Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

OCS > D: Financial Reporting > Flashcards

D: Financial Reporting Flashcards

1
Q

What is inventory valued at?

A

lower of cost vs NRV

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What costs should not be included in inventory?

A
  • abnormal amounts of wasted resources
  • storage costs
  • admin costs unrelated to bringing inv to current location/condition
  • selling and distribution costs

=>these are expenses

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What is IAS 16?

A

Property, Plant and equipment:

tangible assts that:

  • are held by an entity for use in the production or supply of goods
  • expected to be used for more than one period
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What is IAS 36?

A

Impairment of Assets

when CV> recoverable amount

recoverable amount is the higher of:
net selling price (FV-costs to sell)
value in use (PV from use and disposal)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What is IFRS 5?

A

NCA Held for Sale and Discontinued Operations

component that has either been disposed of or classified as HFS and:

  • represents a major line of business or geographical area of operations
  • that is part of a single co-ordinated plan to dispose of a separate major line of business
  • subsidiary acquired exclusively with view to resale
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What is the HFS criteria?

A
  • immediate sale in present condition
  • sale is highly probable
  • management are committed to sale
  • active programme to locate buyer
  • asset marketed at reasonable price
  • sale is expected to be completed in one year
  • unlikely plan change
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What is IAS 2?

A

Inventories i.e assets that are:

  • HFS
  • process of production
  • materials used in production
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What is IAS 10?

A

Events after the Reporting Period

-events that occur between end of reporting period and date when financial statements are authorised

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What is IAS 7?

A

Statement of Cash flows

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What is IFRS 16?

A

leases

contract that conveys right of use of asset for lease term

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Initial recognition of PPE?

A

includes:

  • purchase price
  • directly attributable costs to bring to use and location
  • initial estimate of dismantling and removing
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Subsequent expenditure of PPE?

A

capitalise when:

  • expenditure improves economic benefits
  • replaces a component and carrying amount of component is replaced and derecognised
  • major inspection of faults and carrying amount of previous inspection is derecognised
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What are the two cost models used for IAS 16?

A

cost model: CV=cost - acc dep - imp loss

revaluation model: CV=FV-acc dep-imp loss

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What is the depreciation double entry?

A

Dr Dep expense (SPL)

Cr Acc dep (SOFP)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

How to revalue asset:

A

1 restate asset cost
2 Remove existing Acc Dep
3 Transfer increase in cost account and existing acc dep to reval surplus
4 Recalculate current year’s depreciation on revalued amount

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Entries if upwards reval?

A

Dr Asset Cost (revalued amount - original cost)
Dr Acc dep (should be 0 now)
Cr Reval surplu (revalued amount - previous carrying amount) (SOFP)

17
Q

Downwards reval of PPE?

A

Dr reval surplus
Dr P/L (with excess)
Cr PPE - cost account

18
Q

What is the effect on the FS for IAS 36?

A
  • loss is an expense in SPL is not previously revalued

- if previously revalues, can be offset against reval surplus

19
Q

What is IAS 10?

A

Events, favourable or unfavourable, that occur after the end of the reporting period but before authorisation of the financial statements

20
Q

What is an adjusting event?

A
  • those events which provide evidence of conditions at reporting date
  • adjust FS to reflect
  • e.g selling inventory off, customer into liquidation, completion of court case
21
Q

What is a non adjusting event?

A
  • event that show conditions have arisen since reporting date
  • do not adjust, disclose if material
  • e.g acquisition or disposal of subsidiary, discontinuing operation, catastrophe, changes in tax
22
Q

Where are NCS HFS disclosed?

A

Classified as a separate category in current asset section

  • will be sold in short term
  • not depreciated
23
Q

How is NCA HFS measured?

A

lower of:
carrying amount
fair value less cost of disposal

24
Q

What is the initial recognition of Leases?

A

recognise:
lease liability: PV of lease payments outstanding
right of use asset: lease liability + previous payments + initial direct sots+costs of removing or dismantling

25
Q

What is the lease liability at initial measurement?

A

-fixed payments over lease term

discount rate should be rate implicit in the lease, otw use incremental borrowing rate

26
Q

What is the initial cost of the right of use asset?

A
  • initial lease liability
  • lease payments made at or before measurement
  • any initial direct costs
  • estimates of removing or dismantling
27
Q

Accounting treatment initially? ifrs 16

A

Dr Right of use asset
Cr Lease liability (discount rate)
Cr cash (costs to obtain)

interest charge (finance cost at PV of lease liab)

  • charge with months of lease interest charge
  • add same amount in SoFp to lease liability
28
Q

Accounting treatment in subsequent years? IFRS 16

A

deduct payment from lease liability and interest payable
at YE, lease liability will reduce by amount paid less interest accrued

ROU: depreciate over shorter of UEL and lease term

29
Q

What are the IFRS 16 exemptions?

A

low value items

<12 m term

30
Q

Difference between buy or lease

A

If bought

  • Dr NCA, Cr cash
  • buying price may be higher than ROU, which leaves out premises expenses
  • initial treatment same
  • for buying less depreciation annually
  • for loans, finance cost to SoFP
  • if buying, ignore cost to obtain lease which is an expense
  • leasing favourable
31
Q

Subsequent measurement of lease liability?

A

Dr finance cost (SPL)
Cr Lease Liability (SFP)

Dr Lease liability (SFP)
Cr cash (SCF)

i.e increase carrying amount by interest charge and reduce by cash payment

32
Q

Lease liability tables?

A

payment in arrears: payment taken after

payment in advance: interest taken off subtotal of b/f - payment

33
Q

How is the right of use measured?

A

cost model:initial cost - acc dep - impairment loss

34
Q

IAS 36 effect on FS?

A
  • loss is an expense in SPL is not previously revalued

- if previously revalued, can be offset against reval surplus

OCS (6 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions