General notes: Semester 1

Question 1

General notes:

Answer 1

• Current cost is an entry cost and FV is an exit value (IFRS 13)
• If costs are expensed there is no FEB (Asset is derecognised ) therefore, subject to impairment
• Do not recognize executors contracts until one party has performed
• Having a right doesn’t mean you have an asset. Meet all requirements of CFM
• Do not need output to have a business you need inputs and a substantive process
• If there is no business, it is an asset acquisition
• Obligating event gives right to present obligation
• If something is not recorded IAS 8
• Always mention the tax implications unless they tell you that TAX is NA even in discussions
• Provisions are not measured at historical cost
• Question discount rates (Risk in company and what would be your expectation)

Exam technique:

• In a critically evaluate question mention what must be done per the standard
• Mention that there is no evidence that ….. ‘above things have been done’

Statement of P/L
-Revenue: P+S- sales from inter-company sales
-Less foreign exchange loss
+Foreign exchange gain

Question 2

IAS 10

Answer 2

1. Identification of IFRS 10
2. Event after reporting period (Favorable or unfavorable)_occurred between the reporting date and the date FS are authorized for issue
   - Issue is whether condition occurred at year end
   - Evaluation is based on facts and circumstances specific to company
   - Re-measurement of A/L at reporting date is N/A
   - Disclosure
   - Consider GC principles since FS are prepared on a GC principle
   - If dividends to holder of equity instrument are declared after reporting date, an enterprise should not recognize those dividends as reporting date

Question 3

Inventory IAS 2

Answer 3

Do not capitalize:

• Interest to purchase raw materials
• Storage costs
• Excess capacity

Question 4

IAS 40

Answer 4

• Investment property CA
  =CA at BoY+ Acquisitions+subsequent expenditure capitalised+ FV remeasure gain
  =CA at year end

Question 5

IAS 19

Answer 5

Cost to company/ total days * allowed days py *% those that took it * remaining EE %

Dr Short term EE benefits
Cr Leave pay accrual if paid bank

Termination benefits
DR Accrual termination benefit
Cr Bank
Cr Termination benefit

PBT () Increase in accrual leave pay