Last min revision Flashcards
IFRS 5 - Assets held for sale and discontinued operations
What qualifies as a discontinued operation?
It needs to represent a separate major line of business or geographical area of operations
Treatment of disposal?
- Consolidate up to the date of disposal, when control is lost
Where are exchange differences initially recognised?
Exchange differences on the translation of assets, profits and goodwill
Recognised in other comprehensive income
What rates are used in a foreign exchange translation?
Opening net assets = opening rate
P&L = average rate
Closing net assets = closing rate
At each reporting date use the closing rate, comparing opening net assets to see the exchange gain or loss which has arisen (Bal fig.)
Where do exchange gains or losses go to in the financial statements?
Other comprehensive income
Will be attributable to both NCI and parent - make sure to split
With foreign exchange, what will a profit in the period lead to?
An increase in the opening net assets.
A loss will reduce the opening net assets.
Profits and loss are translated using the average rate
IFRS3 - Business combinations
How is goodwill calculated?
Comparing the fair value of the consideration
Plus non-controlling interests at acquisition
with the fair value of the identifiable net assets at acquisition
IFRS3 - Business combinations
Using the fair value of NCI means…
Goodwill attributable to NCI is included within the overall calculation of goodwill
How is exchange differences apportioned between parent and NCI? (Fair value method)
On a proportionate basis - i.e. 20% vs 80%
Disposal proforma
Proceeds - Net Assets at disposal - Goodwill at disposal \+ NCI at disposal \+ Exchange gains recycled to P&L = Group profit on disposal
When is contingent consideration recognised in the FS?
Always, regardless of probability
When should a provision be recognised?
When an outflow of economic resources is probable
When can contingent assets be recognised?
When the inflow of economic benefits is virtually certain
What was the key change in the 2018 conceptual framework?
probability criteria
more asset and liabilities with low probability of inflow or outflow of economic resources will be recognised in the future
IFRS9 - Financial instruments
When does a financial asset qualify for derecognition?
Once the entity has transferred the contractual rights to receive the cash flows from the asset
Consideration of the risks and rewards of ownership
