Definitions

Question 1

Define Asset

Answer 1

A present economic resource controlled by an entity as a result of past events

Question 2

Define Liability

Answer 2

A present obligation of the entity to transfer an economic resource as a result of a past event

Question 3

Define Equity

Answer 3

A residual interest when deducting all liabilities from assets

Question 4

Define Income

Answer 4

Increase in asset or decrease in liabilities that result in an increase in equity

Question 5

Define Expenses

Answer 5

Decrease in assets o increase in liabilities that result in a decrease in equity

Question 6

Define Fair Value (IFRS 13)

Answer 6

The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date

Question 7

Define IFRS 5 Discontinued Operation

Answer 7

A component of an entity that has been sold, or held for sale and is a:
Separate line of business
Part of a plan to dispose of a Separate line of Business
A Sub acquired purely for resale

Question 8

Define Interim Financial Reporting IAS 34

Answer 8

Interim Period is a financial reporting period that is shorter than a full financial year
Condensed SFP, SPL, SOCIE, SCF, Selected Disclosure Notes

Question 9

IFRS 15 - Revenue from Contracts with Customers (5 Steps)

Answer 9

1) Identify the Contract
2) Identify the Performance Obligation
3) Determine the Transaction Price
4) Allocate the transaction price to the perf obl
5) Recognise revenue when perf obl is satisfied

Question 10

Define Performance Obligation

Answer 10

Promise to transfer goods or services to a customer

Question 11

Define Principal

Answer 11

Providing good or service

If controls the good or service before sale to customer

Question 12

When is a performance obligations satisfied OVER time

Answer 12

• When customer simultaneously receives and consumes benefits from entity as it performs
• Entity is creating or enhancing asset controlled by customer
• Entity cannot use asset ‘for alternative use’ and entity can demand payment to date

Recognised PROGRESS TOWARDS COMPLETION

Question 13

How is the FV of a non-financial asset measured?

Answer 13

Highest and Best Use

Question 14

Define IAS 23 Borrowing Costs

Answer 14

Borrowing Costs are interest and other costs incurred on borrowing funds.

Entities MUST capatilise borrowing costs that are directly attributable to acquisition, construction or production of assets that take a substantial amount of time to get ready for use.

Question 15

Define IAS 40 Investment Properties

Answer 15

Properties held to earn rentals or for capital appreciation or both

INITAL - measure at COST
SUBSEQUENT - COST or FV

GAIN/LOSSES to SPL

Question 16

Define IAS 38 Intangible Assets

Answer 16

Identifiable non-monetary asset without physical substance.
RECOGNISE IF:
Identifiable
Controlled by Entity
Generate probable future economic benefits
Cost can be reliably measured

Question 17

When should costs during development be recognised as an asset? PIRATE

Answer 17

Project is technically feasible
Is financially able to complete project
Reliably measured
Able to use or sell asset
Technically Feasible
Economic benefits flow to entity

Question 18

Define Impairment Loss IAS 36 Impairment of Assets

Answer 18

The amount by which the carrying amount exceeds the recoverable amount.

Question 19

What is the recoverable amount?

Answer 19

Greater of FV-C2S and VIU (PV of future Cash Flows)

Question 20

Indicators of Impairment?

Answer 20

Internal
Damage
Management committed to reorganisation
Idle or Obsolete Assets
Operating Losses in Business where the assets are used

EXTERNAL
Competitor Actions
Increasing Interest Rates
Market Value of Assets Falling

Question 21

Define Functional Currency

Answer 21

The currency of the primary economic environment where an entity operates

Question 22

Define Lease

Answer 22

A contract that conveys right to use an underlying asset for a period of time in exchange for consideration

Question 23

Define Lessor

Answer 23

The entity that provides the ROU asset and receives consideration

Question 24

Define Lessee

Answer 24

The entitiy that obtains the use of the ROU asset and transfers consideration

Question 25

Defined Defined Contribution Pension Scheme

Answer 25

An entity pays fixed contribution and has no legal or constructive obligation to pay further contributions if the fund does not hold sufficient assets to pay all EE benefits.

Question 26

Define Defined Benefit Pension Scheme

Answer 26

A scheme that is not defined as a contribution scheme

Question 27

Define Current Service Cost

Answer 27

The increase in PV of the defined benefit obligation resulting from employee service in the Current Period

Question 28

Define Past Service Cost

Answer 28

Change in PV of the defined benefit obligation for EE service in prior periods resulting from a plan amendment or curtailment in the current period

Question 29

Define Curtailment

Answer 29

Significant reduction in the number of EE covered by the plan. GAIN/LOSS is part of the service cost component to P&L

Question 30

Define Settlement

Answer 30

When entity enters into a transaction to terminate all or part of the benefits due to one or more employees under a plan. SERVICE COST COMPONENT

Question 31

Define Net Interest Component

Answer 31

Change in measurement in both plan obligation and asset due to passage of time.

Calc by applying discount rate for liab to net liab at start of reporting period CHARGED TO P&L

Question 32

Define Remeasurement Component

Answer 32

Difference between assumptions and estimates made when accounting for the defined benefit plan, and what actually happens.

GOES TO OCI

Question 33

Define Derivative

Answer 33

Financial Instrument with

Value changes in response to underlying variable

Little or not investment

Settled at future date

Measure at FVTPL