Module 4: Application of specific Accounting Standards Flashcards
(108 cards)
1
Q
The name of IAS 16 is?
A
Property, Plant and Equipment
2
Q
The cost of an item of property, plant & equipment shall be recognised as an asset if:
- It is p_______ that future ________ benefits associated with the item will ____ to the entity; and
- The cost of the item can be measured _________
A
probable; economic; flow;
reliably;
3
Q
All items of property, plant and equipment are recognised at ____
A
cost;
4
Q
Cost includes the following:
- P______ p_____
- Directly a_________ costs of bringing the asset to the l______ and c_______ necessary for it to be capable of operating in the manner intended by management.
- Estimated cost of d________ and r______ the item and restoring the site on which it is used
A
Purchase price;
attributable; location; condition;
dismantling; removing;
5
Q
Measurement after recognition:
Cost model
- Property, plant and equipment is carried at cost lest a_________ d_________ and accumulated i_________ l_______
A
accumulated depreciation;
impairment losses;
6
Q
Measurement after recognition:
Revaluation model
- Property, plant and equipment is carried at a r_______ amount whose f___ v____ can be measured r_______
A
revalued; fair value; reliably;
7
Q
Revalued amount = f___ v____ at date of r________ less subsequent a________ d__________ and subsequent a_________ i_________ losses
A
fair value; revaluation; accumulated depreciation; accumulated impairment;
8
Q
Where an item of property, plant and equipment is revalued, all other ______ in the same _____ must also be revalued
A
assets; class;
9
Q
Measurement after recognition
Fair Value
- Defined by IFRS 13 Fair Value Measurement as the price that would be r_______ to ____ an a____ or p___ to transfer a _______ in an orderly _________ between market participants at the m________ d___
A
received; sell; asset; paid; liability; transaction; measurement date;
10
Q
- Revaluation gains are reported in o_____ c_________ i_____
- And the revaluation surplus in the s________ of ________ __________, except where reversing a previous revaluation loss charged to ______ or ____
A
other comprehensive income;
statement; financial position; profit; loss;
11
Q
The revaluation surplus may be transferred directly to retained earnings when the asset is __________
A
derecognised;
12
Q
The useful life, residual value and depreciation method must be reviewed at least at each f________ ____ ___ and adjusted where necessary
A
financial year end;
13
Q
IAS 38 Intangible Assets defines intangible assets as:
- N__-m_______ assets without p_______ s_________
A
Non-monetary; physical substance;
14
Q
Intangible assets include:
- G_______
- I_______ rights (eg. patents, performing rights and authorship rights)
- C________ s______ and d__________ costs
A
Goodwill;
Intellectual; Computer software; development;
15
Q
The objectives of IAS 38:
- To establish the criteria for when an intangible asset is __________.
- To specify how intangible assets are _________.
- To specify the ________ ____________ for intangible assets
A
recognised;
measured;
disclosure requirements;
16
Q
1) An Intangible asset must be identifiable.
It is identifiable if:
- It is s________, that is if it could be r______ or s___ s_________.
- It is a l____ or c_________ right
A
separable; rented; sold separately;
legal; contractual;
17
Q
2) Intangible assets must be under the control of the entity as a result of a p___ e____.
- Control over t______ knowledge or k___-h__ only exists if it is protected by a l____ right
- T_____ is most unlikely to be recognisable as an intangible asset; an entity cannot control the future actions of its staff
- M_____ s_____ and c______ l_____ cannot be intangible assets, since the entity cannot control the actions of its customers
A
past event;
technical; know-how; legal;
Training;
Market share; customer loyalty;
18
Q
3) Intangible asset: Expected future economic benefits
An item can only be recognised as an intangible asset if economic benefits are e_______ to f___ in the future from o________ of the asset.
- Economic benefits may come from the s___ of products or services, or from a r________ in e_________ (cost savings).
A
expected; flow; ownership;
sale; reduction; expenditure;
19
Q
Worked example: Intangible Assets, P219 Study Guide
A
Bus license: Yes
Recruitment and training: No
Brand ‘Super X’: Yes
Advertising: No
20
Q
As per IAS38, Intangible Assets:
- Must be ____________
- Must be c_________ by the entity
- There should be e_______ f_______ e________ b_______
A
identifiable;
controlled;
expected future economic benefits;
21
Q
When it is acquired, an intangible asset is measured at ____
A
cost;
22
Q
An intangible asset should be recognised if both the following occur:
- It is probable that the f_____ e_______ b______ attributable to the asset will flow to the e____; and
- The cost can be measured ________
A
future economic benefits; entity;
reliably;
23
Q
- If an intangible asset is a______ s________, its cost can usually be measured reliably as its p______ p____
A
acquired separately; purchase price;
24
Q
When an intangible asset is acquired with other assets and liabilities as part of a b_______ c_________, the cost of the intangible asset is its f___ v____ at the date of the a__________.
A
business combination; fair value; acquisition;
25
The revaluation model may be applied to intangible assets only where a f___ v____ can be established by reference to an a_____ m______.
An a_____ m______ is one in which items traded are ____________, willing ______ and ______ are available and prices are made ______.
fair value; active market;
active market; homogeneous; buyers; sellers; public;
26
The residual value of an intangible asset is ___ unless there is a c_________ by a third party to purchase the asset at the end of its useful life, or there is an ______ ______ for the asset that is likely to exist at the end of its useful life.
nil; commitment; active market;
27
Internally generated goodwill is ___ __________ as an _____
not recognised; asset;
28
Expenditure on r_______ must always be ________ ___ in the period in which it is ________.
research; written off; incurred;
29
If the criteria laid down by IAS 38 are satisfied, d_________ e__________ must be capitalised as an _________ _____.
If it has a f_____ u______ l___, it is amortised over that life.
development expenditure;
intangible asset;
finite useful life;
30
Two possible treatments of the debit balance on the R&D account:
- Classify it as an _______ and transfer to ______ or ____.
- Classify it as an _____ and included in the _________ of ________ ________. This argument is based on the _______ assumption.
expense; profit; loss;
asset; statement; financial position;
accrual;
31
Research
O_______ and p______ investigation undertaken with the prospect of gaining new s_______ or t________ knowledge and understanding.
Original; planned; scientific; technical;
32
Development
The application of r_______ f______ or other knowledge to a plan or design for the production of ___ or s__________ i______ materials, devices, products, processes, systems or services before the start of __________ production or use.
research findings; new; substantially improved; commercial;
33
Characteristics of Research:
- A_______ aimed at obtaining n__ k________
- The search for applications of r_______ f_______ or other knowledge
- The search for p_____ or p_____ alternatives; and
- The formulation and design of possible ___ or _________ p______ or p______ alternatives
Activities; new knowledge;
research findings;
product; process;
new; improved product; process;
34
Characteristics of Development:
- The d____, construction and testing of pre-production p_________ and m______
- The d_____ of tools, jigs, moulds and dies involving n__ t_________
- The d_____, construction and operation of a p____ p____ that is not of a scale economically feasible for c_________ production; and
- The d_____, construction and testing of a chosen alternative for n__/i________ materials
design; prototypes; models;
design; new technology;
design; pilot plant; commercial;
design; new/improved;
35
Research and development costs will include all costs that are d______ a________ to research and development activities, or that can be a________ on a r_________ basis.
directly attributable; allocated; reasonable;
36
The following costs may be included in R&D (all of the below being involved in R&D activities):
- S______, w____ and other employment-related costs
- M_______ and s_______ consumed
- D________ of property, plant and equipment for assets used
- O________ costs other than general administrative costs
- Other costs such as a_________ of p_____ and l_______
Salaries, wages;
Materials; services;
Depreciation;
Overhead;
amortisation; patents; licenses;
37
Research costs are recognised as an _______ in the period in which they are ________
expense; incurred;
38
Criteria for a business to recognise development expenditure as an asset (all must be fulfilled):
- The technical feasibility of c_________ the intangible asset so that it will be available for u__ or s___;
- Its intention to c_______ the intangible asset and u__ or s___ it;
- Its a_____ to use or sell the intangible asset;
- How the intangible asset will generate probable f______ e________ b______.
- The availability of adequate t______, f______ and other r_______ to complete the development and use or sell the intangible asset;
- Its ability to m______ r______ the expenditure attributable to the intangible asset during its development
completing; use; sale;
complete; use; sell;
ability;
future economic benefits;
technical, financial; resources;
measure reliably;
39
Amortisation is the s________ a________ of the d_________ amount of an i_______ a____ over its useful life.
systematic allocation; depreciable; intangible asset;
40
The amortisation will begin when the asset is _________ for ___.
Until the asset is _________ for ___, it should be subject to an annual i_________ r_____.
available; use;
available; use; impairment review;
41
Development costs should be _______ ____ to the extent that the unamortised balance exceeds the e_______ f______ e_______ b______
written down; expected future economic benefits;
42
Financial statements should disclose the _________ _______ that have been adopted for i_______ a_____
accounting policies; intangible assets;
43
For each class of intangible asset, the following disclosure is required:
- The m____ of a__________ used
- The u_____ l___ of the assets or the a__________ r___ used
- The g____ c________ amount, the a________ a__________ and the a_________ i__________ losses as at the beginning and the end of the period;
- A r__________ of the c________ amount as at the beginning and at the end of the period
- The l___ i___ to which amortisation has been charged in the SPLOCI; and
- The c_______ amount of i________-g________ intangible assets (development).
method; amortisation;
useful life; amortisation rate;
gross carrying; accumulated amortisation; accumulated impairment;
reconciliation; carrying;
line item;
carrying; internally-generated;
44
Question 1) & 2) Y Co. P224 Study Guide
See textbook
45
- Impairment is determined by comparing the _______ a_____ of the asset with its __________ a_____.
- This is the higher of its ____ ______ less _____ of _________ and its _____ in ___.
carrying amount; recoverable amount;
fair value; costs; disposal; value; use;
46
IAS 36 is called?
Impairment of Assets
47
- There is an established principle that assets are not carried above their __________ _______.
- An entity should write down the _________ _______ of an asset to its ____________ ________.
recoverable amount;
carrying amount;
recoverable amount;
48
Impairment is a fall in the _____ of an asset, so that its _________ ______ is less than its _________ ______
value; recoverable amount; carrying amount;
49
- If an asset's value in the accounts is higher than its _________ ______, the asset has suffered an ___________ ______.
- The general rule is that the amount of the __________ _____ should be written off against ______ or ____ immediately.
recoverable amount; impairment loss;
impairment loss; profit; loss;
50
With regards to IAS 36 the main accounting issues to consider are:
- How to _______ when an impairment loss may have occurred?
- How should the _________ ______ of the asset be measured?
- How should an _________ _____ be r_______ in the accounts?
identify;
recoverable amount;
impairment loss; reported;
51
Indications of a possible impairment include both ________ and ________ factors
external; internal;
52
Impairment: External sources of information
- A fall in the asset's m_____ v_____ that is more s_________ than would normally be e________ from p______ of t____ or normal ___.
- A significant change in the t_________, m_____, l____ or e_______ environment of the business in which the assets are employed.
- An i_______ in m______ i_______ r_____ or m______ r_____ of r______ on i_________ likely to affect the d______ r____ used in calculating v_____ in u__.
- The c_______ a_____ of the entity's net assets being more than its m______ c_________.
market value; significant; expected; passage; time; use;
technological, market, legal; economic;
increase; market interest rates; market return; return; investments; discount rate; value; use;
carrying amount; market capitalisation;
53
Even if there are no indications of impairment, the following assets must always be tested for impairment annually:
- An i_______ a____ with an i_______ u_____ l___
- An i_______ a____ which is not yet available for use
- G_____ acquired in a b_______ c_________
intangible asset; indefinite useful life;
intangible asset;
Goodwill; business combination;
54
The recoverable amount of an asset is the higher value of:
- The asset's ____ _____ less _____ of ________; and
- It's _____ in ___
fair value; costs; disposal;
value; use;
55
Selling costs do not include ___________ or ___________ expenses, or any costs that have already been recognised in the financial statements
restructuring; reorganisation;
56
The value in use of an asset is measured as the p_____ v____ of estimated f______ c___ f____ generated by the asset, including its estimated n__ d_______ v____ at the end of its e_______ u_____ l___.
present value; future cash flows; net disposal value; expected useful life;
57
For assets held at a revalued amount:
- The impairment loss should be treated as a _________ _______ under the relevant IAS.
revaluation decrease;
58
WEx Impairment and Depreciation charge P227 Study Guide
See textbook
59
When it is not possible to calculate the r__________ a_____ of a single asset, that of its ____-__________ ____ should be measured instead
recoverable amount; cash-generating unit;
60
As a basic rule, the recoverable amount of an asset should be calculated for the _____ i____________.
asset individually;
61
A cash-generating unit is the s_______ i_________ group of ______ for which i__________ _____ inflows can be __________ and __________.
smallest identifiable; assets; independent cash; identified; measured;
62
- Goodwill acquired in a ________ combination does not generate ____ _____ independently of other a_____.
- It must be a_______ to the acquirer's c___-g________ units that are expected to _______ from the synergies of the combination.
business; cash flows; assets;
allocated; cash-generating; benefit;
63
- A cash-generating unit to which goodwill has been allocated must be tested for i_________ a_______.
- The c_______ a______ is compared with the r________ a______.
- If the c_______ a______ exceeds the r_________ a______, the entity must recognise an i_________ loss.
impairment annually;
carrying amount; recoverable amount;
carrying amount; recoverable amount; impairment;
64
The annual impairment test may be performed at ___ time during an accounting period, but it must be performed at the s___ ____ every ____.
any; same time; year;
65
Corporate assets may also be tested for impairment, regardless of whether they can or cannot be a_______ on a _________ and ________ basis.
allocated; reasonable; consistent;
66
An i________ l___ is recognised immediately in ______ or ____ unless the asset has been ________, in which case the loss is treated as a ____________ decrease.
impairment loss; profit; loss; revalued; revaluation;
67
After reducing an asset to its _________ amount, the d________ c_____ on the asset should then be based on:
- Its new c________ a______
- Its estimated r________ v_____
- Its estimated remaining u_____ l___
recoverable; depreciation charge;
carrying amount;
residual value;
useful life;
68
When an impairment loss is recognised for a cash-generating unit, the loss is allocated between the assets in the unit in the following order:
- First, to any assets that are obviously _________ or _________
- Next, to the g______ allocated to the c___-_________ unit
- Then to all other ______ in the c___-g_________ unit, on a ___ ____ basis
damaged; destroyed;
goodwill; cash-generating;
assets; cash-generating; pro rata;
69
In allocating an impairment loss, the carrying amount of an asset should not be reduced below the highest of:
- Its ____ _____ less _____ of ________
- Its _____ in ___
- Z___
Any remaining amount of an impairment loss should be recognised as a l_______ if required by other IFRSs.
fair value; costs; disposal;
value; use;
Zero;
70
WEx) Impairment loss (1) P230 Study Guide
$2.8m
71
WEx) Impairment loss (2) P230 Study Guide
$1m to uninsured destroyed asset
$0.4m to goodwill
72
The annual assessment to determine whether there may have been some impairment should be a_____ to ___ a______
applied; all assets;
73
In some cases, the r_________ a_____ of an a____ that has previously been i______ might turn out to be h_____ than the asset's current c_______ a_____.
In this case, the c_______ a______ of the asset is increased to its new r_________ a______, which should not exceed the c________ a______ at that date had the original i_________ l___ not occurred.
recoverable amount; asset; impaired; higher; carrying amount;
carrying amount; recoverable amount; carrying amount; impairment loss;
74
An impairment loss for ________ is ___ reversed
goodwill; not;
75
Q5) Reversal of Impairment loss p231 Study Guide
See textbook;
76
QRQ 1 Q4 P233 Study Guide
$7,368
77
- Most non-current assets only require testing for i_________ if there are i_______ of i_________, rather than annually.
- If individual a_____ cannot be tested for i________, it may be necessary to test a _____ of _______ as a unit.
- An i_________ loss must be recognised immediately in profit or loss, except that all or part of a loss on a r_______ a_____ should be charged against any related r________ s______.
impairment; indicators; impairment;
assets; impairment; group; assets;
impairment; revalued asset; revaluation surplus;
78
79
QRQ 17 P237 Study Guide
$15k to profit or loss
$100k to other comprehensive income
80
Q19 P238 Study Guide
$7,765
81
An intangible asset with an i________ u______ l___ is test for impairment __________.
However, the test may take place at ___ ____ during the reporting ______ providing that it is at the same ____ each ____.
indefinite useful life; annually;
any time; period; time; year;
82
Accrual accounting is the matching of _____ with the _______ they generate.
costs; revenue;
83
Title of IFRS 15?
Revenue from Contracts with Customers
84
The key principle within IFRS 15 is that _______ is recognised when there is a _______ of ______ to the c________ from the entity supplying the _____ or ________.
C_____ of an _____ is the ability to direct the ___ of, and obtain s___________ all the remaining ________ from, the asset.
revenue; transfer; control; customer; goods; services;
Control; asset; use; substantially; benefits;
85
According to IFRS 15, revenue does not include:
- S____ t_____
- V_____ added t_____
- G____ and s______ t_____ which are only collected for t____ p______, because these do not represent an economic benefit flowing to the entity.
Sales taxes;
Value; taxes;
Goods; service taxes; third parties;
86
Recognition and Measurement of Revenue:
1) I_______ the c_______ with the c________
2) I_______ the s________ p_________ o________
3) Determine the t_________ p_____
4) Allocate the t_________ p_____ to the p_________ o________
5) R_______ r_________ when or as a p__________ o_______ is satisfied
Identify; contract; customer;
Identify; separate performance obligations;
transaction price;
transaction price; performance obligations;
Recognise revenue; performance obligation;
87
An entity must be able to r________ m______ the outcome of a p________ o________ before the related r_______ van be recognised
reasonably measure; performance obligation; revenue;
88
An obligation is satisfied over ____ when one of the following criteria is met:
- The customer simultaneously r______ and c______ the benefits as the performance takes place.
- The entity's performance c______ or e_______ an asset that the customer c______ as the asset is c______ or e________.
- The entity's performance does not c_____ an a_____ with an alternative use to the entity and the entity has an enforceable r____ to p______ for performance completed to date.
time;
receives; consumes;
creates; enhances; controls; created; enhanced;
create; asset; right; payment;
89
WEx: Determining the transaction price, p240 Study Guide
see textbook;
90
WEx: Allocating transaction price to performance obligations, P240 Study Guide
see textbook;
91
Settlement accounting examples P242 Study Guide
see textbook;
92
Q6 settlement discounts P243 Study Guide
see textbook;
93
7.8.2 P243 Study Guide
see textbook;
94
The following amounts should be disclosed in the financial statements (1):
- R_______ recognised from c______ with c_______, disclosed separately from other sources of revenue.
- Any i_________ l______ recognised on any r_________ or contract assets arising from an entity's c_______ with c________
- The ________ and _________ balance of r__________, contract a______ and contract l_________ from c______ with c_________
Revenue; contracts; customers;
impairment losses; receivables; contracts; customers;
opening; closing; receivables; assets; liabilities; contracts; customers;
95
The following amounts should be disclosed in the financial statements (2):
- R______ recognised in the reporting period that was included in the c______ l_______ balance at the ___________ of the period.
- R______ recognised in the reporting period from p_________ o________ satisfied in previous periods
Revenue; contract liability; beginning;
Revenue; performance obligations;
96
Q7 P244 Study Guide
Revenue recognised = $7,500
Deferred income = $2,500
97
Airlines should recognise revenue when the p________ go on their _________
ie. when the service is ________
passengers; flights; performed;
98
IAS 12 is called?
Income Taxes
99
Current tax is the a______ p_______ to the ___ authorities in relation to the _______ activities of the period
amount payable; tax; trading;
100
Deferred tax is an a________ m______, representing the value of f______ t__ consequences of past t_________ and e_____
accounting measure; future tax; transactions; events;
101
102
IAS 12 requires any u_____ t__ in respect of the current period to be charged (_______) to _____ or ____ as a l_______:
Dr. T__ e______ (profit or loss)
Cr. T__ l______ (statement of financial position)
unpaid tax; expensed; profit; loss; liability;
Tax expense;
Tax liability;
103
- Where the liability estimated at a period end is ________ than the tax later paid, the balance remaining on the t__ l_______ is termed an o_________.
- This is then _________ from the following year's t__ c_____ (expense)
greater; tax liability; overprovision;
deducted; tax charge;
104
- Where the liability estimated at a period end is ____ than the tax later p___, the balance remaining on the t__ l______ account is termed an _____-_________.
- The following year's t__ c_____ (expense) is _________ by this amount.
less; paid; tax liability;
under-provision;
tax charge; increased;
105
IAS 12 refers to ___________ and _____-_________ as a________ for c_____ t___ of prior periods.
overprovisions; under-provisions; adjustments; current tax;
106
Q9 Current Tax p246 Study Guide
a) $41,000
b) $31,000
107
IAS 12 requires recognition (as an asset) of the benefit relating to any t__ l___ that can be c_______ b____ to recover c______ t___ of a previous period.
This is acceptable because it is probable that the benefit will f___ to the entity and it can be r______ measured.
tax loss; carried back; current tax;
flow; reliably;
108
Wex: Tax losses carried back, P246 Study Guide
see textbook;
