Accounting Flashcards
(19 cards)
IAS 10
Events after the reporting period: Adjusting events examples: Settlement of outstanding court case, Finalization of bonuses, Discovery of fraud or errors – Information about recovery of an asset (e.g. NRV of inventory)
Non-adjusting events: Major purchase or disposal of assets, Destruction of assets caused by a fire, Announcement of a major restructuring plan, significant fluctuation in exchange rates, Changes in tax rates
Adjusting: customer going into liquidation (even with provision), notification of entity’s insures in new FY that inventories destroyed by fire in previous FY will be paid for
Current Ratio, Quick Ratio, Cash Ratio
ACS 842
Calculation of deferred taxes
IFRS 15 and IFRS 8
IFRS 15 - revenue recognition
IFRS 8 - reporting segments
What are the two possible pension plans?
Financial treatment of investments based on ownership percentage and control
Minority Passive investments - types & treatment
Hedging types and which IFRS regulation are they
“pro-forma” numbers meaning
“Pro forma” financials are alternative presentations of a company’s underlying performance that adjust—or “normalize”—GAAP numbers by excluding or including certain items. They’re used both for past (“historical”) results and for forward-looking (“forecast”) estimates - adjusting/normalizing
A company goes from owning 30% in another company to 70% - accounting treatments of BS
- Goodwill = 100% purchase price - Subsidiary’s equity
- Old “investment in associate” number goes to 0
- NCI = 30% * purchase price
- We pay “only 40%” (cash down and/or debt up) but add “100%” of the goodwill
- –> 100% goodwill, premium paid for old investment in associate number has to be added to common shareholders’ equity
- CFS: For dividends: Dividends received under OCF * ownership percentage; Dividends payed by subCo under financing cash flow (full amount) as outflow
If a company records 100$ in taxes, and deferred taxes are +30$, then a company’s cash taxes are
70$
-100$ in pre-tax income - what are taxes on the IS? What is NOL balance? Cash taxes? Deferred taxes? DTAs?
In which cases might you record deferred taxes?
1) Negative pre-tax income
2) Accelerated depreciation
3) Stock-based compensation
4) Asset impairments - only become cash tax effective when write-down is realized (e.g. in sale)
How can SBC have an effect on taxes?
SBC is not immediately deductible for cash tax purposes, usually only when employee exercises them
Do you account for deferred taxes in FCF calculation?
Yes
Equity method of accounting - IS/CF
- Important to reverse Equity Investment Earnings on the CFS (we only get the dividends in cash)
How do DTLs get created in M&A deals and are afterwards accounted for?
IFRS 5 and IFRS 10
IFRS 5 – Non-current Assets Held for Sale (disposal groups, discontinued ops) and IFRS 10 – Consolidated Financial Statements
