IAS AND IFRS Flashcards
What IAS is about the presentation of Financial Statements?
IAS 1- Presentation of Financial Statements
IAS 16 PPE- What does the cost include?
-Purchase cost
-Import duties
-Net discounts/rebates
-Direct costs to bring to location
-Dismantling and restoring at site
-Testing costs
-Professional fees
When should IAS 16 PPE be capitalized?
-improves future economic benefits that asset will generate
-replaces component of asset
-CA of previous inspection is derecognised
IAS 16- PPE- what is the measurement of the initial recognition?
- Cost model= Carrying value= Cost - acc depreciation- impairment loss
- Revaluation model= Carrying Amount= Fair value - accumulated depreciation- accumulated impairment losses
How do you account for a IFRS 13 Fair Value Measurement Depreciation?
-All acc. Depreciation should be reversed
-Depreciation recalculated on revalued amount
-Revaluations need to be made for entire assets
-more volatile more frequent Revaluation
What are the 4 steps to account for Asset Revaluation?
- Restate Asset cost to revalued amount.
- Remove acc. Depreciation
- Transfer increase in cost account and accumulated Depreciation to Revaluation surplus within equity.
- Recalculate current year dep on revalued amount.
What are the IAS16 -PPE disclosure requirements?
-Measurement basis
- Depreciation method,useful life,Depreciation rate
-Groos carrying amount, accumulated Depreciation at beginning and end of period
-recon of additions l, disposals, Revaluation, impairments
What is the definition of IAS36 - Impairment of Assets?
An impairment loss is the amount by which Carrying Amount of asset exceeds its recoverable amount.
IAS36- how do we measure the recoverable amount?
HIGHER OF:
-Net selling price= fair value-cost of disposal
-Value in use= Present value of est. Future cash flows arising from use and disposal of asset.
What are the signs that an asset is impaired (IAS36)?
-Decline in Market Value
-Technological, legal or economic changes
-physical damage to asset
-plans to dispose of asset
What are the IAS36 Impairment disclosures in the Financial Statements?
- Amount of impairment losses and where it is recorded
-Amount of reversals for impairment loss in SOPL
-Amount of IP recognized directly in equity - Amount of reversal in equity
What is the definition of Non-current asset held for sale (IFRS5) ?
Should be classified as held for sale if an entity plans to recover the value of the asset by selling it, rather than through its continued use in the business.
IFRS5 - what is the criteria for an asset to be held for sale?
-available for immediate sale in present condition
-sale is highly probable
-management is committed to sell
- active program to locate buyers
-asset marketed at reasonable price
- sale expected to happen between 12 months
-unlikely that this will change
IFRS5 -NA held for sale- how is it measured?
LOWER OF:
1. Carrying Amount
2. Fair Value less costs of disposal
HELD FOR SALE ASSETS ARE NOT DEPRECIATED
IFRS 5 - What is Discontinued operations?
A discontinued operation is a component of an entity that either has been disposed of or is classified as held for sale and:
-Represents separate major line of business of geographical area of operations
- Is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations
- Is a subsidiary acquired exclusively with a view to resale
IFRS 5 Discontinued Operations - What should be presented and disclosed in the Financial Statements?
Entity should disclose an analysis of single amount broken into:
- Revenue,expenses and pre-tax profit or loss
- Related income tax expense
- Post tax gain or loss on disposal of assets/disposal groups or on measurement to fair value less costs of disposal
IFRS 16 Leases - what is the definition of a lease? And who is the lessor and a lessee?
- a contract that conveys the right to use an asset
- entity that provides the right to use an asset
-entity that obtains right to use asset
IFRS 16 Leases - how is Lease Liability measured?
Measured at Present Value of lease payments that have not yet been paid.
-Fixed payments over term
- Variable payments
- Residual value guarantee
- exercise price purchase option
- penalties for termination
IFRRS 16- what includes the measurement of the Right of Use asset?
- Cost
-Lease liability initial measurement - Lease payment made before commencement date
-initial direct costs - Est. Cost of removing/dismantling asset
IFRS 16 - Leases - How is Depreciation treated when it comes to right of ownership of the asset?
- if ownership transfers to lessee at end of lease term, then depreciation should be charged over assets remaining useful life
- or charged over shorter of useful life and lease term
IAS2 - Inventories - What is the definition of Inventory?
- held for sale in ordinary course of business
- used in process of production
-materials that will be used in production process
IAS2 - Inventories- how is inventory measured? What ate the 2 options?
LOWER OF:
-Cost - Production overhead allocated correctly
- NRV - Selling prices less costs to completion less costs to sell
IAS10 Events after the Reporting Period- Define an Adjusting Event?
- events that provide evidence of conditions that existed AT reporting date
- FS should be adjusted to reflect it
( selling inv after year end for lower than cost price)
IAS 10 - Non adjusting events. What is the definition?
Conditions that indicative of conditions that arose after reporting date.
Only disclose in FS.
IAS2 Inventories - Name 5 reasons why NRV may be lower than cost?
- Increase in costs or fall in selling price
- Physical deterioration of inventories
- Obsolescence of products
- Decision being made as part of a company’s marketing strategy to manufacture and sell products at a loss
- Errors in production or purchasing
