Accounting Standards Flashcards
(16 cards)
What Is IAS 38?
Intangible Assets
What are the 6 conditions to be met for Ias 38 (Intangible Assets) DEVELOPMENT expenditure?
Intention to complete
Adequate resources
Technical feasibility
Cost can be realiably measured
Can be sold or used
Possible future economic benefit
What is IAS 37?
Provisions, Contingent Liabilities and Contingent Assets
What are the 3 conditions for IAS 37 Provisions to be met?
1)Present obligation due to past event (legal/constructive)
2)Probable outflow of econ benefits
3) Reliable estimate can be made (hard to reach settlement or compensation amount is uncertain)
*If 3 conditions not met it’ll be
‘Contingent Liability’ not provision
What is IFRS 15?
Revenue from contracts with customers (charged to P&L)
What is the 5 step process for Revenue Recognition?
1)Identify Contract
2)Identify separate performance obligations within contract
3)Determine Transaction Price
4)Allocate transaction price to performance obligations
5)Recognise revenue when obligations are satisfied
What is IFRS 16?
Leases
What does IFRS 16 Leases give rise to?
1)Right use of asset
Annual depreciation
asset value of lease payment + any direct costs
2) Lease Liability (obligation to pay future lease payments)
(Annual lease liability- interest is charged to P&L)
What is IAS 33?
Earnings Per share
What does IAS 33 EPS show?
how much profit earned for each ordinary share and max that can be paid
What is the relation of EPS and DEPS?
.Diluted Earnings Per Share (DEPS) - indicates how much current EPS may reduce in future and estimates future of dilution
*If DEPS is less than EPS (shareholders view this negatively) - reduces EPS
What are 2 types of IFRS 16 Leases?
-Operating Lease:
Asset remains on lessor’s SOFP and is depreciated according to policy (they do not transfer ownership of Asset and maintenance is included in lease agreement)
-Finance Lease:
Substantial ownership is transferred to lessee, with lessee responsible for maintenance and potentially going to own it.
What is IFRS 3?
Business Combinations
(how companies should account for acquisition of a business) and recognising GOODWILL
What does IFRS 3 state about Goodwill?
Goodwill arising on acquisition will be recognised in consolidated FS and subject to annual impairment reviews.
What are the 2 conditions for IAS 16?
IAS 16 (PPE)
-1) must generate future economic benefit
-2) It can be measured reliably (deprecaited over UEL)
What are the 2 conditions to be met for IAS 38 intangible assets that ARE NOT DEVELOPMENT EXPENDITURE?
1) Reliably measured (depreciates over UEL)
2) Must generate future economic benefit
(Same as IAS 16)
