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Cima M > F2-1 > Flashcards

F2-1 Flashcards

1
Q

SFP NCI

A

Proportional - NCI @ acq + share of post acq reserves Full - NCI @ acq + share of post acq reserves + share of goodwill impairment

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2
Q

Cost of business combination

A

cash, deferred consideration (discounted), contingent consideration, quoted shares

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3
Q

Intragroup balances

A

Cancel all revenue and cost associated. Remove PUP in books of company making the sale. Cancel loans

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4
Q

Consolidated retained earnings

A

Share of post acq reserves - share of goodwill impairment - PUP + share of profit - dividends + adjustments

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5
Q

Transfer of PPE

A

Profit x (remaining life at y/e / remaining life at date of sale)

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6
Q

Consolidated dividends

A

Ignore dividends received from subs and associates. Dividends paid by parent go in statement of change in equity

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7
Q

PUP

A

Dr Group CoS, Cr Group Inventories (SFP)

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8
Q

Associate

A

Entity over which the investor has significant influence

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9
Q

Significant influence

A

power to participate in financial and operating poliy decisions

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10
Q

Consolidating associate

A

Don’t cancel intragroup but do cancel PUP

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11
Q

Parent sells to Associate

A

Dr COS and P’s RE (A% x PUP) Cr Inv in Associate (A% x PUP)

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12
Q

Associate sells to Parent

A

Dr “Share of As Profit” and P’s retained earnings (A% x PUP) Cr Group Inventories (A% x PUP)

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13
Q

Investment in assiciate

A

Cost + Share of post acq resrves - PUP - impairment losses

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14
Q

Joint arrangement

A

two or moree parties have joing control

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15
Q

joint operation

A

joint control have rights to assets and obligations but no separate entity. Each operator will recognise in its own statements

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16
Q

joint venture

A

separate entity established so separate records kept. Treated same as associate with equity accounting

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17
Q

Bonds (loan stock or debentures)

A

Negotiable instruement offereing a fixed interest rate (coupon rate) over a fixed period of time and with a fixed redemption value. May be secured or unsecured

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18
Q

Ordinary shares

A

Paid dividends at discretion of directors

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19
Q

Preference shares

A

Fixed dividend with limited or no voting rights. Rank before ordinary shares in liquidation. Participating preference carry right to additional preferred dividend when ordinary shareholders are paid a dividend exceeding a pre-determined level

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20
Q

Equity warrant

A

Security issued by a company giving the holder the rights to be allocated ordinary shares in company on terms specified in the warrant

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21
Q

Money markets

A

short term (less thn 12 months) for lending and borrowing

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22
Q

Capital markets

A

Long term debt (e.g. bonds) and equity (shares)

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23
Q

Rights issues

A

Invitation to existing shareholders to purchase extra

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24
Q

Offer for sale

A

Shares offered via issuing house to public. Requires advery

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25
Q

Public issue

A

Shares offereed direct to public

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26
Q

Placing

A

Shares issued to select group of institutional investors

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27
Q

Cost of equity - zero growth in div

A

Ke = d / P0

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28
Q

Cost of equity - constant growth in div

A

Ke = d1 / P0 + g or Ke = d0(1+g)/ P0 + g

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29
Q

Cost of preference shares

A

constant div therefore no growth

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30
Q

Cost of irredeemable debt

A

kd= i(1-t) / P0 where P0 is current ex-interest price

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31
Q

Cost of redeemable debt

A

IRR calc. Y0 ex interest market value. Y1 - YX interest net of tax. YX redemption amount. Need to check if it is convertible and what the investor would do

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32
Q

Weighted average cost of capital (WACC)

A

hurdle rate for appraising future projects

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33
Q

Deferred revenue

A

Discount to the fair value. Difference between FV and nominal sales value is accounted for as interest revenue and accrued over the period until payment is due

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34
Q

Deferred income

A

Payment in advance: credit deferred income, release to profit or loss over time as revenue is recognised

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35
Q

Prefence shares presentation

A

redeemable - liability, Cumulative (div not paid in a year must be paid subsequently) - always liability

36
Q

Initial measurement of Financial instruement

A

FV +/- any transaction costs. Exception is assets or liablities held for short term trading or derivatives. These are recorded at FV excluding transaation costs, movement in FV passes to SFPL as do transaction costs

37
Q

Y/e for financial asset held to maturity

A

amortised cost

38
Q

Y/e for loans and receivables

A

amortised cost

39
Q

Y/e for financial asset through PorL (short term, held for trading, all derivatives)

A

FV, with movement in FV passing through SPL

40
Q

Y/e for available for sale financial assets

A

Cash flows not certain therefore FV with movement passing through reserves / OCI

41
Q

Financial liabilities

A

held at amortused cost using effective interest method unless held for trading then FV with movement & transaction cost through SPL

42
Q

Compound instruments

A

E.g. convertible debt. Split the components

43
Q

Impairment of financial assets

A

E.g. financial difficulty of issuer or high probability of bankruptcy of borrower. Impairment loss held at amortised cost and is different between assets carrying value and present value of future expected cash flows discounted using the assets original effective interest rate

44
Q

Finance lease

A

lease transfers ownership at end, ledee has option to purchase at price below fv at exercise date, lease term Is for major part of assets economic life, PV of minimum lease payments amounts to assets FV at inception, leased asset so specialised that it could only be used by lessee without major modifications being made

45
Q

Actuarial method

A

uses interst rate implicit in the lease

46
Q

Sum of digits method

A

n(n+1)/2

47
Q

Operating lease

A

Operating lease other than a finance lease. Recognised in SPL on a straight line basis over lease term

48
Q

Sale and finance leaseback

A

no sale therefore

49
Q

Provision

A

A liability of uncertain timing or amount

50
Q

Provision regonition

A

present obligation as a result of a past event, probable that an outflow of economic resources will be required to settle the obligation and a reliable estimate can be made of the amount of obligation

51
Q

Obligating event

A

A past event which leads to a present obligation - no realistic alternative

52
Q

Legal obligation

A

dervies from contract, legislation or other operation of law

53
Q

Constructive obligation

A

dervies from an entity’s actions where, from an established pattern of past practice, published policies or a specific statement, the entity has indicated to other parties that it will accpet certain responsibilities and has created a valid expectation

54
Q

Restructuring

A

Provision needed when there is a detailed formal plan and a valid expectation in those affected that it will carrying out the plan or announincg it

55
Q

Warranty provisions

A

When selling goods under warranty needs to make provision on best estimate of repair costs

56
Q

Contingent liablities

A

not recognised but disclosed. Not probable, not reliable

57
Q

Contingent asset

A

possible asset arising from past events whose existnece will only be confirmed by the occurrence of one or more uncertain future events not wholly within the control of the firm. A disclosure

58
Q

Deferred tax

A

Liability for future possible tax payable. Arises due to difference between tax and accounting tratment.

59
Q

Unused tax losses

A

Deferred tax asset when entiy has unused tax losses / credits. Acts as future tax sacing but amount can only be recorded for expected profit levels

60
Q

Functional currency

A

curency of primary economic enviornment in which the entity operates. It is a fact

61
Q

Presentation currency

A

choice by management

62
Q

Translation of SPL

A

subsids translated @ average rate

63
Q

Translation of SFP

A

Assets and liability @ closing rate. GW at closing rate (exchange loss to reserves). Share capital and pre-acq reserves @ historic rate. Post acq reserves not translated but treated as balancing figure

64
Q

Cash equivalents

A

Short term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificatn risk of changes in value

65
Q

Cash acquistion and disposal

A

account for PPE, Cash etc. gained / lost

66
Q

ROCE

A

PBIT / TALCL x 100%

67
Q

Gross profit margin

A

Gross profit / revenue x 100%

68
Q

Operating profit margin

A

PBIT / Revenue x 100%

69
Q

Net Profit margin

A

PAT / Revenue x 100%

70
Q

Return on Equity

A

Profit after tax and pref dividends / Equity SC + reserves x 100%

71
Q

Asset turnover

A

Revenue / TALCL

72
Q

Current Ratio

A

current assets / current liabilities

73
Q

Quick Ratio

A

current assets - inventory/ current liabilities

74
Q

Inventory turnover

A

cost of sales / inventories

75
Q

Non-current asset turnover

A

revenue / non-current assets

76
Q

receivables period

A

TR/credit turnver x 365

77
Q

Payables period

A

TP / Purchases or COS x 365

78
Q

Debt / equity

A

long-term debt / equity

79
Q

Interest cover

A

PBIT / Interest payable

80
Q

Earning per share

A

Profit after tax after NCI / weighted av no of shares

81
Q

Dividend yield

A

Dividend per share / market share price

82
Q

Dividend cover

A

EPS / Dividend per share

83
Q

P/E

A

Market share price / EPS

84
Q

Related party transaction

A

Transfer of resources / goods between parties which would appear to the outside world to be linked in some way. Regardless of whether a price is charged

85
Q

EPS @ full market

A

Time aportion as not had cash for whole year

86
Q

EPS for right issue

A

Bonus fraction = old share price / new share price

Cima M (3 decks)

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