Revision Flashcards
What are the five elements of conceptual framework?
- Assets
- Liabilities
- Income
- Expenses
- Equity
Definition of income
An increase in assets or decrease in liabilities in an entity that causes an increase in equity other than an increase brought about by contributions by a shareholder
Definition of expense
A decrease in assets or increase in liabilities that causes a decrease in equity other than by a distribution of equity claims to holders
Value in use definition for assets
The sum total of all the cash inflows expected to be received from an asset in the future
Fulfillment value definition for liabilities
The present value of a liability. The cash total expected to fulfil a liability.
Current cost definition
the cost of replacing an asset or fulfilling a liability with an equivalent version today
Current value definition
The fair value. The cost of selling the asset under ordinary market conditions
Acronym for whether development expenditure can be capitalised
PIRATE
Probably future economic benefit
Intention to Complete
Resources adequate to complete, use or sell
Ability to use or sell asset
Technologically feasible to complete and use
Expenses can be measured
net assets formula
Total assets - current liabilities
net current assets formula
current assets - current liabilities
another name for working capital cycle
cash operating cycle
Process to recognise lease asset in financial statements
Three ways of calculating current value
fair value - price obtained less selling costs
- value in use - all the cash flows that are expected to flow from an asset
- Current cost - the cost of an equivalent item if you had to replace it
Difference between statutory accounts and annual report and accounts?
Stat accounts - for filing with companies house
annual report and accounts (corporate report) - for distributing to shareholders
Formula for recoverable amount of an asset
the higher of an asset’s fair value less costs to sell and the value in use
