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Flashcards in Notes to Financial Statements Deck (21):

What are some of the basic disclosures required in the notes to financial statements?

1.) Summary of significant accounting policies
2.) Related Party Transactions
3.) Liability Disclosures
4.) Capital Structure
5.) Errors and Irregularities
6.) Illegal Acts


Define Nominal Dollars

Measurements in the price level in effect at a transaction date. These measurements are not adjusted for inflation


Define "Purchasing Power"

The purchasing power of an asset is the amount of goods and services that can be obtained by transferring the asset to another party


Define "Purchasing Power Loss"

Losses that result from holding monetary assets during inflationary times or having monetary liabilities during deflationary times


What is included in illegal acts for companies?

Illegal Contributions and Bribes


What is presented in the related party transaction disclosures?

Nature of relationship, description of all transactions for years presented, dollar amounts of transactions, and receivable to or from parties


What disclosure is required by firms in hyperinflationary economies under IFRS?

Disclosure of impact of inflation on the financial statements is required


What is the Management Discussion & Analysis (MD&A) Section?

Management Discussion & Analysis: a narrative written y management that is an integral part of the disclosure of the financial statements.


What is the difference between errors and irregularities?

Errors are unintentional, irregularities are intentional


Define "Specific Price Change"

The change in the price of a specific good or service over a period of time


Define "Constant Dollars"

Measurements in the general price level as of a specific date


What are the disclosure requirements for noncurrent liabilities?

Combined aggregate amount of maturities on borrowings 5+ years after balance sheet, sinking fund requirements; the aggregate amount of payments for unconditional obligations to purchase fixed or minimum amounts of goods or services; the fair value of each financial debt instrument in the financial statements or in the notes; the nature of the firm's liabilities, interest rates and maturity dates, conversion options, assets pledged as collateral, and restrictions.


Define "Purchasing power gain"

Gains that result from holding monetary assets during deflationary times or having monetary liabilities during inflationary times


Define "Inflation"

The increase in general prices for a period of time; deflation is the decrease in general prices


What does the first footnote generally cover?

Summary of significant accounting policies


What is a development stage enterprise?

An enterprise placing substantially all its efforts into the establishment of a new business


Define "General Prices"

The term general prices refers to a market basket of items that the typical consumer purchases


Under IFRS, what should the summary of significant accounting policies include?

1.) Judgements and key assumptions made in applying those policies
2.) Measurement bases used for recognition (e.g. historical cost)
3.) Information enabling assessment of the estimation uncertainty that could result in a material adjustment to the balances of assets and liabilities, which are point estimates in many cases.


Define "Monetary Items"

The specific price of monetary items cannot change. Specific price of nonmonetary can change


What is the "Summary of Significant Accounting Policies" disclosure?

Includes a summary of significant account policies - the methods and principles chosen by management where GAAP allows a choice. Examples include Depreciation method, valuing inventory and basis for consoldiation


Is "Summary of Significant Accounting Policies" disclosure required in Interim Financials?

No, not if the policies have not changed.

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