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Financial Reporting (FR) > Other standards > Flashcards

Other standards Flashcards

1
Q

What includes in IAS8 Accounting Policies, Estimates and Errors

A
  • selection of accounting policies
  • changes in accounting policies
  • changes in accounting estimates
  • correction of prior period errors
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2
Q

What are accounting policies?

A
  • are the specific principles, bases, conventions, rules and practices applied by an entity in preparing and presenting financial statements
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3
Q

By the Interpretations what information needs to provide?

A
  • relevant to the economic decision-making needs of users
  • reliable in that the financial statements
  • represent faithfully the financial position, financial performance and cash flows of the entity
  • reflect the economic substance of transactions, other events and conditions and not merely the legal form
  • are neutral
  • are prudent
  • are complete in all material respects
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4
Q

IAS8 requires accounting policies to be changed, conditions:

A
  • is required by an IFRS Standard
  • results in the financial statements providing reliable and more relevant information
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5
Q

What are the accounting estimates?

A
  • are monetary amounts in financial statements that are subject to measurement uncertainty
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6
Q

What are the examples of estimates?

A
  • depreciation expense
  • fair value of an asset or liability
  • net realisable value of inventory
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7
Q

Examples of changes in accounting estimates are changes in

A
  • the useful lives of non-current assets
  • the method of depreciating non-current assets
  • warranty provisions, based upon more up-to-date information about claims frequency and value
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8
Q

What are the prior period errors?

A
  • are omissions from, and misstatements in, the financial statements for one or more prior periods arising from a failure to use information
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9
Q

Examples of prior period errors?

A
  • mathematical mistakes
  • mistakes in applying accounting policies
  • oversights and fraud
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10
Q

Prior period errors are dealt with by:

A
  • restating the opening balance of assets, liabilities and equity
  • restating the comparative figures presented, as if the error had never occurred
  • disclosing within the accounts a statement of financial position
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11
Q

IFRS 13 Fair Value Measurement objective

A
  • is to provide a single source of guidance for fair value measurement, where it is required by a reporting standard rather than being spread throughout several reporting standards.
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12
Q

What is fair value?

A
  • is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date
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13
Q

Hierarchy of inputs to valuation?

A

Level 1 - inputs comprise quoted prices in active markets for identical assets and liabilities at the measurement date
Level 2 - inputs are observable inputs, other than those included within Level 1 above, which are observable directly or indirectly
Level 3 - inputs are unobservable inputs for an asset or liability, based upon the best information available, including information that may be reasonably available relating to market participants

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14
Q

What characteristics of the asset and liability shall be taken into account when measuring the fair value?

A
  • the condition and location of the asset
  • restrictions, if any, on the sale or use of the asset
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15
Q

What are the exclusions of IFRS 13?

A
  • IFRS 16 Leases
  • net realisable value
  • value in use
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16
Q

What are inventories?

A
  • valued at the lower of cost and net realisable value NRV
17
Q

Definition of cost

A
  • is the cost of bringing items of inventory to their present location and condition
18
Q

Cost of purchase comprises

A
  • purchase price including import duties, transport and handling costs
  • any other directly attributable costs, less trade discounts, rebates and subsidies
19
Q

Cost of conversion comprises

A
  • costs which are specifically attributable to units of production, e.g. direct labour, direct expense, subcontracted work
  • production overheads, which must be based on the normal level of activity
  • other overheads, if any, attributable in the particular circumstances of the business to bringing the product or service to its present location and condition
20
Q

Cost charged as expense

A
  • abnormal waste
  • storage costs
  • administrative overheads which do not contribute to bringing inventories to their present location and condition
  • selling costs
21
Q

Definition of Net Realisable Value NRV

A
  • is the estimated selling price, in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale
22
Q

Inventory valuation methods

A
  • actual unit cost
  • first in, first out FIFO
  • weighted average cost AVCO
23
Q

Disclosure requirements of IAS2

A
  • accounting policy adopted, including the cost formula used
  • total carrying amount, classified appropriately
  • amount of inventories carried at NRV
  • amount of inventories recognised as an expense during the period
  • details of any circumstances that have led to the write-down of inventories to their NRV
24
Q

IAS 41 Agriculture what does it relates to?

A
  • to Biological assets, government grants and agricultural produce at the point of harvest
25
Q

Results of processing after harvest is ?

A
  • dealt with under IAS 2 Inventories
26
Q

Biological assets

A

-is a living animal or plant
recognised if:
- it is probable that economic benefits will flow to the entity
- the cost or fair value of the asset can be reliably measured
- the entity controls the asset

27
Q

Recognition and measurement of biological assets

A

Initial:
- fair value less any estimated ‘ point of sale’ costs
- if there is no fair value, then the cost model should be used
Subsequent:
- revalue to fair value less point of sale costs at year-end, taking any gain or loss to the statement of profit or loss

28
Q

What are the Bearer plants?

A
  • are accounted for under IAS 16 Property, Plant and Equipment, rather than IAS41 Agriculture
  • is a living plant that:
  • is used in the production or supply of agricultural produce
  • is expected to near fruit for more than one period
  • has a remote likehood of being sold as agricultural produce, expect for incidental scrap sales
29
Q

Which of the following is not the outcome of a biological transformation according to IAS 41 Agriculture?
Growth, Harvest, Procreation, Degeneration

A

Harvest - intervention
Growth, procreation, degeneration- natural biological processes

Financial Reporting (FR) (22 decks)

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