IFRS - Chapters 5 & 23 Flashcards
On the Balance Sheet, what are the three account classification characteristics?
- Liquidity
- Function
- Amounts, nature, and timing
In what order is the presentation of the Balance Sheet for GAAP?
- Assets
- Liabilities
- Equity
In what order is the presentation of the Balance Sheet for IFRS?
- Assets
- Equity
- Liabilities
Define non-current assets
assets not meeting the definition of current assets
Define current assets
cash and other assets a company expects to convert to cash, sell, or consume either in one year or the operating cycle, whichever is longer
What is a held-for-collection investment?
Debt securities that a company manages to collect contractual principal and interest payments
What is a trading investment?
Debt and equity securities bought and held primarily for sale in the near term to generate income on short-term price changes
What is a non-trading equity investment?
Certain equity securities held for purposes other than trading (e.g., to meet a legal or contractual requirement).
What are the four types of long-term investments?
- Securities (bonds, ordinary shares, or long-term notes).
- Tangible assets not currently used in operations (land held for speculation).
- Special funds (sinking fund, pension fund, or plant expansion fund.
- Non-consolidated subsidiaries or associated companies.
For a held-for-collection investment, state the type, valuation, and classification.
- Type
- Debt
- Valuation
- Amortized Cost
- Classification
- Current or Noncurrent
For a trading investment, state the type, valuation, and classification.
- Type
- Debt or Equity
- Valuation
- Fair Value
- Classification
- Current
For a non-trading equity investment, state the type, valuation, and classification.
- Type
- Equity
- Valuation
- Fair Value
- Classification
- Current or Noncurrent
Does IFRS have the available-for-sale and held-to-maturity classifications?
No
What are property, plant, and equipment?
Tangible long-lived assets used in the regular operations of the business
What are intangible assets?
assets which lack physical substance and are not financial instruments (i.e. patents, copyrights, franchises, goodwill, trademarks, etc.)
What is included in “Other Assets”?
unusual items sufficiently different from assets included in specific categories
How are the assets in GAAP presented?
In order of liquidity.
What is the general order of presentation of current assets?
- Inventories
- Receivables
- Prepaid expenses
- Short-term investments
- Cash and cash equivalents
What is the basis of valuation for inventories?
Lower-of-cost-or-net realizable value
What is the basis of valuation for prepaid expenses?
Cost
What is the basis of valuation for receivables
Estimated amount collectible
What is the basis of valuation for short-term investments?
Generally, fair value
What is the basis of valuation for cash and cash equivalents?
Fair value
What is discloses regarding inventories?
- Basis of valuation (i.e. lower-of-cost-or-net realizable value)
- Cost flow assumption used (i.e. FIFO or average cost)
What is a cash equivalent?
short-term highly liquid investments that will mature within three months or less
Why is there a three moths or less rule to be considered a cash equivalent?
Because of the market fluctuation of interest rates.
True or False:
A company must disclose any restrictions or commitments related to the availability of cash.
True
Define share capital.
The par or stated value of shares issued. It includes ordinary shares and preference shares.
What is another term for ordinary shares?
Common shares
What is another term for preference shares?
Preferred shares
Define share premium?
The excess of amounts paid-in over the par or stated value
Define retained earnings.
The corporation’s undistributed earnings
Define accumulated other comprehensive income.
The aggregate amount of the other comprehensive income items
Define treasury shares.
Generally, the amount of ordinary shares repurchased
Define non-controlling interest (minority interest).
A portion of the equity of subsidiaries not owned by the reporting company
How are ordinary shares and preference shares presented?
must disclose the par value and the authorized, issued, and outstanding amounts
How is a share premium presented?
usually presents one amount for ordinary and preference shares
How is retained earnings presented?
amount may be divided between the unappropriated and restricted amounts
How are treasury shares presented?
shown as a reduction of equity
What is an unappropriated amount?
the amount that is usually available for dividend distribution
What is a restricted amount?
An amount restricted by bond indentures or other loan agreements
What does the term reserve mean?
It is an all-inclusive catch-all for items such as retained earnings, share premium, and accumulated other comprehensive income
True or False:
The use of the term “reserve” is encouraged in U.S. GAAP.
False. The use of the term “reserve” is discouraged in U.S. GAAP, there is no prohibition under IFRS.
Generally, what are the three types of non-current liabilities?
- Obligations arising from specific financing situations.
- Obligations arising from the ordinary operations of the company.
- Obligations that depend on the occurrence or non-occurrence of one or more future events to confirm the amount payable, or the payee, or the date payable (provisions).
What are the three types of current liabilities?
- Payables resulting from the acquisition of goods and services: accounts payable, wages payable, and so on.
- Collections received in advance for the delivery of goods or performance of services, such as unearned rent revenue.
- Other liabilities whose liquidation will take place within the operating cycle or one year.
Does IFRS specify the order or format in which a company presents items in the statement of financial position.
No
Do GAAP and IFRS use the same format for the statement of cash flows?
Yes
What are the sources of information for the statement of cash flows?
- comparative statement of financial position
- current income statement, and
- selected transaction data
The operating section of the statement of clash flows includes what content?
Cash inflows and outflows from operations.
The investing section of the statement of cash flows includes what content?
Cash inflows and outflows from non-current assets.
The financing section of the statement of cash flows includes what content?
Cash inflows and outflows from non-current liabilities and equity.
