Pocket book Flashcards
What are the things that go down the left side of a statement of changes in equity?
Opening balance Change in accounting policy/Adjustments Share issue Revaluation surplus/deficit Equity option Profit from SPL Dividends Transfer to retained earnings
Closing balance
What are the IFRS foundation responsible for?
Responsible for the governance of the standard setting process
What is the IASB responsible for?
Responsible for setting the IFRS standards
What are the IFRS Advisory council responsible for?
Provides a forum for experts from different countries and business sectors to offer advice to the board
What are the IFRS Interpretations committee responsible for?
Issue rapid guidance on accounting matters where divergent interpretations exist
By what process are standards set?
By a process of consultation
What does the board do for new standards?
Identifies a subject and establishes an advisory committee to recommend and appropriate treatment
What is each standard preceded by?
An exposure draft which gives the public an opportunity to comment
What might the board issue at any stage?
A discussion paper
What are three things that effect the preparation of financial statements in addition to the IFRS standards?
- National company law
- EU directives
- Stock exchange rules
What does principles based accounting involve?
Preparing financial statements so that they meet a set of principles-based criteria
What does rules based accounting involve?
Putting he requirement to comply with each individual accounting standard first
What are the two fundamental characteristics of useful financial information?
Relevance
Faithful representation
What are the four enhancing characteristics of useful financial information?
- Comparability
- Verifiability
- Timeliness
- Understandability
What does information have to be to be useful?
Material
What are the three extended characteristics of the fundamental characteristic Faithful representation?
Completeness
Free from error
Neutral
What are the two extended characteristics of the fundamental characteristic Relevance?
Predictive value
Confirmatory value
What is a financial liability initially recognised at?
Fair value
This is usually…
Net proceeds of cash received
Less: costs of issuing
How do we initially measure financial assets?
Fair value
Transaction costs can be included unless the asset is fair value through P+L
How are equity investments measured? 3 things
Fair value through P+L
Transaction costs are expensed
Any gains or losses shown in statement of P+L
When can an entity classify equity investments in fair value through other comprehensive income and what do they have to do for this?
- When the investment is seen as a long term investment
- The designation must be done on acquisition
When we classify equity under FVOCI, how do we treat transaction costs?
Capitalise them
When we classify equity under FVOCI, how do we treat gains or losses?
Revalued each year
Gain or loss shown in other comprehensive income
Gain taken to investment reserve in equity
Can an investment reserve be negative?
Yes!
