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FAR Flashcards

1
Q

What’s the the qualities characteristics of the conceptual framework

A

2 fundamental characteristics
- relevance
- faithful representation

4 enhancing characteristics
- comparability
- understandability
- timeliness
- verifiability

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2
Q

What are the elements of financial statements?

A

-asset
-liability
- equity
-income
-expenses

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3
Q

When do you allow recognition

A
  1. The item meets the element definition
  2. It provides useful information to the user
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4
Q

When does derecognition occur

A

When the item no longer meets the definition of an asset or liability

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5
Q

What are the two main measurement basis?

A

Historical cost
Current value

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6
Q

What should be excluded for ppe recognition

A
  • cost after asset is ready for use but not yet being used
  • repair / maintenance work
  • incidental income
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7
Q

What costs should be capitalised for an asset under contstruction

A

Labour costs
Material costs
Directly attributed bleeping costs

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8
Q

What period does an asset depreciate

A

From when it is available for use to the point when it is sold or helps for sale

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9
Q

How often should the useful life, residual value and depr method be reviewed?

A

Annually

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10
Q

How much can be transferred from revaluation surplus and retained earnings

A

The difference between the depreciation charge due to revaluation and the depreciation charge of the original cost

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11
Q

When is an impairment review carried out

A
  1. Annually for intangibles with indefinite UL and goodwill
  2. When there is an indication of impairment
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12
Q

What are some indications of impairment

A

-operating losses
-net cash flow
- decline in market value
- obsolescence / physical damage
- significant changes to business or market

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13
Q

How do you calculate recoverable amount

A

Higher of
1. Value in use
2. FV less costs

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14
Q

What are the criteria of a non current asset held for sale

A
  • asset must be available for sale in its present condition
  • sale must be highly probable (12 months)
  • it must be actively marketed at a reasonable price
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15
Q

Can an asset that is intended to be abandoned be classed as hfs?

A

No

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16
Q

How can a low value short term lease be recognised

A

Can choose to recognise as a lease payment in pnl or as a lease liability

17
Q

What are the two ways of recognising a sale and lease back transaction?
I’d it is
1. A sale
2. Not a sale

A
  1. Recognise the liability which is equal to the proceeds received
  2. Recognise an rou asset as a proportion of the previous carrying amount. A lease liability will also be recognised
18
Q

What are the five steps or revenue

A
  1. Recognise the co tract
  2. Identify the separate performance obligations
  3. Determine the transaction price
  4. Allocate the transaction price to the performance obligations
  5. Recognise revenue as it when a performance obligation is satisfied
19
Q

What are some evidences of a loan

A
  • sale value does not equal market value
  • buyer charges interest in the sales value when calculating the repurchase price
  • likely that the seller will get the asset back
  • seller gets to use asset after sale date
20
Q

When can you make a provision

A

-when there is a present obligation it past event
- probable transfer of economic benefit
- measure reliably

21
Q

How are provisions measured

A

Best estimate of the present value of the future obligation

22
Q

Can a provision be made for the following
1. Future operating losses
2. Onerous contract
3. Reorganisation

A
  1. No - there is no obligation / past event
  2. Yes - recognise as the lower cost of meeting the contract or exiting the contract
  3. Yes - only if announced before y/e
23
Q

Can counter claims be recognised?

A

Only recognise if certain. The asset can only be the amount of the provision

24
Q

How are inventories valued?

A
  • lower of cost and npv
25
Q

How should treasury shares be treated?

A

As a negative equity

26
Q

What are the two methods of capital grants

A
  1. Netting off method - net off against the cost of the asset
  2. Deferred income - defer grant to sfp, the income is released over the UL just like the depreciation
27
Q

What are the two methods recognising a grant tied to income

A
  1. Net off against the expense
  2. Show as other income
28
Q

How should government assistance be recognised

A

Do not recognise as it can not be measured reliably, instead this should be disclosed

29
Q

How do you calculate basic earnings per share?

A

Profit attributed to the ordinary equity holders
Over
Weighted average no. Of ordinary shares outstanding during audit period

30
Q

How do you calculate bonus fraction

A

No. Shares after issue
Over
No. Shares before issue

31
Q

How do you calculate bonus fraction for a rights issue

A

Market share price before issue
Over
Theoretical ex rights price (terp)

32
Q

What can public companies not allow their NAs fall below?

A

The aggregated amount of called-up share capital and undistributable reserves

33
Q

What are undistributable reserves?

A

Share premium account
Unrealised profits
Any other reserve the company is prohibited from distributing

34
Q

How do you unwind a PURP

A

increase the cost of sales of the selling company by the PURP amount

35
Q

What are the types of joint arrangements

A
  1. Joint operation
  2. Joint ventures
36
Q

What is the limit of time after awustition that goodwill can be recalculated

A

12 months

far (2 decks)

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