Pmr Flashcards
How to recognize the asset under IFRS?
- future economic benefits can be measured reliably
- resource controlled by entity as a result of past event
- future economic benefits expect to flow to the entity
Measurement: historical cost vs other (current cost, realizable value, present value)
- amortization method & time frame
- impairment /write down
What is the criteria used to measure revenue recognition for goods under IFRS ?
- transfer of significant risks and reward of ownership to the buyer
- consignment, installment and return - no continuing management involvements
- consideration is measurable
- FMV is consider receive/ receivable
- economic benefits will flow to the entity
- cost incurred or cost to be incurred can be reliably measured
How to recognize the PP&E under IFRS?
- probable that future economic benefits will flow to the entity
- cost can be measured reliably
Initial record at cost consider what to include for purchase vs self-constructed assets
- subsequent- cost vs revaluation
Depreciation:
Each significant parts depreciate separately
Consider when to depreciate and how
Depreciate amount = cost - residual value
- ASPE: the greater of cost - residual value or cost - salvage cost
No revaluation mode under ASPE
ASPE-subsequent cost (betterments: capitalize vs repairs & maintenance: expense)
Under IFRS and ASPE: when to test for recoverability for LLA ?
IFRS: assess at the end of each reporting period
ASPE: event or changes indicate carrying amount may not be recoverable
IFRS: carrying amount > recoverable amount (higher of FMV less cost to sell or value in used)
ASPE: carrying amount > sum of undiscounted cash flow
Measurement:
IFRS: amount by which carrying amount exceeds recoverable amount
ASPE: amount by which carrying amount exceed FMV
Reversal of Impairment loss
IFRS: yes
ASPE: yes
How to recognize the intangible assets under IFRS and the difference in ASPE.
Definition: IFRS
- identifiability
- control
- future economic benefits
Recognize: IFRS
- expect future economic benefits are probable
- cost can be measured reliability
Measurement: IFRS
- initial: record at cost (purchase price + direct attributable costs)
- subsequent: cost vs revaluation model
Amortization: IFRS
- definite life: amortize over useful life
- indefinite life: do not amortize
IFRS and ASPE converge except:
- ASPE p: policy choice to expense or to capitalize the development cost
- IFRS: permit revaluation to FMV for intangible assets that have an active market
Discuss the internal generated intangible asset.
Do not internal generate goodwill
Research: expense in the period incurred
Development: capitalize if all criteria meet
Expense: start up cost (except capital asset), training activities, promotion/advertising
How to recognize service revenue? And the different between IFRS and ASPE
-Amount of revenue can be measured reliably
-economic benefits will flow to entity
- stage of completion can be measured reliability
Construction contract
- when out come can be reliably estimated, recognize base on stage of completion (competed of contact not allowed
IFRS and ASPE converge except:
- IFRS requires FMV for consideration received
- IFRS required effective interest method (ASPE allows straight line)
- ASPE allowed completed of contract
How do you recognize the initial franchise fee?
• IAS 38.18, specifically recognized as intangible asset, the item must meet the definition of intangible assets.
• Definition of Intangible assets (IAS 38.21)
o Separately identifiable
o Has the ability to control future economic benefits flowing from the assets
o Probable that economic benefits will flow to the entity
o Cost can be reliably measured
o Subsequent measure
Cost vs revaluation
• Revaluation may only be used if FMV of the intangible can be determined in active market
• Cost model, assess the asset’s useful life
How do you account for the asset retirement obligation under IFRS?
• Legal obligation associated with the retirement of a tangible long-lived asset that an entity is required to settle as a result of a law or contract ( ex: site restoration, oil or gas well or landfill, nuclear plant decommissioning or removal of PP&E from lease property on the termination of least)
• Recognize the liabilities in the period it incurred
• Measurement: best estimate of expenditures required to settle the present obligation at B/S date, PV of future cash flow
• Cost is to capitalized to the carry amount of the related asset then amortized to income on a systematic and rational basis
• In subsequent periods, the liabilities would be adjusted for the passage of time
Asset retirement obligation IAS 37
• Best estimate of the expenditure required to settle the present obligation
o Discounted using market value
• Have to be calculate at every reporting date
• Increase the carrying amount of the related PP&E, amortize the asset retirement cost over the useful life
o Adjust passage of time using the discount rate
How to account for leases under IFRS?
• Lease term is accounted for majority of the economic life of the asset
• PV of MLP is accounted to substantially all of the FV of the lease asset
o No quantities guideline => use professional judgement
• There is a BPO transfer at the end
o Not FMV
• If the lessee responsible for the cost of non-cancellable lease to the lessor
• Only lessee can use it without major modification
• They are paying much less than the FMV
• Since there are land and building
o The MLP must be allocated to the building element and the land element based on relative FV of the leasehold interests at the inception
• Calculate the PV MLP= PV payment paying + PV guaranteed residual value
• Upfront fee ASPE 3065
o Paid by the lessee to the lessor must recorded as deferred revenue and amortized over the lease term
Explain the NPO?
• Fund accounting
o General operating fund
The same for both method
o Combo
General + deferral
o Restricted fund method
External restriction place on fund (donation)
Donation is recorded with the purpose of the donation, with major categories having their own columns
• With statement of operations, showing the operating activities for each donation purposes
General- recognize as revenue immediately
Endowment- recognize as revenue in the endowment fund
Restricted contribution
• For restricted fund- recognize as revenue of that restricted fund
• For unrestricted fund (no fund set up)- recognize in accordance is deferral method
o Deferral method
Show activities of the organization
Recognize the revenue as the expense incurred “matching”
Unrestricted- recognized as revenue when received
Endowment- recognized as a direct increase in asset
• Interest endowment go from endowment and recognize as revenue
Restricted
• Expenses in current period- recognize aas revenue in current period
• Expenses of a future period- defer and recognize income when expense incurred
• Fixed assets- recognized revenue on some basis as amortization
• Repayment of debt- recognize revenue based as purpose of debt
Contribution material + services
• FMV reasonably estimated
• Used in normal course of operation
• Would have been purchased other wise
o D- recognized in income as service used, materials used, or fixed assets amortized
o R- recognized immediately in entire restricted or general fund if above criteria are met
• Materials and services
o May choose to recognize contribution of materials and services when the FMV can be reasonably estimated. And when the materials and services used in the normal course of the business that is otherwise might needed to be purchased
