One's that catch me out Flashcards
What is the probability criteria of recognising an intangible assets?
Why is the criteria considered to be satisfied if the intangible asset is acquired separately or as part of a business combination?
- An economic benefit attributable to the asset is expected to flow from the entity
- It can be reliably measured
It’s considered to be satisfied because:
The probability of economic benefit is reflected in the price of the acquiring the asset.
The price reflects the expectation about probability.
Define a business
‘An integrated set of activities and assets that is capable of being conducted and managed to produce returns. A business consists of inputs, process and outputs.’
Hedging through FVTOCI
If the value of the hedging instrument exceeds that movement in value of the hedged item, what happens to the excess profit or loss?
The excess goes to profit or loss
Share Based Payments
If there are market conditions attached to the share based payments, what might these be and have they been factored into the fair value at the grant date?
Acheiving a minimum share price
Market based conditions have already been factored into the fair value of the equity instrument at the grant date. Therefore an expense is recognised irrespective of whether the conditions are satisfied.
Share Based Payments
If there are non market conditions attached, what might these be and what do we consider?
EPS
Profit targets
Must take into account in determining whether an expense should be recognised in a reporting period.
IFRS 2 determines the value of the share based payment differently than IFRS 13. How?
Unlike IFRS 13, IFRS 2 determines the fair value to be the value of goods or services provided.
IFRS 13 states that fair value is the price for an assets or transferred for a liability. So the FV essentially, the amount paid, not the value of the asset received.
How do you calculate the FX gain or loss on net assets on a foreign operation?
D m
FX
$m
Opening net assets
488
8
61
Profit for the year
34
8.5
4
Exchange gain/ loss Bal fig
(10.1)
Net assets at 31 Oct
522
- 5
- 9
According to IAS 19, what does a remeasurement component comprise?
- Actuarial gains and losses
- Returns on plan assets not included in the net interest component
- Changes in the asset ceiling not included within the net interest component
What is the asset ceiling?
IF a defined benefit plan is in surplus, it must be measured at the lower of:
- The amount calculated as normal
- The total of the present value of any economic benefits available in the form of refunds from the plan or reductions in future contributions from the plan
In other words, the assets will only be recognised to the extend that is recoverable in the form of refunds or reduced contributions to the plan
The conceptual framework states that an item should only be recognised in the financial statements if ……
it meets the definition of an element
A plan settlement should be recognised at the earlier of:
- The date the plan of termination was announced
- the date the associated restructuring costs were recognised.
For other long term benefits (payable in more than 12 months) where should actuarial gains or loss, services costs and interest costs be recorded?
Statement of profit or loss
