Day 2/3 FR/MA

Question 1

IFRS Revenue

Answer 1

Identify contract
Identify separate performance obligation
Determine transaction price (includes right to return)
Allocate transaction price to separate performance obligations
Determine when performance obligation is complete and revenue can be recognize
Conclusion
Quantify Adjustments
Impact of adjustment to user’s objective

Question 2

IFRS/ASPE Intangible

Answer 2

Definition criteria:
- Identifiable
- Control
- Future economic benefit
Recognition
- Future economic benefit
- Measurable
Amortization period
Conclusion
Quantify Adjustments
Impact of adjustments to users’ objective

Question 3

IFRS/ASPE Development Cost

Answer 3

Definition criteria:
Technical feasibility
Intention to complete
Ability to use or sell
Availability of technical, financial, or other resources
Reliability of cost measurement
Probability of future economic benefit

Question 4

IFRS Capitalization

Answer 4

• Future economic benefit
• Measurable
• Directly attributable
  Discuss each item
  Conclusion
  Quantify Adjustments
  Impact of adjustments to users’ objective

Question 5

IFRS Inventory

Answer 5

Identify each item/group
Calculate net realizable value and cost
Identify lower amount (cost vs net realizable value)
Determine write-down if required
Conclusion
Quantify Adjustments
Impact of adjustments to users’ objective

Question 6

IFRS Lease

Answer 6

Identify there is a lease
Identify and separate the lease components
Determine the commencement date of the lease
Determine the lease term
Determine the discount rate
Initial measure calculation: PV of ROU and Lease Liability
Subsequent measure (include Leasehold Improvements if any)
Conclude

Question 7

IFRS Government Grant

Answer 7

Loan and grant?
Loan:
Measure at amortized cost
Discount rate
PV
Grant criterion - likely to meet requirements?
Presentation
Grant repayment
Adjustments
Conclude

Question 8

IFRS Investment Property

Answer 8

Definition
Future economic benefit
Reliably measured
Initial measurement
Discuss fair value and cost method
Subsequent reporting
Impact
Conclude and advise according to users’ objective

Question 9

IFRS Provision

Answer 9

Definition
Recognition
- present obligation as a result of a past event
- probable outflow of resources required to settle the obligation
- reliable estimate of the obligation
Conclude

Question 10

IFRS MDA

Answer 10

Identifies information should be complete, fair, and not misleading

Question 11

ASPE Grant

Answer 11

For expense, net of expense or income
For PPE, net PPE cost or income over the life of the PPE

Question 12

ASPE Inventory

Answer 12

Lower of cost and NRV
Recoverable costs
Control

Question 13

ASPE Revenue

Answer 13

Collectability
Measurability
Performance

Question 14

ASPE Revenue principal vs. agent

Answer 14

Responsibility for providing goods (principal)
Inventory risk (principal)
Establishing prices (principal)
Credit risk (principal)
Predetermined fee (agent)

Question 15

ASPE Revenue bill-and-hold

Answer 15

The risks of ownership
Fixed commitment to purchase the goods
Buyer request/substantial business purpose
Schedule for delivery of the goods
Specific performance obligations
Segregation of seller’s inventory
Product must be complete and ready for shipment

Question 16

ASPE Indicator of impairment

Answer 16

Impairment value — present value of the cash flow
Impairment value — selling the asset
Impairment value — collateral
Higher value of above

Question 17

ASPE Lease

Answer 17

Capital Lease
Ownership
Lease term 75%
Minimum lease payments 90%

Question 18

ASPE Investment

Answer 18

Significant influence criteria:
Less than 20% voting interest
Representation on the board of directors
Participation in policy-making processes
Material intercompany transactions
Conclude on significant influence
Cost vs equity method (+ calculation)
Recommend based on users needs

Question 19

ASPE non-monetary transaction

Answer 19

Definition
Commercial substance: configuration of cash flows
Commercial substance: entity-specific value
Exchange of product/property to be used in the sale line of business
Fair value of asset received and asset given up not reliably measurable
Non-monetary non-reciprocal transfer to owners

Question 20

Flexible budget variance

Answer 20

Flexible budget variance = Selling price variance = (AP – SP) × AQ
Flexible budget variance = rate variance + efficiency variance
AP = actual price per unit of output = actual price
SP = standard (budgeted) price per unit of output = standard price
AQ = actual volume of units = actual quantity (unit)

Question 21

Static budget variance

Answer 21

Static budget variance = (SQ × SP) – (AQ × AP)
Static budget variance = flexible budget variance + sales volume variance
SQ = standard (budgeted) volume of units = standard quantity (unit)
SP = standard (budgeted) price per unit of output = standard price
AQ = actual volume of units = actual quantity (unit)
AP = actual price per unit of output = actual price

Question 22

Sales volume variance

Answer 22

Sales volume variance = (AQ – SQ) × SP
AQ = actual volume of units = actual quantity (unit)
SQ = standard (budgeted) volume of units = standard quantity (unit)
SP = standard (budgeted) price per unit of output = standard price

Question 23

Rate variance

Answer 23

Rate variance = (AP – SP) × AQ
rate variance = Flexible budget variance - efficiency variance
AP = actual price per unit of output = actual price
SP = standard (budgeted) price per unit of output = standard price
AQ = actual volume of units = actual quantity (unit)

Question 24

Efficiency variance

Answer 24

Efficiency variance = (AQ – SQ for actual output) × SP
efficiency variance = rate variance + Flexible budget variance
AQ = actual volume of units = actual quantity (unit)
SQ = standard (budgeted) volume of units = standard quantity (unit)
SP = standard (budgeted) price per unit of output = standard price

Question 25

ABC Costing

Answer 25

advantages of ABC:
- control cost drivers
- eliminate non-added value activities
- reviews
disadvantages:
- cost due to complexity
- complexity
- training

Question 26

Full absorption cost-based pricing

Answer 26

pros:
reliability
ease of use
cons:
accuracy of cost for new product
margin expected
volume assumptions
impact of competition

Question 27

Demand-based pricing

Answer 27

pros:
customer considerations
curve
impact
cons:
research reliability

Question 28

Earnings per share (EPS)

Answer 28

Weighted
Initial
+additional (additional shares / 365 days x period issued)
EPS = Adjusted net income / weighted shares
Convertible debt = diluted shares = shares / 365 days x period of debt)
Interest per shares < EPS
Interest per share = interest of the period net of tax / diluted shares
Diluted net income = Net income + interest
Diluted EPS = diluted net income / (diluted shares + normal shares )