IFRS IAS Flashcards
Ch13 - IFRS 5 Non-Current Assets held for sales and discontinued operations
What are the conditions that must be met for the sale of non-current assets (or disposal groups) to be considered PROBABLE IFRS 5?
(Hint: PUMAS)
P - Price must be reasonable
U - Unlikely that significant selling plan changes will be made
M - Management committed to sell
A - Active programme to find buyer
S - Sale expected to take place within one year of classification
Ch17 - Integrated Reporting Framework (IR)
What are the Objectives of IR?
- Improve quality information
- promote a more cohesive and efficient approach
- Support integrated thinking, decision making and actions that focus on value creation short, medium and long term
Ch17 - IR
Name the Fundamental Concepts of IR.
- Value creation (short, medium and long term)
- The capitals
- The value creation Process
CH17 - IR
What are the Guiding Principles of IR?
HINT: A-G
A - Strategic focus on Future orientation B - Connectivity of Information C - Stakeholder relationships D - Materiality E - Conciseness F - Reliability and completeness G - Consistency and comparability
CH17 - IR
What are the elements that an Integrated Report should include?
HINT: there are 8 elements
- Organizational Overview
- Governance
- Business Model
- Risks and Opportunities
- Strategy and resource allocation
- Performance
- Outlook
- Basis of preparation and presentation
Ch13 - IFRS 5 Non-current assets held for sale and Discontinued operations
Under IFRS 5, what is the criteria that must be met for a non-current asset to be classified as held for sale?
An entity may classify a non-current asset as Held For Sale, if its carrying amount will primarily be recovered through a sale, rather than through its use.
a) Asset must be available for immediate sale in its present condition.
b) The sale must be highly probable. This is satisfied if all PUMAS are met.
Ch3 - IAS 38 Intangible assets
Define Intangible Asset.
Separable, non-monetary asset without physical substance. Must be:
a) controlled by the entity
b) something from which the entity expects economic benefits to flow
Ch3 - IAS 38 Intangible assets
What does “Identifiable” mean, within the context of an Intangible Asset?
a) it is separable,
OR
b) arises from contractual legal rights
Ch3 - IAS 38 Internally generated Intangible assets
What conditions must be met for RnD costs to be capitalized.
Research Costs MUST BE EXPENSED
Development costs: must satisfy the PIRATE
P - probable econ bens will flow to entity as a result
I - intent to complete sell/use
R - resources adequate to complete, sell/use
A - ability to use/sell asset
T - technical feasibility reached to sell/use
E - expenses can be reliably measured
Ch3 - IAS 38 Intangible assets
Illustrate 5 ways intangible asset can be acquired and how it is measured under the different circumstances.
Separate acquisition — Cost (which is purchase price)
Acquired part of bus combo — FV inline with IFRS3
Internally generated GW — not recognised!
Internally generated IA — PIRATE
Acquired by government grant — Asset and grant at FV plus expenditure directly attributable to prep for use.
Ch3 - IAS 40 Investment property
How is invest. property measured at recognition?
Under IAS 40, at cost less costs to bring into working condition as well as transaction costs.
After recognition, option to switch to revaluation model. ALL properties must be measured the same way though!
FV Model – changes in FV direct to PnL (not OCI)
Cost Model – same as IAS 16 PPE
IAS 16 - PPE
How is PPE measured at initial recognition?
PPE initially measured at Cost. Option to switch to reval model
Purchase Price net of discounts \+ Directly attributable costs to bring into working condition \+ Borrowing costs on qualifying asset
IAS 16 - PPE
What costs constitute as “Directly attributable costs of bringing asset into working condition?
- Employee benefit costs
- site restoration provision
- site prep
- initial delivery and transportation costs
- installation and assembly
. professional fees - testing costs
IFRS 3 Business combinations
What criteria must be met when determining whether a transaction meets the definition of a business combination under IFRS 3?
The business combination must involve the acquisition of a business, which generally has three elements:
Inputs – an economic resource (e.g. non-current assets, intellectual property) that creates outputs when one or more processes are applied to it
Process – a system, standard, protocol, convention or rule that when applied to an input or inputs, creates outputs (e.g. strategic management, operational processes, resource management)
Output – the result of inputs and processes applied to those inputs.
IFRS 3 Business combinations
Name the Exceptions to the recognition and measurement principles under IFRS3.
HINT: I CARIES
Indemnification assets - an acquirer recognises indemnification assets at the same time and on the same basis as the indemnified item [IFRS 3.27-28]
Contingent liabilities – the requirements of IAS 37 Provisions, Contingent Liabilities and Contingent Assets do not apply to the recognition of contingent liabilities arising in a business combination [IFRS 3.22-23]
Assets held for sale – IFRS 5 Non-current Assets Held for Sale and Discontinued Operations is applied in measuring acquired non-current assets and disposal groups classified as held for sale at the acquisition date.
Reacquired rights – the measurement of reacquired rights is by reference to the remaining contractual term without renewals [IFRS 3.29]
Income taxes – the recognition and measurement of income taxes is in accordance with IAS 12 Income Taxes [IFRS 3.24-25]
Employee benefits – assets and liabilities arising from an acquiree’s employee benefits arrangements are recognised and measured in accordance with IAS 19 Employee Benefits (2011) [IFRS 2.26]
Share-based payment transactions - these are measured by reference to the method in IFRS 2 Share-based Payment.
