Reporting financial performance Flashcards
Which accounting policies can be changed and how must the change be applied?
Accounting policies: required by IFRS or more relevant information - retrospectively
Accounting estimates - prospectively
Prior period errors - retrospectively
What disclosures must be made when changing policies?
Nature of change
Reason for change
Amount of adjustment/correction for each line affected
If comparative info restated or impracticable to do so
What is a discontinued operation?
Component disposed of or classified for sale
What criteria must a discontinued operation meet?
Represents separate major line of operations
Part of a single co-ordinated plan to dispose of separate major line of business
Subsidiary acquired exclusively with view to resale
What should be disclosed for a discontinued operation?
Disclosed separately
Single amount in profit or loss = post-tax profit and post-tax gain or loss
Analysis of single amount into rev, exp, pre-tax profit, related income tax, post-tax gain or loss
What should be disclosed in the statement of cash flows for discontinued operations?
Net cash flows attributed to operating, investing, financing activities of discontinued operations
How is the tax charge calculated and where does it go?
SPL
Tax due on this year profits +/- under/over provision for previous year
What is the initial recognition for foreign exchange rates?
Translate at spot rate at the date of transaction
What is the treatment of foreign exchange rates at subsequent year end?
Monetary items retranslated at closing rate giving rise to exchange gains and losses to P&L
Non-monetary items held at historic cost not retranslated
Non-monetary items held at fair value translated at rates when values were measure
How are interest rates treated at the point of receipt/payment?
Conversion exchange gains and losses created at the point of receipt/payment
What is a related party?
A person or entity related to the reporting entity
A person - close family member of key management personnel
A entity - members of same group, associate or joint venture, controlled by person
What is not a related party?
2 entities having a director in common
2 venturers because they share joint control
Providers of finance, trade unions, public utilities
Customer/supplier whom entity has significant economic dependence
What is a related party transaction?
Transfer of resources between reporting entity and related party
What are some examples of related party transactions?
Related parties in full, open market prices charged
No charge made
Artificial charge made
Compensation received by all key management personnel
Disclose nature of relationship, amount of transactions, amounts written off
What is the UK GAAP comparison for reporting performance?
IFRS requires disclosure of any non-application of new standard
GAAP - change to cost model is not change to accounting policy
What is the UK GAAP comparison for continuing and discontinuing operations?
IFRS 5
GAAP - separate column in P&L
