pwc ppt Flashcards
(34 cards)
What conditions must be met to recognize revenue for the sale of goods under ASPE?
Risks and rewards of ownership have transferred.
The revenue amount can be measured.
Related costs can be measured.
What conditions must be met to recognize revenue for services under ASPE?
Revenue can be measured.
The stage of completion can be measured.
Related costs can be measured.
What are the five steps in the IFRS 15 revenue recognition model?
Identify the contract(s) with a customer.
Identify the performance obligations in the contract.
Determine the transaction price.
Allocate the transaction price to the performance obligations in the contract.
Recognize revenue when (or as) the entity satisfies a performance obligation.
What are the key characteristics of intangible assets under IAS 38?
The asset must be identifiable (separable or from contractual or legal rights).
The entity must control the asset.
Future economic benefits must be probable.
The cost of the asset can be reliably measured.
How are intangible assets initially measured under IAS 38?
At cost, including purchase price and directly attributable costs of preparing the asset for its intended use.
For non-monetary exchange, it is measured at fair value (asset given up first).
How is research treated for internally generated intangible assets under IAS 38?
Research is expensed in the period it is incurred.
How is development treated for internally generated intangible assets under IAS 38?
Technical feasibility.
Intention to complete.
Ability to sell or use.
Probable future economic benefits.
Availability of resources.
Ability to measure expenditures.
Note: Internally generated goodwill is not recognized as an asset.
What are the options for measuring intangible assets after recognition under IAS 38?
Cost model: Cost less accumulated amortization and impairment.
Revaluation model: Fair value (only if it can be reliably measured), less amortization and impairment.
Gains are recognized in Other Comprehensive Income (OCI), and losses in profit or loss.
What are the key characteristics of intangible assets under IAS 38?
- Identifiable (separable & from contractual or legal rights)
- Entity controls it
- Future economic benefits are probable
- Cost can be reliably measured
How should research and development costs be treated under IAS 38?
Research: Expensed in the period incurred.
Development: Capitalized if all the following criteria are met:
Technical feasibility
Intention to complete
Ability to sell or use
Probable future economic benefits
Availability of resources
Ability to measure expenditures
What is the initial measurement of intangible assets under IAS 38?
At cost, which includes the purchase price and directly attributable costs of preparing the asset for intended use. Non-monetary exchanges are measured at fair value (asset given up first).
What are the two measurement models for intangible assets after recognition under IAS 38?
Cost Model: Cost less accumulated amortization & impairment.
Revaluation Model: Fair value (only if reliably measurable), less amortization & impairment. Gain to OCI, loss to profit/loss.
How should intangible assets with definite lives be amortized?
Amortized over their useful life.
When should indefinite life intangible assets begin to be amortized under IAS 38?
Only when determined to no longer have an indefinite life
What are the steps involved in determining impairment under IAS 36?
- Assess for indicators of impairment (each reporting period).
- Determine CGU or Asset Level.
- Determine if indicators are present.
- Estimate recoverable amount (if indicators are present).
- Recognize any required write-down and loss.
What are some examples of indicators of impairment under IAS 36?
-Significant decrease in market price.
- Adverse change in technological, market, economic, or legal environment.
- Carry amount > market capitalization.
- Obsolescence or physical damage.
- Cash flow issues.
How is recoverable amount determined under IAS 36?
It is the higher of:
Fair Value less costs to sell.
Value in use (discounted cash flow)
How is inventory valued under IAS 2
Valued at the lower of cost and net realizable value (NRV). NRV is the estimated selling price less cost of completion.
What is the basis for measuring non-monetary transactions under ASPE 3831?
Measured at the more reliably measurable fair value of the asset given up and the fair value of the asset received, unless:
- The transaction lacks commercial substance.
- The transaction is in exchange for a product or property held for sale in the ordinary course of business.
- Neither the fair value of the asset received nor the fair value of the asset given up is reliably measurable.
- The transaction is a non-monetary non-reciprocal transfer to owners.
What are the steps in the audit and assurance process?
Client acceptance and continuance.
Association.
Audit planning.
Risk assessment procedures.
Audit procedures.
Evidence.
Documentation.
Audit conclusions.
What are the threats to independence in auditing?
Self-interest.
Self-review.
Advocacy.
Familiarity.
Intimidation.
What safeguards can be put in place to maintain auditor independence?
Education & training.
Professional standards.
Policies & procedures.
Audit committee.
Personnel rotation.
What are the steps involved in audit planning
Gain an understanding of the client.
Perform analytical procedures.
Determine ROMM (Risk of Material Misstatement) at the overall financial statement and assertion level.
Assess fraud risk.
Set materiality.
Determine the overall audit strategy.
What is materiality in auditing, and how is it set?
Materiality is the threshold for misstatements that could influence users’ decisions. It is typically set based on quantitative factors such as net income, total revenue, gross profit, total assets, and total equity. The chosen threshold is “reasonable.”
