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IASs Flashcards

1
Q

IAS 1

IAS 1 states that a full and complete set of financial statements consist of what 6 statements?

A
  1. Statement of Profit and Loss
  2. Statement of Financial Position
  3. Statement of Cash Flows
  4. Statement of Changes In Equity
  5. The Accounting Policies and Notes
  6. Comparative Information for the proceeding period
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2
Q

IAS 1
Which one of the six things that make a complete set of financial statements should be given most prominence in the accounts?

A

IAS 1 states that all financial statements are to be given equal prominence

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3
Q

IAS 1

What are the six main elements that make up the financial statements?

A

1, Assets

  1. Liabilities
  2. Equity
  3. Income
  4. Expenses
  5. Profit
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4
Q

IAS 1

What is meant by an asset?

A

An asset is a resource controlled by the entity which is a result of past events and from which future economic benefits are expected to flow.

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5
Q

IAS 1

What is meant by a liability?

A

A liability is current obligation of the entity arising from past events and the settlement is expected to result in an outflow of resources.

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6
Q

IAS 1

What is meant by equity?

A

Equity is the residual interest in the assets of the entity after deducting all its liabilities. It includes funds contributed by shareholders, retained earnings and other gains or losses.

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7
Q

IAS 1

What is meant by profit or losses?

A

Profit and losses are increases or decreases in equity not resulting from contributions from shareholders. They are the result of comparing income and expenses.

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8
Q

IAS 1

What is meant by income?

A

Income is an increase in economic benefits in the form of inflows or enhancements in assets that increase equity.

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9
Q

IAS 1

What is meant by expenses?

A

Expenses are decreases in economic benefits in the form of outflows or depletions of assets or or the incurring of liabilities that decrease equity.

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10
Q

IAS 10

What is the definition of IAS 10?

A

Events after the reporting date are favourable or unfavourable events that take place after the financial statements have been prepared at the year-end and before the time the statements are authorised for issue to interested parties

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11
Q

IAS 10

What is an adjusting event?

A

An adjusting event contains evidence of conditions that existed at the end of the reporting period. If material, adjustments should be made to the amounts shown in the financial statements

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12
Q

IAS 10

What is a non-adjusting event?

A

An non-adjusting events is one where the conditions arose after the end of the reporting period. No adjustment is made to the financial statements, but, if the amounts are material, they are disclosed in the notes of the accounts.

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13
Q

IAS 10

What does the notes contain in the financial statements?

A

1 nature of the event

2 an estimate of the financial impact

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14
Q

IAS 10

What are dividends?

A

Declared or proposed on ordinary shares after the reporting period are not to be recognised as a liability on the statement of financial position. Instead, they are non adjusting events which are disclosed by way of a note

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15
Q

IAS 10

What is a going concern?

A

An entity cannot prepare its financial statements on a going concern basis, if, after the reporting period, management determines either that it intends to liquidate the business or cease trading, or that there is no realistic alternative to these courses of action.

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16
Q

IAS 10

What is meant by the date of authorisation for issue?

A

Entities must disclose the date when the financial statements were authorised for issue and who gave the authorisation

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17
Q

IAS 16

What is plant, property and equipment?

A

PPE are tangible assets that are held for use in the production or supply of goods and services, for rental to others, or for rental to others, or for admin purposes and are expected to be used for more than one period.

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18
Q

IAS 16

What 3 questions does IAS 16 ask?

A
  1. The question of recognition
  2. The question of measurement
  3. The question of depreciation and impairment
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19
Q

IAS 16

What is ‘the question of recognition’?

A

Should this item be recognised as an asset or not?

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20
Q

IAS 16

What is ‘the question of recognition’?

A

How shall the asset be valued in the SOFP?

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21
Q

IAS 16

What is ‘the question of recognition’?

A

How shall any loss in its value be accounted for?

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22
Q

IAS 16

When should PPE be recognised as an asset in the SOFP?

A

The cost of an item shall be recognised as an asset if:

  1. Its probable that future economic benefits associated with the item will flow to the entity
  2. The cost can be reliably measured.
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23
Q

IAS 16

What is ‘subsequent expenditure’ on PPE and how is it dealt with by IAS 16?

A

Subsequent expenditure includes:

  • Day to day services and repairs - not recognised, should be on PPL and OCI
  • Regular/routine replacement of part of an asset (eg replacing seats on a plane) - there costs can be recognised as PPE and added to the carrying value of PPE.
  • Major regular inspection costs - eg faults - costs can be recognised as ppe and are added to the carrying value of ppe
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24
Q

IAS 16

The question of measurement - at what value are assets initially valued/measured in the SOFP?

A

At cost

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25
Q

IAS 16

What sort of things can be capitalised in an asset?

A

Delivery costs, Purchase costs, installation and assembly.

26
Q

IAS 16

What cannot be included on the SOFP as a cost of the asset?

A

Fuel, Admin Costs

27
Q

IAS 16

The question of depreciation and impairment.

A

IAS 16 states that after initial acquisition, an entity must choose its PPE. There are two options,

28
Q

IAS 16

What value are assets initially valued/measured in the SOFP as according to the question of measurement.

A
  1. Cost Model

2. Revaluation Model

29
Q

IAS 16 - What is meant by cost model?

A

The asset is carried on a SOFP at initial cost less accumulated depreciation and impairment losses.

30
Q

IAS 16 - What is meant by revaluation model?

A

The asset is carried on the SOFP at a revalued amount. The revalued amount is a fair value less subsequent depreciation + impairment. Revaluations should be done every 3 -5 years.

31
Q

What is the definition of PPE?

A

Held for use in the production or supply of goods and services, which are expected to be used for more than one period.

32
Q

What is the definition of depreciation?

A

Systematic allocation of the depreciable amount (cost or valuation less residual value) of an asset over its economic life.

33
Q

What is the definition of depreciation amount?

A

Cost of the asset less any residual value

34
Q

What is the definition of useful life?

A

Length of time or the number of units of production for which tan asset is expected to be used.

35
Q

What is the definition of fair value?

A

Amount for which an asset could be exchanged between knowledgeable willing parties in an arms length transaction.

36
Q

IAS 38

What is an intangible asset?

A

An intangible asset is defined as an identifiable non monetary asset without physical substance

37
Q

IAS 38

Examples are intangible asset include…

A

Computer software, patents, copyrights, customer lists.

38
Q

IAS 38

What are the three key elements of an intangible assets?

A
  1. Identifiability
  2. Control
  3. Future economic benefits
39
Q

IAS 38

What is meant by identifiability?

A

The asset is separable from the entity and is capable of being sold or transferred, or it arises from contractual or legal rights

40
Q

IAS 38

What is meant by control?

A

The entity has the power to obtain future economic benefits from the asset

41
Q

IAS 38

What is meant by future economic benefits?

A

Include revenue from the sale of products or services, cost savings or other benefits

42
Q

IAS 38

What are the two main sources of intangible assets?

A
  1. Purchased.

2. Internally generated.

43
Q

IAS 38

What ‘price’ is intangible assets recorded in the financial statements?

A

Cost Price

44
Q

IAS 38

When is a intangible asset recorded in the financial statements at cash price?

A
  1. It is probable that expected future economic benefits that are attributable to the asset will flow to the entity; and
  2. The cost of the asset can be measured reliably.
45
Q

IAS 38

What is meant by research?

A

The original and planned investigation undertaken with the prospect of gaining new scientific or technical knowledge and understanding

46
Q

IAS 38

What is meant by development?

A

The application of research findings or other knowledge to a plan or design for the production of new or substantially improved materials, devices, products, processes, systems or services before the start of commercial production or use

47
Q

IAS 38

What are examples of research?

A
  • Activities to gain new knowledge.
  • Searches for alternatives for materials
  • Formulation/Design
48
Q

IAS 38

What are examples of development?

A
  • Design/construction of prototypes

- Design of new technology equipment

49
Q

IAS 36

What is impairment?

A

A reduction in the recoverable amount of an asset below its carrying value.

50
Q

IAS 36

What is the recoverable amount?

A

The higher of fair value and value in use

51
Q

IAS 36

What is meant by fair value?

A

Price that would be received to sell an asset (less cost of disposal)

52
Q

IAS 36

What is meant by value in use?

A

Present value of the future cash flow expected to be derived from an asset (what an asset is likely to bring into the business)

53
Q

IAS 36

What is the higher of fair value and value in use compared to?

A

Carrying Value.

54
Q

IAS 36

Impairment is done each year on which two things?

A

Goodwill

Intangible assets with an indefinite life.

55
Q

IAS 36

Impairment is done on other assets when?

A

There is indication of impairment

56
Q

IAS 36

What do you do if the recoverable amount is higher than carrying amount?

A

Leave asset at carrying amount

57
Q

IAS 36

What do you do if the recoverable amount is lower than carrying value?

A

Impair the asset

58
Q

IAS 36

What is the double entry for impairment?

A

DR Impairment losses

CR Acc Dep’n

59
Q

IAS 2

What is the definition of IAS 2?

A

IAS 2 is the accounting standard that deals with the way stock is valued for inclusion in the final accounts.

60
Q

IAS 2

What is the basic rule of inventories?

A

Stock should be valued at the lower cost or net realisable value.

61
Q

IAS 2

What does IAS 2 define cost as?

A

The expenditure incurred in bringing the product or service to its present location and condition

62
Q

IAS 2

What does IAS 2 define NRV as?

A

The actual or estimated selling price less all further costs to be incurred in marketing, selling and distributing.

IAS (1 decks)

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