FAR

Question 1

What’s the the qualities characteristics of the conceptual framework

Answer 1

2 fundamental characteristics
- relevance
- faithful representation

4 enhancing characteristics
- comparability
- understandability
- timeliness
- verifiability

Question 2

What are the elements of financial statements?

Answer 2

-asset
-liability
- equity
-income
-expenses

Question 3

When do you allow recognition

Answer 3

1. The item meets the element definition
2. It provides useful information to the user

Question 4

When does derecognition occur

Answer 4

When the item no longer meets the definition of an asset or liability

Question 5

What are the two main measurement basis?

Answer 5

Historical cost
Current value

Question 6

What should be excluded for ppe recognition

Answer 6

• cost after asset is ready for use but not yet being used
• repair / maintenance work
• incidental income

Question 7

What costs should be capitalised for an asset under contstruction

Answer 7

Labour costs
Material costs
Directly attributed bleeping costs

Question 8

What period does an asset depreciate

Answer 8

From when it is available for use to the point when it is sold or helps for sale

Question 9

How often should the useful life, residual value and depr method be reviewed?

Answer 9

Annually

Question 10

How much can be transferred from revaluation surplus and retained earnings

Answer 10

The difference between the depreciation charge due to revaluation and the depreciation charge of the original cost

Question 11

When is an impairment review carried out

Answer 11

1. Annually for intangibles with indefinite UL and goodwill
2. When there is an indication of impairment

Question 12

What are some indications of impairment

Answer 12

-operating losses
-net cash flow
- decline in market value
- obsolescence / physical damage
- significant changes to business or market

Question 13

How do you calculate recoverable amount

Answer 13

Higher of
1. Value in use
2. FV less costs

Question 14

What are the criteria of a non current asset held for sale

Answer 14

• asset must be available for sale in its present condition
• sale must be highly probable (12 months)
• it must be actively marketed at a reasonable price

Question 15

Can an asset that is intended to be abandoned be classed as hfs?

Answer 15

No

Question 16

How can a low value short term lease be recognised

Answer 16

Can choose to recognise as a lease payment in pnl or as a lease liability

Question 17

What are the two ways of recognising a sale and lease back transaction?
I’d it is
1. A sale
2. Not a sale

Answer 17

1. Recognise the liability which is equal to the proceeds received
2. Recognise an rou asset as a proportion of the previous carrying amount. A lease liability will also be recognised

Question 18

What are the five steps or revenue

Answer 18

1. Recognise the co tract
2. Identify the separate performance obligations
3. Determine the transaction price
4. Allocate the transaction price to the performance obligations
5. Recognise revenue as it when a performance obligation is satisfied

Question 19

What are some evidences of a loan

Answer 19

• sale value does not equal market value
• buyer charges interest in the sales value when calculating the repurchase price
• likely that the seller will get the asset back
• seller gets to use asset after sale date

Question 20

When can you make a provision

Answer 20

-when there is a present obligation it past event
- probable transfer of economic benefit
- measure reliably

Question 21

How are provisions measured

Answer 21

Best estimate of the present value of the future obligation

Question 22

Can a provision be made for the following
1. Future operating losses
2. Onerous contract
3. Reorganisation

Answer 22

1. No - there is no obligation / past event
2. Yes - recognise as the lower cost of meeting the contract or exiting the contract
3. Yes - only if announced before y/e

Question 23

Can counter claims be recognised?

Answer 23

Only recognise if certain. The asset can only be the amount of the provision

Question 24

How are inventories valued?

Answer 24

• lower of cost and npv

Question 25

How should treasury shares be treated?

Answer 25

As a negative equity

Question 26

What are the two methods of capital grants

Answer 26

1. Netting off method - net off against the cost of the asset
2. Deferred income - defer grant to sfp, the income is released over the UL just like the depreciation

Question 27

What are the two methods recognising a grant tied to income

Answer 27

1. Net off against the expense
2. Show as other income

Question 28

How should government assistance be recognised

Answer 28

Do not recognise as it can not be measured reliably, instead this should be disclosed

Question 29

How do you calculate basic earnings per share?

Answer 29

Profit attributed to the ordinary equity holders
Over
Weighted average no. Of ordinary shares outstanding during audit period

Question 30

How do you calculate bonus fraction

Answer 30

No. Shares after issue
Over
No. Shares before issue

Question 31

How do you calculate bonus fraction for a rights issue

Answer 31

Market share price before issue
Over
Theoretical ex rights price (terp)

Question 32

What can public companies not allow their NAs fall below?

Answer 32

The aggregated amount of called-up share capital and undistributable reserves

Question 33

What are undistributable reserves?

Answer 33

Share premium account
Unrealised profits
Any other reserve the company is prohibited from distributing

Question 34

How do you unwind a PURP

Answer 34

increase the cost of sales of the selling company by the PURP amount

Question 35

What are the types of joint arrangements

Answer 35

1. Joint operation
2. Joint ventures

Question 36

What is the limit of time after awustition that goodwill can be recalculated

Answer 36

12 months