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Cima M > F2-1 > Flashcards

F2-1 Flashcards

(86 cards)

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1
Q

SFP NCI

A

Proportional - NCI @ acq + share of post acq reserves Full - NCI @ acq + share of post acq reserves + share of goodwill impairment

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2
Q

Cost of business combination

A

cash, deferred consideration (discounted), contingent consideration, quoted shares

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3
Q

Intragroup balances

A

Cancel all revenue and cost associated. Remove PUP in books of company making the sale. Cancel loans

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4
Q

Consolidated retained earnings

A

Share of post acq reserves - share of goodwill impairment - PUP + share of profit - dividends + adjustments

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5
Q

Transfer of PPE

A

Profit x (remaining life at y/e / remaining life at date of sale)

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6
Q

Consolidated dividends

A

Ignore dividends received from subs and associates. Dividends paid by parent go in statement of change in equity

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7
Q

PUP

A

Dr Group CoS, Cr Group Inventories (SFP)

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8
Q

Associate

A

Entity over which the investor has significant influence

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9
Q

Significant influence

A

power to participate in financial and operating poliy decisions

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10
Q

Consolidating associate

A

Don’t cancel intragroup but do cancel PUP

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11
Q

Parent sells to Associate

A

Dr COS and P’s RE (A% x PUP) Cr Inv in Associate (A% x PUP)

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12
Q

Associate sells to Parent

A

Dr “Share of As Profit” and P’s retained earnings (A% x PUP) Cr Group Inventories (A% x PUP)

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13
Q

Investment in assiciate

A

Cost + Share of post acq resrves - PUP - impairment losses

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14
Q

Joint arrangement

A

two or moree parties have joing control

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15
Q

joint operation

A

joint control have rights to assets and obligations but no separate entity. Each operator will recognise in its own statements

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16
Q

joint venture

A

separate entity established so separate records kept. Treated same as associate with equity accounting

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17
Q

Bonds (loan stock or debentures)

A

Negotiable instruement offereing a fixed interest rate (coupon rate) over a fixed period of time and with a fixed redemption value. May be secured or unsecured

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18
Q

Ordinary shares

A

Paid dividends at discretion of directors

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19
Q

Preference shares

A

Fixed dividend with limited or no voting rights. Rank before ordinary shares in liquidation. Participating preference carry right to additional preferred dividend when ordinary shareholders are paid a dividend exceeding a pre-determined level

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20
Q

Equity warrant

A

Security issued by a company giving the holder the rights to be allocated ordinary shares in company on terms specified in the warrant

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21
Q

Money markets

A

short term (less thn 12 months) for lending and borrowing

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22
Q

Capital markets

A

Long term debt (e.g. bonds) and equity (shares)

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23
Q

Rights issues

A

Invitation to existing shareholders to purchase extra

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24
Q

Offer for sale

A

Shares offered via issuing house to public. Requires advery

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25
Public issue
Shares offereed direct to public
26
Placing
Shares issued to select group of institutional investors
27
Cost of equity - zero growth in div
Ke = d / P0
28
Cost of equity - constant growth in div
Ke = d1 / P0 + g or Ke = d0(1+g)/ P0 + g
29
Cost of preference shares
constant div therefore no growth
30
Cost of irredeemable debt
kd= i(1-t) / P0 where P0 is current ex-interest price
31
Cost of redeemable debt
IRR calc. Y0 ex interest market value. Y1 - YX interest net of tax. YX redemption amount. Need to check if it is convertible and what the investor would do
32
Weighted average cost of capital (WACC)
hurdle rate for appraising future projects
33
Deferred revenue
Discount to the fair value. Difference between FV and nominal sales value is accounted for as interest revenue and accrued over the period until payment is due
34
Deferred income
Payment in advance: credit deferred income, release to profit or loss over time as revenue is recognised
35
Prefence shares presentation
redeemable - liability, Cumulative (div not paid in a year must be paid subsequently) - always liability
36
Initial measurement of Financial instruement
FV +/- any transaction costs. Exception is assets or liablities held for short term trading or derivatives. These are recorded at FV excluding transaation costs, movement in FV passes to SFPL as do transaction costs
37
Y/e for financial asset held to maturity
amortised cost
38
Y/e for loans and receivables
amortised cost
39
Y/e for financial asset through PorL (short term, held for trading, all derivatives)
FV, with movement in FV passing through SPL
40
Y/e for available for sale financial assets
Cash flows not certain therefore FV with movement passing through reserves / OCI
41
Financial liabilities
held at amortused cost using effective interest method unless held for trading then FV with movement & transaction cost through SPL
42
Compound instruments
E.g. convertible debt. Split the components
43
Impairment of financial assets
E.g. financial difficulty of issuer or high probability of bankruptcy of borrower. Impairment loss held at amortised cost and is different between assets carrying value and present value of future expected cash flows discounted using the assets original effective interest rate
44
Finance lease
lease transfers ownership at end, ledee has option to purchase at price below fv at exercise date, lease term Is for major part of assets economic life, PV of minimum lease payments amounts to assets FV at inception, leased asset so specialised that it could only be used by lessee without major modifications being made
45
Actuarial method
uses interst rate implicit in the lease
46
Sum of digits method
n(n+1)/2
47
Operating lease
Operating lease other than a finance lease. Recognised in SPL on a straight line basis over lease term
48
Sale and finance leaseback
no sale therefore
49
Provision
A liability of uncertain timing or amount
50
Provision regonition
present obligation as a result of a past event, probable that an outflow of economic resources will be required to settle the obligation and a reliable estimate can be made of the amount of obligation
51
Obligating event
A past event which leads to a present obligation - no realistic alternative
52
Legal obligation
dervies from contract, legislation or other operation of law
53
Constructive obligation
dervies from an entity's actions where, from an established pattern of past practice, published policies or a specific statement, the entity has indicated to other parties that it will accpet certain responsibilities and has created a valid expectation
54
Restructuring
Provision needed when there is a detailed formal plan and a valid expectation in those affected that it will carrying out the plan or announincg it
55
Warranty provisions
When selling goods under warranty needs to make provision on best estimate of repair costs
56
Contingent liablities
not recognised but disclosed. Not probable, not reliable
57
Contingent asset
possible asset arising from past events whose existnece will only be confirmed by the occurrence of one or more uncertain future events not wholly within the control of the firm. A disclosure
58
Deferred tax
Liability for future possible tax payable. Arises due to difference between tax and accounting tratment.
59
Unused tax losses
Deferred tax asset when entiy has unused tax losses / credits. Acts as future tax sacing but amount can only be recorded for expected profit levels
60
Functional currency
curency of primary economic enviornment in which the entity operates. It is a fact
61
Presentation currency
choice by management
62
Translation of SPL
subsids translated @ average rate
63
Translation of SFP
Assets and liability @ closing rate. GW at closing rate (exchange loss to reserves). Share capital and pre-acq reserves @ historic rate. Post acq reserves not translated but treated as balancing figure
64
Cash equivalents
Short term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificatn risk of changes in value
65
Cash acquistion and disposal
account for PPE, Cash etc. gained / lost
66
ROCE
PBIT / TALCL x 100%
67
Gross profit margin
Gross profit / revenue x 100%
68
Operating profit margin
PBIT / Revenue x 100%
69
Net Profit margin
PAT / Revenue x 100%
70
Return on Equity
Profit after tax and pref dividends / Equity SC + reserves x 100%
71
Asset turnover
Revenue / TALCL
72
Current Ratio
current assets / current liabilities
73
Quick Ratio
current assets - inventory/ current liabilities
74
Inventory turnover
cost of sales / inventories
75
Non-current asset turnover
revenue / non-current assets
76
receivables period
TR/credit turnver x 365
77
Payables period
TP / Purchases or COS x 365
78
Debt / equity
long-term debt / equity
79
Interest cover
PBIT / Interest payable
80
Earning per share
Profit after tax after NCI / weighted av no of shares
81
Dividend yield
Dividend per share / market share price
82
Dividend cover
EPS / Dividend per share
83
P/E
Market share price / EPS
84
Related party transaction
Transfer of resources / goods between parties which would appear to the outside world to be linked in some way. Regardless of whether a price is charged
85
EPS @ full market
Time aportion as not had cash for whole year
86
EPS for right issue
Bonus fraction = old share price / new share price

Cima M (3 decks)

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