General (Blue) Flashcards
Treatment of Borrowing Costs:
- If specifically borrowed funds
- If generally borrowed fund
If specific: Capitalize (less investment income from other use of funds)
If general: Only capitalize borrowing costs
= Average borrowing costs for the period * Expenditure on the asset
Recoverable Amount
The higher of:
Fair value - Disposal costs
Value in Use
Recognition of Impairment Losses
If asset carried at cost:
Expense impairment loss
If asset revalued:
Reduce revaluation surplus
Then expense
Can impairment losses to goodwill be reversed?
No.
Contract Asset
Revenue that’s been earned but not invoiced for
Not yet a receivable
Contract Liability
Something that a customer has paid for that hasn’t yet been provided
Forward Contract
Right of Return
The entity is obligated to repurchase the asset
Treat as a loan
Revenue only recognized at end of loan period
Call Option
Right of Return
The entity has the right to repurchase the asset
Treated as a loan
Revenue only recognized when return period ends
Put Option
Right of Return
The entity is obliged to repurchase only if requested by the customer
If repurchase price < original: Treat as sale
Otherwise, treat as a loan
When are warranties treated as a distinct service?
When purchased separately
Government Grants:
- Income
- Asset
- Loan
Income-related grants shown in SPLOCI as other income
Asset-related grants shown in SOFP as deferred income
Released to SOPL as a reduction in the asset’s carrying amount over its life
Repayment grants increase the carrying amount of the asset or decrease deferred income
Entries to write off impairments to goodwill
Debit Retained Earnings
Debit NCI
Credit Goodwill
Entries to adjust for parent to subsidiary sales
Debit Cost of Sales
Debit Retained Earnings of Parent
Credit Consolidated Investments
Entries for consolidating intragroup PPE sales (P to S)
Debit Retained earnings of parent Unrealized profit
Credit PPE Unrealized profit
Debit PPE Excess depreciation
Credit Retained earnings of subsidiary Excess depreciation
Entries/Calculations to deal with unrealized profit
Debit/Increase Cost of Sales
Credit/Decrease Inventories
-Adjust NCI when S sells to P
Entries for dealing with intragroup loans
Cancel in CSFP:
Debit Loan payables
Credit Loan receivables
Cancel in CSPLOCI
Debit Group finance income
Credit Group finance costs
CSFP with an associate
Line with “Investment in Associate”
= Cost of associate + Share of post-acq reserves - Impairment losses - Group share of unrealized profit
CSPLOCI with an associate
Line for “Share of profit of the associate”
Line for “Share of OCI of the associate”
Measurement of Debt Instruments
Initially: Fair value + Transaction costs
Subsequently: Amortized cost
- EXCEPT when debt instrument only held for sale
- Then, changes to fair value shown in OCI
Steps to capitalizing provision costs
- Debit Non-current assets
Credit Provision - Release costs to SOPL:
Debit Depreciation expense
Credit Accumulated depreciation - Once provision is required (in final year):
Steps to capitalizing provision costs
- Debit Non-current assets
Credit Provision - Release costs to SOPL:
Debit Depreciation expense
Credit Accumulated depreciation - Once provision is required (in final year):
Debit Provision
Credit Cash
Adjusting vs Non-adjusting events after the reporting period
Adjusting: Evidence shows that the condition existed at or before the reporting period end date
Non-adjusting: Occurred after the reporting period (prior to reports being issued)
Inventories are measured at…
The lower of:
Cost
Net Realizable Value
Deferred Tax
A non-payable accounting adjustment needed due to the difference between the carrying amount of assets and their tax bases
Recognized in SPLOCI only
