Day 2/3 FR/MA Flashcards
D2 Notes
IFRS Revenue
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
IFRS/ASPE Intangible
Definition criteria:
- Identifiable
- Control
- Future economic benefit
Recognition
- Future economic benefit
- Measurable
Amortization period
Conclusion
Quantify Adjustments
Impact of adjustments to users’ objective
IFRS/ASPE Development Cost
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
IFRS Capitalization
- Future economic benefit
- Measurable
- Directly attributable
Discuss each item
Conclusion
Quantify Adjustments
Impact of adjustments to users’ objective
IFRS Inventory
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
IFRS Lease
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
IFRS Government Grant
Loan and grant?
Loan:
Measure at amortized cost
Discount rate
PV
Grant criterion - likely to meet requirements?
Presentation
Grant repayment
Adjustments
Conclude
IFRS Investment Property
Definition
Future economic benefit
Reliably measured
Initial measurement
Discuss fair value and cost method
Subsequent reporting
Impact
Conclude and advise according to users’ objective
IFRS Provision
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
IFRS MDA
Identifies information should be complete, fair, and not misleading
ASPE Grant
For expense, net of expense or income
For PPE, net PPE cost or income over the life of the PPE
ASPE Inventory
Lower of cost and NRV
Recoverable costs
Control
ASPE Revenue
Collectability
Measurability
Performance
ASPE Revenue principal vs. agent
Responsibility for providing goods (principal)
Inventory risk (principal)
Establishing prices (principal)
Credit risk (principal)
Predetermined fee (agent)
ASPE Revenue bill-and-hold
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
ASPE Indicator of impairment
Impairment value — present value of the cash flow
Impairment value — selling the asset
Impairment value — collateral
Higher value of above
ASPE Lease
Capital Lease
Ownership
Lease term 75%
Minimum lease payments 90%
ASPE Investment
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
ASPE non-monetary transaction
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
Flexible budget variance
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)
Static budget variance
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
Sales volume variance
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
Rate variance
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)
Efficiency variance
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
