Week 5 Flashcards
Income (revenue and gains)
Revenue arising in the course of ordinary activities e.g. sales, fees
Gains representing other items that meet the definition of income and may, or may not, arise in the course of ordinary activities
Revenue from principal activities
Trading firm/manufacturer sells goods to a customer
A professional services firm provides services to clients
Gains from agricultural activities
An increases in bearing plants, agricultural produce or livestock on a commercial farm
Long-term construction projects
Accounting Standards permit entities who recognise revenue over time to use an input (or percentage of completion) method for both recognition and measurement
Expenses
Expenses arising in the course of ordinary activities
Losses representing other items that meet the definition of expenses and may, or may not, arise in the course of ordinary activities
Expenses relating to inventory
When economic benefit is consumed or ceases to exist
Expenses relating to receivables
Qualitative assessment of receivables identifies recoverable amount below CA
Expenses relating to non-current assets
Depreciation/amortisation - systematic allocation of cost over-estimated useful life of PPE/intangible
Impairment - If recoverable amount falls below cost
Expenses relating to employees
Wages and salaries
Leave and entitlements
On-costs - Superannuation, insurance, payroll tax
Other expenses in the ordinary course of business
Advertising, rent, insurance, utilities etc
Finance costs
Interest on loans and any other costs associated with borrowings
Determined by capital structure => linked to operating performance
Income tax
Tax on profit imposed by government
Determined by government policy => not linked to operating performance
Other comprehensive income
Revenues, expenses, gains, and losses that have yet to be realised and are excluded from net income on an income statement
Statement of changes in Equity
Presents details about the changes in CA from the beginning to the end of the period for each component
Must disclose details about changes resulting from profit or loss, other comprehensive income and transactions in relation to contributions by and distributions to owners
