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Strategic Business Reporting > SBR > Flashcards

SBR Flashcards

1
Q

What is investment property?

A

land/buildings for rentals/ capital appreciation

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2
Q

how to account for g.ment grant?

A

recognise in the P+L over the period in which it occurs

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3
Q

how often should PPE and IP be revalued under FV Model?

A

IP - yearly. PPE - regularly (3-5yrs)

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4
Q

what are some egs of monetary assets

A

receivables and cash

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5
Q

maximum gap for parent-subsidiary year end consolidation

A

3 months apart

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6
Q

equity is

A

assets - liabilities

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7
Q

six capitals of IR

A

Financial, Manufactured, Human, Intellectual, Natural and Social

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8
Q

in what 2 situations should you make a prior period adjustment?

A

change in accounting policy / material error in prior year

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9
Q

when should contingent liabilities and assets be disclosed

A

CL - possible

CA - probable

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10
Q

in what circumstances can you recognise a provision for an organisation?

A

detailed plan AND announced to those affected

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11
Q

define provision

A

liability of uncertain timing or amount

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12
Q

in what circumstances should a deferred tax asset relating to loss be recognised

A

only if its likely the co will make future taxable profits it can offset the loss against

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13
Q

how does Lessee recognise a Lease in FS

A

SPL - depreciation and finance cost

SFP - right of use asset and lease liability

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14
Q

define lease

A

right to control/use an asset over a period of time for consideration

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15
Q

five stages of revenue recognition model

A

1) identify contract
2) identify performance obligations
3) determine the price
4) allocate price to performance obligations
5) recognise revenue as performance obligations are satisfied

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16
Q

define operating segment

A

segments whos results are regularly reviewed by CODM

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17
Q

define derivative

A

value changes in response to change in value of some underlying asset / liability
requires little/no initial investment and settled ar a future date

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18
Q

define liability

A

present obligation resulting in a transfer of economic resources resulting from a past event

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19
Q

define financial liability

A

a liability with obligation to deliver cash

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20
Q

should goodwill be amortised

A

NO it should be reviewed for impairment at each SFP date

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21
Q

accounting for negative goodwill

A

negative goodwill should be credited to SPL immediately

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22
Q

how to measure SPL charge for cash settled share based pay schemes

A

no. of instruments expected to vest
FV of instrument at SFP date
vesting period

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23
Q

how to measure SPL charge for equity settled share based pay schemes

A

no. of instruments expected to vest
FV of instrument at GRANT date
vesting period

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24
Q

which type of pension appears in an employers SFP

A

defined benefit pension scheme

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25
Q

what is a defined benefit pension scheme ?

A

employee promised to receive certain benefits upon retirement based on length of serviceand retirement salary

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26
Q

where in SFP would you record a NCA sale

A

below CA

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27
Q

where in P+L would you record a discontinued operation

A

after tax before NCI

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28
Q

at what value are NCA held for sale recognised in SFP

A

lower of CV OR FVLC

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29
Q

define Value in Use and its relevance

A

PV of future cash flows from the asset

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30
Q

when can you capitalise development costs?

A

if the project is commercially viable

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31
Q

in what circumstances should borrowing costs be capitalised?

A

if an asset is being constructed over time and if its then known as a qualifying asset

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32
Q

should you depreciate PPE and IP if held at FV?

A

PPE - yes

IP - no

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33
Q

in CFS where would dividends from assosciate show?

A

investing activities

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34
Q

define functional currency

A

currency of the primary economic environment in which the entity operates

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35
Q

how are joint ventures accounted for ?

A

equity accounting

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36
Q

define joint arrangment

A

two or more parties have joint control and the right to veto important decisions

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37
Q

6 qualitative characteristics of financial information

A

Relevance, FR, Comparability, Verifiability, Timeliness,

Understandability

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38
Q

ethical issue from failing to consolidate a subsidiary

A

lack of integrity - straightforward business conduct

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39
Q

how are derivatives recognised in the FS

A

SFP - Fair Value

SPL - changes in Fair Value

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40
Q

how are derivatives recognised in the FS

A

SFP - Fair Value

SPL - changes in Fair Value

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41
Q

SOFP shows

A

assets and liabilities (resources and claims against entity)

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42
Q

SOCE

A

changes in economic resources

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43
Q

SPL

A

efficiency and effectiveness of management

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44
Q

objective of FR

A

provide information that is useful to investors, lenders, creditors in making decisions about entity

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45
Q

fundamental characteristics

A

relevance and faithful representation

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46
Q

enhancing characteristics

A

comparability, verifiability, understandability and timeliness

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47
Q

liability definition

A

present obligation from past event leads to a transfer of economic resources

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48
Q

income definition

A

increase in asset

reduction in liability

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49
Q

expense definition

A

reduction in asset

increase in liability

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50
Q

recognition

A

include an item in FS if its relevant and FR

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51
Q

derecognition

A

removal of an asset

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52
Q

historical cost

A

price of the transaction that gave rise to the item

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53
Q

Fair value

A

amount you would receive if you sold that asset today

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54
Q

current cost

A

amount to buy it new minus any depreciation

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55
Q

value in use

A

present value of cash flows

value * yrs * discount rate

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56
Q

development process

A 
agenda consultation
discussion paper
exposure draft
revised exposure draft
new ifrs issued
new ifrs adopted
post implementation review
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57
Q

what is exposure draft

A

the draft of the standard, needs to ensure it meets principals from framework

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58
Q

IASB prepares

A

IFRS

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59
Q

SOFP has

A

Assets, Equities and liabilities

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60
Q

SPL

A 
continuing operations
revenues
cost of sales
PBT
income tax
Profit from operations
OCI for the year

total comp income FY

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61
Q

an entity has a subsidiary IF

A

holds > 50%
holds voting rights which give control
has majority of voting rights
< 50% but the rest are widely distributed

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62
Q

an entity has an associate IF

A

20-50% control
representation on board
participation inpolicyy making process
interchange of managerial personell

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63
Q

6 steps to consolidate SOFP

A

1) group structure
2) net assets of sub
3) goodwill
4) NCI
5) group retained earnings
6) investment in associate

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64
Q

work out group structure

A

check midyear acquisition and NCI for sub (none for associate)

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65
Q

work out net assets of sub

A 
Equity shares
SP
ret earnings
PUP - S
FV adjustment

@reporting date @acq @postacq

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66
Q

goodwill

A

FV of consideration
+ NCI @ acq
- FV of net assets
= goodwill in full

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67
Q

NCI

A

NCI @ acq
add NCI % * S post acq profits
less NCI impairment to date

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68
Q

group retained earnings

A

100% P’s earnings
add P’s % of S and A post acq earnings
less impairment to date

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69
Q

investment in associate

A

cost
add P% of A’s post acq profit
less impairment to date

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70
Q

accounting for intracompany balances

A 
remove payables (DR)
remove receivables (CR)
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71
Q

account for inventory in transit

A

on SFP
DR inventory
Cr payables

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72
Q

accounting for cash in transit

A

DR bank

CR receivables

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73
Q

inventory PUP

A

CR inventory

DR retained earnings

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74
Q

NCA PUP

A

CR PPE

DR retained earnings

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75
Q

FV adjustments

A

bring fair value of assets and liabilities on a line by line basis in group accounts

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76
Q

uniform accounting policies

A

sub must adopt parents accounting policies in the group accounts

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77
Q

non consolidation IF

A

subsidiaries are being held for sale

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78
Q

an asset/cash generating unit is impaired IF

A

its carrying value falls below its recoverable amount

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79
Q

recoverable amount is

A

higher of value in use / FVLCTS

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80
Q

impairment amount is

A

carrying value - recoverable amount

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81
Q

carrying value is

A

S’s NA + goodwill

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82
Q

account for impairment

A

CR Goodwill
DR group retained earnings (leftover % of goodwill credited)
DR NCI (nci% of goodwill credited)

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83
Q

impairment for an associate

A

associate treated like an asset
CV > recoverable amount
carrying value = cost + P’s part of As post acq profit

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84
Q

what is a joint arrangement

A

two or more parties have joint control over an entity under a contractual agreement

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85
Q

what is a joint venture

A

a new entity is created and parties involved have right to the net assets and shares of the new venture

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86
Q

what is a joint operation

A

parties have rights to assets and obligation to liabilities and each party accounts separately and records their shares

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87
Q

group structure
20%
20-50%
50% +

A

1) investment
2) significant influence
3) power to direct

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88
Q

accounting for 20% investment

A

cost accounting

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89
Q

accounting for 20 - 50% sign influence

A

equity accounting

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90
Q

accounting for 50% + power to direct

A

group accounting

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91
Q

account for no control to control acquisition

A

treat any original investment as being disposed of

1) remeasure original investment at FV
2) calculate goodwill

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92
Q

account for control to more control acquisition

A

increase in ownership causes reduction in NCI

NCI @ acq
plus NCI % * postacq profit
ANSWER
multiply by the percentage reduction in NCI

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93
Q

account for control to less control disposal

A

proceeds of sale
increase in NCI (NCI% of net assets)
adjustment amount

DR bank
CR NCI
CR cumulative retained earnings (this is adjustment amount)

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94
Q

account for control to no control disposal

A 
proceeds
add investment still held and NCI
les
net assets @ disposal
less goodwill

equals group profit / loss on disposal

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95
Q

what is functional currency

A

currency of the primary economic environment in which the entity operates

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96
Q

what to consider when determining FC (3)

A

currency dominating sale price
currency in which finances are considered
currency influencing operating costs

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97
Q

transactions in other currencies (monetary)

A

retranslated using the closing rate @ reporting date

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98
Q

transactions in other currencies (non monetary)

A

not retranslated @ reporting date

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99
Q

overseas consolidation of a sub SFP

A

NCA, CA, NCL and CL translate using current rate

equity share capital and reserves @ historical rate

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100
Q

overseas consolidation of a sub SPL

A

income and expense translate at average rate

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101
Q

overseas consolidation

A

all figures must be correctly stated in functional currency and then translated to presentation curency

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102
Q

consolidated SCF investing

A

dividend from A

acq/disposal of S

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103
Q

consolidated SCF financing

A

dividend paid to NCI

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104
Q

consolidated SCF operating

A 
depreciation
impairment
gain/loss on disposal of tangibles
gain/loss on sale of S
share of A's profit
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105
Q

IAS 16 PPE measurement @ recognition

A

purchase price
less costs directly attributable in collecting asset
less costs to dismantle/restore @ PV

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106
Q

revaluation - cost model

A

carried @ cost less accumulated depreciation and impairment losses

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107
Q

revaluation - revaluation model

A

carried @ revalued amount (FV less accum dep and impairment)

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108
Q

IAS 16 depreciation of PPE either

A

straight line or reducing balance

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109
Q

IAS 23 borrowing costs

A

borrowing costs must be capitalised over the period of construction

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110
Q

capitalisation of borrowing costs begins when (3)

A

expenditure on asset commences
borrowing costs are incurred
activities necessary to prepare the asset are in progress

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111
Q

capitalisation of borrowing costs must stop when

A

the asset is ready for use (even if its not being used)

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112
Q

IAS 20 government grants recognised when

A

entity complies with conditions attached to the grant

entity will actually receive the grant

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113
Q

IAS 20 government grant recognition method

A

deferred income approach - recognised over the period in which the expenditure occurs

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114
Q

IAS 20 govt grants initial accounting

A

show PPE @ cost on SFP in NCA

show govt grant on SFP as a liability in NCL

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115
Q

IAS 20 govt grants subsequent accounting

A

show depreciation on SPL

show amortisation of deferred income on SPL (e.g. 2mill over 10 yrs is 0.2 per year)

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116
Q

IAS 40 investment properties are

A

properties to earn rentals for capital appreciation

instead of production, admin purposes or future use as an IP

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117
Q

IAS 40 IP initial measurement

A

IPs should initially be measured @ cost plus directly attributable costs

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118
Q

IAS 40 IP subsequent measurement FV model

A

IPs are revalued to FV @ each reporting date
gains/lesses are recognised through SPL
properties DONT depreciate

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119
Q

IAS 40 IP subsequent measurement cost model

A

IP are held using benchmark method (cost)

properties are depreciated like any other asset

120
Q

change in IP.

IP to owner occupied

A

FV @ date of change

121
Q

change in IP.

IP to inventory

A

FV @ date of transfer

122
Q

change in IP.

Inventory to IP

A

FV on gain/loss to PL

123
Q

change in IP.

owner occupied to IP

A

revalue then treat as IP

124
Q

IAS 38 intangible assets

A

no physical substance but has value to the business - patent, brand names, licenses

125
Q

IAS 38 intangible assets 3 factors to consider

A

identifiability
control
recognition (must have probably inflow of economic resources and measure reliably)

126
Q

IAS 38 intangible assets separate acquisition

A

capitalised at cost plus any directly attributable costs (e.g. legal fees)

127
Q

IAS 38 intangible assets research

A

charged immediately to P+L in the years its incurred

128
Q

IAS 38 intangible assets development

A

capitalised when it meets ALL SECTOR criteria

129
Q

IAS 38 intangible assets development SECTOR

A 
sell/use
expense
commercially viable
technically feasible
overall probably future economic benefit
resources to complete
130
Q

IAS 36 impairment indicators external

A

changes in technological, legal or economic environment

decrease in assets market value more than expected

131
Q

IAS 36 impairment indicators internal

A

operating losses from asset
physical damage
changes in the way the asset is used

132
Q

IAS 36 impairment review

A

if CV is more than recoverable amount then it is impaired and should be written to its recoverable amount

133
Q

IAS 36 impairment recoverable amount

A

FV less costs to sell + VIU
costs to sell is amount sold - cost of disposal
VIU is PV of future cash flows

134
Q

IAS 36 impairment record the impairment

A

reduction in CV for individual assets is taken through P+L

135
Q

IFRS 5 NCA held for sale

A

must be available for sale and must be highly probable

136
Q

IFRS 5 NCA held for sale valued at

A

lower of CV and FVLCTS

137
Q

IFRS 5 NCA held for sale models

A

cost model or revaluation model which revalues asset to FV before holding for sale

138
Q

IFRS 5 NCA held for sale accounting

A

sale of the asset will give rise to profit or loss on disposal which goes to SFP

139
Q

IFRS 5 Discontinued Operation definition

A

disposed of or held for sale AND separate line of business or geographical are of operations.

140
Q

IFRS 5 Discontinued Operation years

A

held for sale - disclose in year held for sale

disposed of in the yr - disclose in yr of disposal

141
Q

IFRS 5 Discontinued Operation accounting

A

SFP - fully disposed, none. held for sale - “assets held for sale”

SCF - net cash flows from discontinued operations

142
Q

IAS 19 Pensions covers

A

employee benefits, short term, long term, post employment and termination benefits

143
Q

IAS 19 Pensions defined contribution pension scheme

A

company pays a fixed (annual amount) contribution into employee pension fund giving variable return (risk lying with employee)

144
Q

IAS 19 Pensions defined contribution pension scheme accounting

A

debit expense

credit cash/accruals

145
Q

IAS 19 Pensions defined benefit pension scheme

A

company pays variable contribution into company pension fund and there is a guaranteed return to employee on retirement (% of final salary)

146
Q

IAS 19 asset ceiling

A

if a company has an overall pension asset on SOFP it can only be recognised UP TO its asset ceiling

147
Q

IAS 19 asset ceiling definition

A

PV of any future cash savings of not having to contribute to the ceiling as its in surplus

148
Q

IAS 19 asset ceiling accounting

A

anything over the asset ceiling is recognised in OCI
DR OCI
CR net pension asset

149
Q

IAS 19 curtailment

A

when a significant number of employees leave the scheme
asset and liability are remeasured to FV
any change is taken from P+L

150
Q

IFRS 2 Share based payments

A

a payment for goods/ services in either share or share options

151
Q

IFRS 2 Share based payments - equity settled

A

company issues shares in return for goods/services
debit SPL
credit equity

152
Q

IFRS 2 Share based payments - cash settled

A

company pays cash for goods / services
debit SPL
credit liability

153
Q

IFRS 2 Share based payments - Grant date (1)

A

terms of scheme agreeeed.
No of years
No of employees
No of options/rights

154
Q

IFRS 2 Share based payments - Vesting date (2)

A

employees become entitled to the share based payment

155
Q

IFRS 2 Share based payments - exercise date (3)

A

employees receive share based payment

spread FV of share based payment over vesting period based on no of employees

156
Q

IFRS 2 FV of equity settled

A

is the FV at grant date

157
Q

IFRS 2 FV of cash settled

A

is the FV at reporting date

158
Q

if the FV of goods/services is unkown then the option

A

should be reassessed @ each reporting date

159
Q

IFRS 2 vesting conditions

A

condition that needs to met by the end of the period In order for options to be exercised

160
Q

IFRS 2 vesting conditions non market based

A

conditions relating to an employee having to remain with the company for a fixed period - taken into account at each reporting date

161
Q

IFRS 2 vesting conditions market based

A

conditions relating to market price of companys shares - ignored for the purpose of estimating number of options

162
Q

Financial instruments intro

A

asset and liability must be shown In both companies

163
Q

Financial assets - initial measurements

A

initially recognise at fair value + transaction costs

164
Q

Financial assets - subsequent measurements for short term investments

A

FV through P+L

remeasure to FV @ reporting date with gains and losses through P and L

165
Q

Financial assets - initial measurements for long term investments

A

FV through OCI - remeasure to FV @ reporting date with gains and losses through OCI

166
Q

why is a financial asset amortised?

A

if it passes these tests its amortised:

intent to hold the asset until its maturity date + contractual cash receipts on holding the asset

167
Q

how are financial liabilities initially measured?

A

recognised @ FV net of transaction costs

168
Q

how are financial liabilities subsequently measured?

A

amortised cost, FV through profit or loss

169
Q

how are financial liabilities derecognised?

A

when they are paid in full or transferred to another party

170
Q

what is a convertible instrument ?

A

when it is issued it becomes a combination of a liability and equity and is accounted for with split equity accounting

171
Q

what is the liability element of a convertible debenture?

A

this is calculated using the discount rate which is the interest rate on any similar debt without an conversion option

172
Q

what is the equity element of a convertible debenture?

A

difference between proceeds on issue and the initial liability element

173
Q

how are issue costs relating to convertible debentures accounted for ?

A

theyre recognised by adjusting the effective rate of interest on the debenture

174
Q

impairment of financial assets

A

expected credit loss model is used to recognise credit losses before default occurs

175
Q

stage 1 of credit loss model

A

initial recognition - PV of ecpected credit losses 12 month after reporting date

176
Q

stage 2 of credit loss model

A

significant deterioration in credit quality (e.g. 30 days overdue)
impairment is recognised at PV

177
Q

stage 3 of credit loss model

A

objective evidence of an impairment such as the borrower becoming insolvent - the impairment is recognised at PV of credit shortfalls

178
Q

what is a derivative?

A

a financial instrument that is either an asset or liability

179
Q

what three things must a derivative have ?

A

it requires no initial investments
its settled at a future date
its value changes in response to an underlying item

180
Q

how is a derivative measured ?

A

initially measured at fair value

subsequently measured with gains/losses through P and L

181
Q

what is an example of a derivative?

A

forward contracts and options

182
Q

what is hedging ?

A

a process of managing risk trough the use of financial instruments so the variability in FV of changes in future cash flows are reduced

183
Q

what is hedge accounting ?

A

the specific matching of changes in FV of instrument with changes in FV through the FS (P/L/OCI)

184
Q

what is a hedging instrument ?

A

a financial instrument whose chane in value is expected to offset the changes in FV of cash flows of designated items

185
Q

what is a hedged item ?

A

a specific item that exposes the company to risk of changes in FV or future cash flows

186
Q

what is a hedged risk ?

A

specific risk being hedged against market risk

187
Q

what is a cash flow hedge ?

A

aims to protect the value of a highly probable future cash flow

188
Q

how to account for a cash flow hedge ?

A

when the item is recognised its gains / losses are put through P and L

when its not the effective portion goes to OCI and the ineffective portion goes to profit or loss

189
Q

what is a fair value hedge

A

it aims to porrect the fair value of an item ALREADY recognised in the FS

190
Q

how is a fair value hedge accounted for ?

A

gain or loss on the instrument and the hedged item are recognised through P and L

191
Q

what are the conditions of hedge accounting ?

A

must be formally designated and documented
must consist of eligible hedging instruments and items
must be effective and have a risk management strategy

192
Q

what is overhedging ?

A

change in instrument > change in itme

ineffectiveness in the hedge and gain/loss recognised through OCI are equivalent to change in the item

193
Q

what is underhedging ?

A

change in instruments < change in item

no ineffectiveness in the hedge and gains/losses recognised through OCI are equivalent to change in instrument

194
Q

What is fair value

A

the price that would be received to sell an asset or paid to transfer a liability in a transaction @ measurement date

195
Q

what is the fair value method

A

measures asset and liabilities because historical costs isn’t relevant

196
Q

level 1 input of fair value IFRS 13

A

quoted prices in an active market for identical assets / liabilities that the entity can access @ measurement date

197
Q

level 2 input of fair value IFRS 13

A

inputs other than quoted market prices such as similar assets and liabilities in active or inactive markets

198
Q

level 3 input of fair value IFRS 13

A

inobservable inputs, so using their own data to make assumptions

199
Q

what is an operating segment IFRS 8 ?

A

results are reviewed regularly by chief operating decision maker (CODM)

200
Q

why is disclosure required for an operating segment ?

A

to understand past performance
to understand risks and rewards
to make better informed judgements

201
Q

what must be disclosed for an operating segment ?

A 
seg
segment revenue if > 10% total revenue
segment profits if > 10% total profits
segment assets > 10% total assets
AND
if total reported segment is not > 75% of external revenue, additional segments are required to be disclosed
202
Q

when can operating segments be combined ?

A

if they have similar economic characteristics e.g. nature of products / services / production, type of customer or nature of regulatory environment

203
Q

what is disclosed in regards to an operating segment ?

A 
segment revenue
segment results
segment assets
segment liabilities
capital exp
dep/amortisation
other non cash expenses
204
Q

IFRS 15 revenue from contracts with customers 5 steps

A 
COPAR
contract
obligations
price of transaction
allocation price to performance obligations
recognise revenue
205
Q

IFRS 15 revenue from contracts with customers step 1

A

contracts must be commercially substance and probably consideration

206
Q

IFRS 15 revenue from contracts with customers step 2

A

obligations - performance obligations are accounted for separately if promised goods/services are distinct (software + license)

207
Q

IFRS 15 revenue from contracts with customers step 3

A

price of transaction, expected to receive for goods but must adjust for financing components and any amount payable to customers like refunds

208
Q

IFRS 15 revenue from contracts with customers step 4

A

obligation - transaction price is allocated in proportion to each obligation

209
Q

IFRS 15 revenue from contracts with customers step 5

A

recognise revenue when control of goods/ services has been transferred to the customer and the obligation is satisfied

210
Q

IFRS 16 lease identification

A

a contract has a lease if it conveys the right to control the use of an asset for a period of time in exchange for consideration

211
Q

what is an advance and arrear ?

A

advance is the start of the lease period

arrears are the end of the lease period

212
Q

in IFRS 16 leases how is control conveyed ?

A

where the customer has both the right to direct the identified assets use and to obtain all the economic benefits from the asset

213
Q

IFRS 16 leases what is a combined contract ?

A

where part of the payment is for the lease of the asset and other part for a service (e.g. maintenance)

214
Q

IFRS 16 leases Lessee accounting initial recognition

A

DR right of use asset - measured @ lease liability plus initial direct costs

CR lease liability - measured at PV of lease payments payable

215
Q

IFRS 16 leases Lessee accounting subsequent recognition

A

DR costs less accumulared depreciation

CR financial liability plus any amortised costs

216
Q

IFRS 16 lessor accounting - finance lease

A

derecognise the asset and record a receivable (SFP)
record finance lease receipts as a reduction in the receivable (SFP)
record interest income on receivable (P/L)

217
Q

IFRS 16 lessor accounting - operating lease

A

income receipts recognised as income through P and L

depreciation continues over its useful life

218
Q

IFRS 16 finance lease definition

A

if the risks and rewards of ownership are transferred to lessee

219
Q

IFRS 16 operating lease definition

A

any lease other than a finance lease

220
Q

IAS 41 agriculture - biological asset

A

living plant/animal
FV less estimated point of sale costs initially and at each reporting date
gain / loss to profit or loss

221
Q

IAS 41 agriculture - agricultural produce

A

produce from a biological asset

measured at FV at point of harvest less estimated point of sale costs

222
Q

IAS 2 inventory measurement

A

lower of cost or NRV

223
Q

IAS 12 deferred tax calculation step 1

A

calculate the temp difference as the difference between the carrying value and the tax base

224
Q

IAS 12 deferred tax calculation step 2

A

multiply the temporary difference by the income tax rate to get closing deferred tax provision

225
Q

IAS 12 deferred tax calculation step 3

A

closing deferred teax provision is an asset or liability dependent on whether its more than the carrying value
e.g. carrying value > tax base - taxable temp difference = liability

226
Q

IAS 12 deferred tax calculation step 4

A

movement in deferred tax position goes to P and L

closing position - open position = movement

227
Q

IAS 12 deferred tax individual company accounts PPE

A

carrying value vs tax base

X vs X

228
Q

IAS 12 deferred tax individual company accounts provisions

A

carrying value vs tax base

X < nil

229
Q

IAS 12 deferred tax individual company accounts intangibles

A

carrying value vs tax base

X > nil

230
Q

IAS 3 how to acount for an onerous contract ?

A

recognise a provision at the lower of PV under the contract vs PV of exiting the contract

231
Q

IAS 12 deferred tax group accounts FV adjustments

A

FV of consolidates A/L are usually higher than their book value causing a deferred tax liability - this goes in SOFP

232
Q

IAS 12 deferred tax group accounts goodwill

A

tax authorities don’t recognise this as its an estimated number

233
Q

IAS 12 deferred tax group accounts PUP

A

any tax made on the profit will need to be eliminated giving rise to a deferred tax asset

234
Q

IFRS 1 first time adoption

A

an entity adopting ifrs for the firs time must state it is doing so and do these three

  • prepare current yr under IFRS
  • restate prior yr according to IFRS
  • reconcile current year profit under IFRS
235
Q

IAS 3 what is a provision ?

A

a present obligation as a result of a past event resulting in probably transfer of economic resources

236
Q

IAS 3 measurement of a provision

A

best estimate of the expenditure
EV
discount to PV

237
Q

IAS 3 subsequent treatment of a provision

A

review the provision annually

only use the provision for the expense originally created

238
Q

IAS 3 what is a liability ?

A

possible obligation or a present obligation with a possible transfer of resources

239
Q

IAS 3 what are the three types of contingent assets

A

possible - ignore
probable disclose
virtually certain - recognise as an asset

240
Q

IAS 3 what is a future operating loss ?

A

no provision can be made for anticipated losses as theres no third party obligation

241
Q

IAS 3 what is a onerous contract ?

A

where the cost of fulfilling the contract exceed the benefits received from the contract

242
Q

IAS 3 what is restructuring ?

A

make a provision if there is a plan and its announced

examples - closure of a line of business, relocating activities, reorganisation

243
Q

IAS 10 events after reporting - adjusting events

A

information relating to a condition which existed at reporting date e.g. settlement of court case / bankruptcy of customer

244
Q

IAS 10 events after reporting - nonadjusting events

A

a condition that didn’t exist at the reporting date

e.g. major purchase of asset/ announcing discontinuation/ fall in investments

245
Q

IAS 8 accounting policies are ?

A

the specific principles, bases, conventions and rules applied by an entity in preparing FS

246
Q

IAS 8 how to select an accounting policy ?

A

apply standard specifically dealing with the transaction or a relavant and reliable one (with similar item)

247
Q

IAS 8 a change in accounting policy ?

A

if there is a new IFRS that is better suited follow that of if theres a more relevant IFRS, adjust b/f figures in SOCE

248
Q

IAS 8 what is an accounting estimate ?

A

changes in accounting estimates are recognised prospectively by a period of change or a future period

249
Q

IAS 8 what is a prior period error ?

A

error in applying accounting policy, oversight or fraud - can be corrected retrospectively

250
Q

IAS 24 related parties parent sub and associate

A

parent and sub RP
parent and associate RP
sub and associate RP

251
Q

IAS 24 related parties joint ventures

A

JV and Co A are RP
JV and Co B are RP
Co A and Co B are NOT RP

252
Q

IAS 24 related parties 2 subs

A

parent, sub 1 and sub 2 are all RP

253
Q

IAS 24 related parties other examples (5)

A 
director
supplier
customer
bank
government
254
Q

IAS 33 EPS - basic EPS formula

A

profit attributable to SH of the parent / weighted average number of shares

255
Q

IAS 33 EPS - full price issue

A

normal w a calculation

256
Q

IAS 33 EPS - bonus issues

A

assume bonus shares have always been in issue

257
Q

IAS 33 EPS - rights issues

A

assumes shares issued are a mix of bonus and full price

258
Q

IAS 33 EPS - diluted EPS

A

calculated where potentially ordinary shares have been outstanding during the period

259
Q

IAS 34 interim financial reporting requirement

A

only condensed with focus on new activities events and circumstances

260
Q

IAS 34 interim financial reporting is specified as

A

SOFP at interim date
SPLOCI for interim/cumulatively to date for the yr and previous years
SOCE cumulatively to interim date
SOCF cumulatively to interim date and comparable period

261
Q

what is a small and medium sized

A

unlisted entities that don’t have public accountability and aren’t registered

262
Q

what are the IFRS for small and medium sized

A

small and designed to meet the capabilities of small companies, written in clear and easily translatable language

263
Q

what do the small and medium sized show

A

irrelevant topics are omitted and theres a 90% reduction in disclosures required. revisions are limited to every 3 yrs and principles are simplified

264
Q

IAS 2 inventory measurement of cost

A

costs incurred in bringing inventory to its present condition and location

265
Q

IAS 2 inventory measurement of NRV

A

selling price less costs to complete and cost of selling is NRV

266
Q

What is an integrated report?

A

must be a specific and identifiable communication that can be either a standalone report or an accessible part of another report

267
Q

what does an integrated report provide insight to

A

the connectivity of the information and how value is created over time

268
Q

what are the objectives of integrated reporting ?

A

improve quality of information
enhance accountability
promote understanding
support integrated decision making, thinking and actions

269
Q

what are the underlying concepts of integrated reporting ?

A

the capitals
value creation process
value creation for the organisation

270
Q

what are the six capitals of integrated reporting ?

A 
financial
manufactured
intellectual
human
natural
social
271
Q

IR financial

A

how finance is used to add value

272
Q

IR manufactured

A

tangible assets such as machinery and offices and how theyre used

273
Q

IR intellectual

A

ideas created and how they can be used in the future

274
Q

IR human

A

maintain staff levels and how to ensure key individuals remain

275
Q

IR natural

A

resources, reusable energy,and technology from earth/wind

276
Q

IR social

A

interact with the wider community, charity, advice and local businesses

277
Q

6 guiding principals

A 
strategic focus
stakeholder relationships
materiality
conciseness
reliability
and completeness
278
Q

what should be included in the IR (8)

A 
external environment
business model
risks and opportunities
strategy and resource allocation
performance
outlook
basis of preparation
governance
279
Q

what is management commentary ?

A

it provides users of FS with historical and prospective commentary

280
Q

IFRS practice statement on management commentary

A

its not an IFRS but suggests the commentary that should include narratice and numerate information

281
Q

what is in the practice statement for management commentary (6)

A 
nature of business
management objectives
strategies for achieving objectives
entitys most significant resources
results of operations
critical performance measures
282
Q

interpretation of FS - stakeholder analysis

A

investors interested in profitability (SPL)

lenders interested in liquidity and solvency (SOFP)

283
Q

interpretation of FS - alternative performance measurements

A

EBITDA and EBITDAR (this ads in rental expenses)

don’t take into account movement in working capital

284
Q

traditional ratio analysis

A 
ROCE
current ratio
acid test ratio
asset turnover
gearing ratio
285
Q

gearing ratio

A

-

286
Q

asset turnover

A

-

287
Q

acid test ratio

A

-

288
Q

current ratio

A

-

289
Q

ROCE

A

total assets- current liabilities

290
Q

EPS

A

-

291
Q

Ethics - ways in which directors can manipulate information

A

window dress year end of FS
inappropriate recording of transactions
exercise judgement in applying accounting standards

292
Q

Ethics - why directors may try to manipulate information

A

increase pay
deliver specific targets
reduce risk of insolvency
reduce tax liabilities by understating revenue
improve appearance of a business prior to a disposal

293
Q

3 areas where ethical issues could arise

A

leases - classified as short term
financial assets - impairment
intangibles - research and development

294
Q

exam techniques for ethics part 1 / 4

A

explain any relevant accounting rules which have been breached

295
Q

exam techniques for ethics part 2 / 4

A

mention that the directors actions aren’t in line with ACCA code of ethics

296
Q

exam techniques for ethics part 3 / 4

A

apply and explain which principals have been breached
integrity - not good conduct
professional competence - failed to be knowledgable on all the rules
professional behaviour - could discredit the directors profession if behave with misconduct

297
Q

exam techniques for ethics part 4 / 4

A

consider where theres been a threat to objectivity where directors acted to maximise their own pay - self interest threat.

Strategic Business Reporting (1 decks)

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