 1 for 4 (fraction used)?
1/4+1
1/5
Cumulative gain for FVTOCI treatment?
Don’t reclassify to SPL
What is a deposit?
A current liability
How to determine a capital expense?
It is separately identified as a component part
Correct overstatement of inventory?
Debit RE
Credit COS
Is discounting time-apportioned?
No
When calculating using reducing balance method?
Always do one year at a time
NCI in CSPL?
Included at the bottom
Profit attributable to owners of the parent CSPL?
Total profit - NCI
SHARE OF PROFIT OF ASSOCIATE TIME APPORTIONED?
NO
Where is goodwill impairment included?
Included in reporting column for NVA
Is tax charge included for associate in CSPL?
No
Dividend received debit or credit?
Credit
Goodwill impairment in CSPL?
Debit administrative expenses
