IFRS Flashcards
IFRS 15
Revenue from Contracts with Customers
Revenue Recognition
IFRS 15.09 - Revenue from Contracts with Customers
An entity shall account for a contract with a customer that is within the scope of this Standard only when ALL of the following criteria are met:
(a) the parties to the contract have approved the contract, and are committed to perform their respective obligations;
(b) the entity can identify each party’s rights regarding the goods or services to be transferred;
(c) the entity can identify the payment terms for the goods or services to be transferred;
(d) the contract has commercial substance (ie the risk, timing or amount of the entity’s future cash flows is expected to change as a result of the contract); and
(e) it is probable that the entity will collect the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer.
IFRS 15
Revenue from Contracts with Customers
Identifying performance obligations (Ex points)
IFRS 15.22 - Revenue from Contracts with Customers
At contract inception, an entity shall assess the goods or services promised in a contract with a customer and shall identify as a performance obligation each promise to transfer to the customer either:
(a) a good or service (or a bundle of goods or services) that is distinct; or
(b) a series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the customer (see paragraph 23).
.26) Examples:
Depending on the contract, promised goods or services may include, but are not limited to, the following:
(a) sale of goods produced by an entity (for example, inventory of a manufacturer);
(b) resale of goods purchased by an entity (for example, merchandise of a retailer);
(c) resale of rights to goods or services purchased by an entity (for example, a ticket resold by an entity acting as a principal, as described in paragraphs B34–B38);
(d) performing a contractually agreed-upon task (or tasks) for a customer;
(e) providing a service of standing ready to provide goods or services (for example, unspecified updates to software that are provided on a when-and-if-available basis) or of making goods or services available for a customer to use as and when the customer decides;
(f) providing a service of arranging for another party to transfer goods or services to a customer (for example, acting as an agent of another party, as described in paragraphs B34–B38);
(g) granting rights to goods or services to be provided in the future that a customer can resell or provide to its customer (for example, an entity selling a product to a retailer promises to transfer an additional good or service to an individual who purchases the product from the retailer);
(h) constructing, manufacturing or developing an asset on behalf of a customer;
(i) granting licences (see paragraphs B52–B63B); and
(j) granting options to purchase additional goods or services (when those options provide a customer with a material right, as described in paragraphs B39–B43).
IFRS 15
Revenue from Contracts with Customers
Allocating transaction price to performance obligation
IFRS 15.73 - Revenue from Contracts with Customers
The objective when allocating the transaction price is for an entity to allocate the transaction price to each performance obligation (or distinct good or service) in an amount that depicts the amount of consideration to which the entity expects to be entitled in exchange for transferring the promised goods or services to the customer.
IFRS IAS 2
Inventories
Measurement
IFRS IAS 2 - Inventories
Inventories shall be measured at the lower of cost and net realisable value.
IFRS 9
Financial Instruments
Amortized cost
IFRS 9 - 4.1.2 - Financial Instruments
A financial asset shall be measured at amortised cost if both of the following conditions are met:
(a) the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and
(b) the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
eg. Loan receivable
IFRS 9
Financial Instruments
Fair value through other comprehensive income
FVTOCI
IFRS 9 - 4.1.2A - Financial Instruments
A financial asset shall be measured at fair value through other comprehensive income if both of the following conditions are met:
(a) the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and
(b) the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
eg. held for trading securities, shares.
include transaction fees
IFRS 9
Financial Instruments
Fair value through profit and loss
FVTPL
IFRS 9 - 4.1.4 - Financial Instruments
A financial asset shall be measured at fair value through profit or loss unless it is measured at amortised cost in accordance with paragraph 4.1.2 or at fair value through other comprehensive income in accordance with paragraph 4.1.2A.
However an entity may make an irrevocable election at initial recognition for particular investments in equity instruments that would otherwise be measured at fair value through profit or loss to present subsequent changes in fair value in other comprehensive income (see paragraphs 5.7.5–5.7.6).
eg. shares, securities (intended to sell)
do not include transaction fees
IFRS 9
Financial Instruments
Warranties Classification
Most warranty obligations are not financial liabilities because the outflow associated with them is the delivery of goods and services rather than a contractual obligation to pay cash or another financial asset (IAS 32.11). All Starr will repair the faulty game
cartridge or supply a new one to settle the warranty. Therefore, the warranty obligation is not considered a financial instrument under IFRS.
IFRS IAS 21
The effects of changes in foreign exchange
Initial Recognition
IFRS IAS 21 - Paragraph 21
A foreign currency transaction shall be recorded, on initial recognition in the functional currency, by applying to the foreign currency amount the spot exchange rate between the functional currency and the foreign currency at the date of the transaction.
IFRS IAS 21
The effects of changes in foreign exchange
Subsequent reporting periods
IFRS IAS 21 - Paragraph 23
At the end of each reporting period:
(a) foreign currency monetary items shall be translated using the closing rate; eg. Accounts Payable
(b) non-monetary items that are measured in terms of historical cost in a foreign currency shall be translated using the exchange rate at the date of the transaction; eg. Equipment
(c) non-monetary items that are measured at fair value in a foreign currency shall be translated using the exchange rates at the date when the fair value was measured.
IAS 38
Intangible assets
Recognition
IAS 38 - Paragraph 18
The recognition of an item as an intangible asset requires an entity to demonstrate that the item meets:
(a) the definition of an intangible asset (see paragraphs 8–17); and
(b) the recognition criteria (see paragraphs 21–23).
IAS 38
Intangible assets
Intangible asset - definition
IAS 38 - Paragraph 11, 13, 17
11) Identifiability - is separable or divided from an entity OR arises from contractual or other legal rights, regardless of whether those rights are transferable or separable from the entity
13) Control - entity has control of intangible asset
17) Future Economic Benefits - company would not buy if intangible asset didn’t have future economic benefits
IAS 38
Intangible assets
Intangible asset - recognition criteria
IAS 38 - Paragraph 21 - 24
21) An intangible asset shall be recognised if, and only if:
(a) it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity; and
(b) the cost of the asset can be measured reliably.
24) An intangible asset shall be measured initially at cost. Amortize accordingly as per useful life
IAS 36
Impairment of assets
Identifying an asset that may be impaired
IAS 36 - Paragraph 8-9
An asset is impaired when its carrying amount exceeds its recoverable amount.
An entity shall assess at the end of each reporting period whether there is any indication that an asset may be impaired. If any such indication exists, the entity shall estimate the recoverable amount of the asset.
IAS 36
Impairment of assets
Cash Generating Units
Eg. Core 1 Week 7 PC
IAS 36 - Paragraph 66
If there is any indication that an asset may be impaired, recoverable amount shall be estimated for the individual asset. If it is not possible to estimate the recoverable amount of the individual asset, an entity shall determine the recoverable amount of the cash-generating unit to which the asset belongs (the asset’s cash-generating unit).
