IA2 Flashcards
1
Q
Gross Investment
A
Gross Rentals
+ Residual Value
Gross Rental = Annual Rent x Lease Term
2
Q
Direct
Net Investment
A
Cost of the Asset
+ Initial Direct Costs paid by Lessor
3
Q
Sales Type
Net Investment
A
PV of Rentals
+ PV of RV or Options
4
Q
Annual Rentals
A
Cost of the Asset
+ PV of Residual Value (PV of 1)
÷ PV Factory ( OA or AD)
5
Q
Unearned Interest Income
A
Gross Investment
- Net Investment
6
Q
Sales Type
SALE
A
Net Investment vs. Fair Value
LOWER
7
Q
Sales Type
COGS
A
Cost of the Asset
+ Initial Direct Costs
8
Q
Sales Type
COGS
RV is guaranteed
A
Cost of the Asset
+ Initial Direct Costs
9
Q
Sales Type
SALES
RV is guaranteed
A
Net Investment vs. Fair Value
LOWER
10
Q
Sales Type
SALES
RV is unguaranteed
A
Net Investment vs. Fair Value
LOWER
- PV of RV
11
Q
Sales Type
COGS
RV is unguaranteed
A
Cost of the Asset
+ Initial Direct Costs
- PV of RV
12
Q
Carrying Amount Short Cut
A
CA, beginning
x 1.Effective Rate
- Payment
13
Q
67
Lease Receivable is equal to
A
Net Investment
14
Q
Lease Accounting for Lease
GR & Exemption
A
Finance Lease
except: Low Value Asset & Short-Term Lease
15
Q
Finance
ROU
Initial Measurement
A
Initial Measurement of Lease Liability
+ IDC paid by the Leassee
+ Lease Bonus
- Lease Incentives
- Estimated Cost to Dismantle the Asset
= Costs
16
Q
Finance
ROU
Not part of the cost
A
Leasehold Improvement
Executory Costs - taxes, insurances
Refundable Security Deposit
17
Q
Finance
ROU
Subsequent Measurement
A
Costs (Initial Measurement)
- Accu. Depreciation/ Impairment Losses
18
Q
Finance
ROU
Depreciation
A
Cost - RV
÷ Useful Life
✓ TO - RV at the end of Useful Life
✓ TO - Useful Life
X TO - Useful Life vs. Lease Term
SHORTER
X TO - RV guaranteed
19
Q
Lease Liability
Initial Measurement
A
PV of Lease Payments
*Implicit Rate or Incremental Rate
20
Q
Lease Liability
Subsequent Measurement
A
Amortized Cost =
CA, beginning
x 1.ER
- Principal Payments*
*Payment - Interest Expense
21
Q
Finance
Lease Liability
Residual Value Guaranteed
Initial Measurement
A
PV of Rentals
+ PV of RV
22
Q
Finance
Actual Purchase of Lease Asset
Cost of the Asset
A
CA of ROU
+ Cash Payment
- CA of LL
23
Q
Sale & Leaseback
Seller - Lessee
ROU
A
CA
x Right Retained / FV
24
Q
Sale & Leaseback
Seller - Lessee
Lease Liability
A
PV of Lease Payments
25
Sale & Leaseback
Seller - Lessee
Right Retained
Lease Liability
+ Additional Financing (SP > FV)
- Prepayments (SP < FV)
26
Sale & Leaseback
Seller - Lessee
Total Gain
Fair Value
- Carrying Amount
27
Sale & Leaseback
Seller - Lessee
Total Gain
Operating Lease
recognized in full
28
Sale & Leaseback
Seller - Lessee
Total Gain
Finance Lease - gain to be recognized
Total Gain
x Right Transferred/ FV
Right Transferred = FV - Right Retained
29
Sale & Leaseback
Seller - Lessee
Total Gain
Finance Lease - gain not to be recognized
Total Gain
x Right Retained/ FV
or Total Gain - Gain to be recognized
30
Lease Liability
Variable Lease Payment
e.g
First 2 period 100k
Other 3 period 150k
PV of 100k x (PV Factor OA/AD)
PV of 150k x (PV Factor OA/AD x PV of 1)
yung PV of 1 - 2 periods
31
Lease Modification
Remeasurement of Lease Liability
Remeasured LL vs CA of LL (before modification)
increased ( R > CA ) dr. ROU cr. LL
decreased ( R < CA ) dr. LL cr. ROU
32
RATE
Change in lease term
Revised Discount Rate
33
RATE
Change in the assessment of an option to purchase the cost
Revised Discount Rate
34
RATE
Change in residual value guarantee
Original Discount Rate
35
RATE
Change in future lease payments
Original Discount Rate
36
IAS 33
Basic Earning Per Share
Net Income - Pref. Dividends
÷ Average Outstanding Share
37
Cumulative
Dividend
declared or not
38
SHE components
Contributed Capital
+ Retained Earnings
+ Other Comprehensive Income
- Treasury Shares
39
Contributed Capital components
Share Capital (Issued, Ord, Pref)
+ Share Premium
+ Subscribed Share Capital
- Subscription Receivable
40
Share Issued in Exchange for Non-cash Consideration
Hierarchy
1. FV of Non-cash Consideration
2. FV of Issued Share
3. Par/Stated Value of Issued Share
41
Issued Share computation
Authorized Share Capital
- Unissued Share Capital
42
Convertible Preference Share
IP > Par of Ord. Shares
Gain
Cr. Share Premium - Ordinary Shares
43
Convertible Preference Share
IP < Par of Ord. Shares
Loss
Dr. Retained Earnings
44
Reissuance & Retirement
Reissue Price > Cost
Original Issue Price
Cr. Share Premium - TS
45
Reissuance & Retirement
Reissue Price < Cost
Original Issue Price
1. Dr. Share Premium - TS
2. Dr. Retained Earnings
46
Effect in Shareholders Equity of Donations
NO EFFECT
47
Maximum Amount of Dividend
Amount of unappropriate RE
48
In this date the RE is reduced
Date of Declaration
49
Liquidating Dividend is a
Return OF Capital
50
Outstanding Shares computation
Issued Shares
+ Subscribed Share Capital
- Treasury Shares
51
Share Dividend
SMALL
Measurement
less than 20%
FV @ date of Declaration vs Par
HIGHER
52
Share Dividend
LARGE
Measurement
20% or more
Par
53
Share Dividend JE
dr. RE
cr. Share Dividend Payable - CL
cr. Share Premium
54
Recapitalization
Change par to no par ( vice versa )
Original Issue Price > Par/Stated Cap
Cr. Share Premium - recapitalization
55
Recapitalization
Change par to no par ( vice versa )
Original Issue Price < Par/Stated Cap
Dr. RE
56
Recapitalization
Reduction of par JE
Dr. Share Capital
Cr. Share Premium
57
Share Split Effect
(Silent)
no. of Share ⬆️
Par/Stated ⬇️
58
Reverse Share Split / Split Down
# of Share ⬇️
Par/Stated ⬆️
59
Held for Trading
CL
60
Current Liability
Initial Measurement
@PV
61
Non-current Liability
Initial & Subsequent Measurement
PV (conceptually)
pero Face Amount talaga
62
Non-current Liability
Subsequent Measurement
Amortized Cost (EIM)
63
Provision
Midpoint
Highest + Lowest
÷ 2
dapat reasonable yung gap bawal ganiey 20k to 500k
64
Risk and Uncertainties
Provision
Best Estimate
x 1.Risk Adjustment Factor
ittimes mo sa PV
65
Contingent Liability
characteristics
possible obligation
not probable or
not measured reliably
DISCLOSED ONLY
66
51-94%
Probable
Recognized
67
96-100%
certain
Recognized
68
50%
possible
Diclosed
69
Remote
Ignored
70
Contingent Asset
remote to possible
Ignored
71
Contingent Asset
probable
Disclosed
72
Contingent Asset
certain
Recognized
73
Premium Expense
Expected # of premium to be distributed during the year
x Premium Expense per unit
74
Expected # of premium to be distributed during the year
# of units sold
x Expectations %
= # of coupons
÷ coupons required
75
Premium Expense per unit
Cost of Premium
+ Other Costs e.g shipping keme
- Remittance
76
Estimated Premium Liability
Estimated Premium Liability, beg.
+ Premium Expense
- Premium Distributed
77
Premium Distributed
# of premium actually distributed
x Premium Expense per unit
78
Premium Inventory
Inventory, beg.
+ Cost of Premium Purchased
- Cost of Premium Distributed
79
Cost of Premium Purchased
❌ Premium Expense per unit
✅ Cost of Premium inclusive of other costs e.g shipping, handling, storage. Remittance NOT INCLUDED
80
Warranty Expense
- based on current sales
- based on past expense
- could be mutiplied to $ price per units sold & % of sales
81
Estimated Warranty Liability
Estimated Warranty Liability, beg.
+ Warranty Expense
- Actual Warranty Costs Incurred
82
Liability for Gift Certificates
Unearned Revenue - GC
Unearned Revenue - GC, beg.
+ GC sold during the year
- GC redeemed during the year
- GC expected to not be redeemed
- Expired GC
83
Short-term Notes Payable
Initial Measurement
Face Value
84
Long-term Interest Bearing NP
with realistic rate NR = ER
Initial Measurement
Face Value
85
Long-term Interest Bearing NP
with realistic rate NR = ER
Subsequent Measurement
Face Value
86
Long-term Interest Bearing NP
with realistic rate NR = ER
Interest Paid
Face Value x Nominal Rate
87
Long-term Interest Bearing NP
with realistic rate NR = ER
Face Value x Nominal Rate
88
Short-term Notes Payable
Subsequent Measurement
Face Value
89
Short-term Notes Payable
Interest Paid
Face Value x Nominal Rate
90
Short-term Notes Payable
Interest Expense
Face Value x Nominal Rate
91
Long-term Interest Bearing NP
with unrealistic rate NR ≠ ER
Interest Paid
Face Value x Nominal Rate
92
Long-term Interest Bearing NP
with unrealistic rate NR ≠ ER
Initial Measurement
1. Cash Price Equivalent
2. Present Value
93
Long-term Interest Bearing NP
with unrealistic rate NR ≠ ER
Subsequent Measurement
Amortized Cost
94
Long-term Interest Bearing NP
with unrealistic rate NR ≠ ER
Interest Expense
Carrying Amount, beg.
x Effective Rate
95
Long-term Non-Interest Bearing NP
Interest Expense
Carrying Amount, beg.
x Effective Rate
96
Long-term Non-Interest Bearing NP
Interest Paid
Face Value x Nominal Rate
97
Long-term Non-Interest Bearing NP
Initial Measurement
1. Cash Price Equivalent
2. Present Value
- use PV of 1 kapag sa maturity babayaran principal
- use Pv of OA kapag equal payments
98
Long-term Non-Interest Bearing NP
Subsequent Measurement
Amortized Cost
99
Bonds to the Perspective of Purchaser/Investors
Asset, Investment in Bonds in particular.
100
Bonds Payable
Initial Measurement
FV Option
Designate the bonds - FV through P/L
Fair Value of the Bonds
1. Cash Price Equivalent
2. Quoted Price
3. Present Value
& Transaction Costs are expensed not kasama
101
Bonds Payable
Initial Measurement
❌ FV Option itey yung normal or usual
No designation
Fair Value
- Transaction Cost/Bond Issue Cost & is amortized together w/ the premium or discount
102
Nominal Rate aka
used in
Coupon Rate
Stated Rate
Agreed Rate
used in Interest Payment
103
Effective Rate aka
used in
Market Rate
Yield Rate
Realistic Rate
used in Interest Expense
104
Nominal > Effective
PV > FV
Premium
105
Nominal < Effective
PV < FV
Discount
106
Initial Measurement ≠ Proceeds
Date of Issuance ≠ Date of Sale
Initial Measurement
Proceeds
Fair Value
Proceeds = FV + Accrued Interest
107
Present Value
Principal - 1. Term - PV of 1
2. Serial - PV of OA
Interest - PV of OA
108
Bonds Payable
Subsequent Measurement
FV Option
Fair Value
others:
No discount or premium
Interest Paid = Interest Expense and use FA x Nominal Rate
🔺FV
⬆️ loss
⬇️ gain
109
Stock Right
Adjusting Factor
MV of Shares right on
÷ MV of Shares ex right
110
Is Premium bonds payable & deferred liability CL?
NO
111
Test for Dilution
Preference Share/Bonds Payable - convertible dapat
🔺(NI - Pref. Dividend)
÷ 🔺 WANOS
112
Test for Dilution
Share Option and Share Warrants
MV of Shares > Option Price
Dilutive
113
Test for Dilution
Share Option and Share Warrants
MV of Shares < Option Price
Anti Dilutive
114
BEPS > DEPS
Dilutive
115
BEPS ≤ DEPS
Anti Dilutive
116
Retirement of Bonds
at Maturity
Face Amount = CA
no premium and discount
117
Retirement of Bonds
before Maturity
CA @ maturity > Retirement Price
Gain
118
Retirement of Bonds
before Maturity
CA @ maturity < Retirement Price
Loss
119
Bond Issue Cost
treatment
❌ FV Option
netted against premium
lumped with discount
deducted from FV to compute the initial CA of BP
120
if walang nominal rate sa liability to get the CA
CA, beginning
x 1.ER
121
Grace Period
more than 12 months & granted on or before reporting date
Non current
122
Accrued Interest Payable is
current
123
Recorded unreleased checks, stale & posdated check shall be ___ to the AP
added
124
Change in FVTPL due to changes in credit risk shall be recognized in
OCI
125
A payment of accounts payable within the discount period shall decrease the balance of accounts payable equal to
a cash payment only
b. cash payment plus purchase discount
c. purchase discount only
d. none of the above since payment of accounts payable shall increase the balance of the accounts payable
cash payment plus purchase discount
126
The amount recognized as a provision shall be the best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The _____'s judgment is the primary basis for the estimate of the obligation.
management
127
____ is used when the provision being measured involves a large population of items. The procedure is to weight all possible outcome amounts by their associated probabilities.
Expected value method
128
The _____ is used when there is a continuous range of possible outcomes, and each point in that range is as likely as any other.
mid-point approach
129
____ from the disposal of an asset shall not be considered in measuring the amount of provision.
Expected gain
130
Changes in the estimate of the provision shall be accounted _____. The effects of the change are generally recognized in the current period's profit or loss
prospectively
131
Under PAS 37 the following accounting procedures related to premiums are corren except
a. During the period when the related goods were sold, estimated premium expense and corresponding estimated premium liability shall be recognized.
b. During the period when the premiums were actually given to the availing customers, additional premium expense shall be recorded.
c. The undistributed items of premium shall be recorded as prepaid assets.
d. None of the above
During the period when the premiums were actually given to the availing customers, additional premium expense shall be recorded.
132
Under PFRS 15, the following accounting procedures related to the premiums are correct, except
a. The transaction price shall be allocated to the products sold and the premium items to be distributed in the future.
b. The amount initially allocated to the products sold shall be recognized as revenue when the products are delivered to the customers.
c. The amount initially allocated to the premium items shall be immediately recognized as income when the main products are delivered to the customers
d. None of the above
The amount initially allocated to the products sold shall be recognized as revenue when the products are delivered to the customers.
133
The allocation of the transaction price to the products sold and the items of premium under PFRS 15 shall be
a. based on the relative stand-alone selling prices of the product sold and the items of premium.
b. based on the relative cost of the product sold and the items of premium.
c. based on the relative number of units of the product sold the number of items of premium expected to be distributed.
d. equally.
based on the relative stand-alone selling prices of the product sold and the items of premium.
134
If an entity acts as the principal in its customer loyalty program, which of the following accounting procedures is correct?
a. The total transaction price shall be immediately recognized as revenue.
b. The amount allocated to the loyalty points shall be equal to the total amount of discount that the customers can have assuming all of the points will be exercised.
c. The amount allocated to the loyalty points shall be recognized as income only when the products or services were already transferred to the availing customers
135
Under PFRS 15, rebates shall be accounted by
a. recognizing estimated rebate expense and corresponding estimated rebate liability.
b. recognizing estimated rebate income and corresponding estimated rebate receivable.
c. allocating the transaction price to the rebates equal to the total amount of rebates that are expected to be exercised by the customers. d. allocating the transaction price between the goods sold and the rebates based on their relative stand-alone selling prices.
allocating the transaction price between the goods sold and the rebates based on their relative stand-alone selling prices.
136
What is the purpose of notes to financial statements?
a. To present information about the basis of preparation of the statements and accounting policies used.
b. To disclose the information required by PFRS not presented elsewhere in the financial statements.
c. To provide additional information not presented but necessary for a fair presentation.
d. All of these can be considered a purpose of the notes.
All of these can be considered a purpose of the notes.
137
What is the first item in presenting the notes?
a. Statement of compliance with PFRS
b. Other disclosures, such as contingent liabilities and contractual commitments unrecognized
c. Supporting information for items presented on the face of the financial statements
d. Summary of significant accounting policies.
Statement of compliance with PFRS
138
An entity whose financial statements comply with PFRS shall a. Make an explicit statement of compliance in the notes.
b. Make an unreserved statement of compliance in the notes.
c. Make an explicit and unreserved statement of compliance in the notes.
d. Not describe financial statements as complying with PFRS.
Make an explicit and unreserved statement of compliance in the notes.
139
An entity is required to disclose all of the following nonfinancial information, except
a. A description of the nature of the entity's operations.
b. The name of the parent entity and the ultimate parent. Domicile and legal form of the entity, the country of
c. incorporation and address of the registered office.
d. Names and addresses of directors and officers.
Names and addresses of directors and officers.
140
Actual Exercise of Share Warrants
Share Premium - Issuance
Cash received from exercise
+ Full or proport. amount of SP-SW
= Isdue Price of Equity Instruments
- Total par value of issued shares
= Share Premium - Issuance
141
Actual Exercise of Convertibility Opt.
Share Premium - Issuance
Updated CA of bonds
+ Full or proport. amount of SP-CVT
= Isdue Price of Equity Instruments
- Total par value of issued shares
= Share Premium - Issuance
142
Actual Exercise of Share Warrants
Share Premium - Issuance
JE
Dr. Cash
SP - SW
Cr. Share Capital
SP - Issuance
143
Actual Exercise of Convertibility Opt.
Share Premium - Issuance
JE
Dr. Bonds Payable
SP - CVT
Cr. Discount on Bonds payable
Share Capital
SP - Issuance
144
Bonds Payable, net
Bonds Payable
- Discount
145
Extinguishment of Liabilities
Cash Paid < CA of Liability
Gain
146
Extinguishment of Liabilities
Cash Paid < CA of Liability
Loss
147
Extinguishment of Liabilities
CA of Noncash < LP
JE
Dr. Loan Payable
Accumulated Depreciation
Cr. Noncash Cost
Gain on Extinguishment
148
Extinguishment of Liabilities
CA of Noncash > LP
JE
Dr. Loans Payable
Loss on Extinguishment
Cr. Investment in Property - Land
