Ifrs

Front 1

Which retrospective applications are mandatorily prohibited under ifrs 1?

Back 1

IFRS 1 prohibits retrospective application in relation to the following:>> Estimates>> Derecognition of financial assets and financial liabilities>> Hedge accounting>> Non-controlling interests

Front 2

What is the ifrs procedures for entities which applied ifrs in the previous reporting period?

Back 2

The entity must either apply IFRS 1 or else apply IFRSs retrospectively in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors.

Hint 2

IFRS 1

Front 3

Which type of share based transactions fall under ifrs 2?

Back 3

When an entity receives goods or services and settles its obligations by payment of share or cash settlement which value is dependent on the entities share price or the seller has the option to choose the receipt of payment by either cash or equity instruments.

Front 4

How to recognise share based payment under ifrs 2?

Back 4

The goods or services are organised only when they are acquired or received.

>> Recognise an increase in equity for an equity-settled share-based payment transaction>> Recognise a liability for a cash-settled share-based payment transaction>> When the goods or services received or acquired do not qualify for recognition as assets, recognise an expense.

Front 5

How to measure equity settled transactions value with employees according to ifrs 2?

Back 5

It is measured at the fair value of the equity instruments granted at grant date. The fair value is never remeasured and it is recognised over the vesting period.

Front 6

How to measure value of equity settled transactions with non employees according to ifrs 2?

Back 6

It is measured at the fair value of the goods or services received at the date the entity obtains the goods or receives the service. If this fair value cannot be measured reliably then the value of the equity instruments granted for payment is used instead.

Front 7

How to measure share based payment under ifrs 2 where choice of settlement is present?

Back 7

If the entity has the choice of whether to settle in cash or by issuing equity instruments, the entity shall determine whether it has a present obligation to settle in cash and account for the transaction as cash-settled or if no such obligation exists, account for the transaction as equity-settled.

Front 8

How to treat cash based share based payment according to ifrs 2?

Back 8

>> Measure the liability at the fair value at grant date>> Re-measure the fair value of the liability at each reporting date and at the date of settlement, with any changes in fair value recognised in profit or loss for the period>> Liability is recognised over the vesting period (if applicable).

Front 9

What is vesting condition in share based payment?

Back 9

Performance condition – requires counterparty to:

>> complete a specified period of service (i.e. service condition)

>>fulfil specified performance targets while rendering the service.

The period of service cannot extend beyond the end of the service period and may start before commencement of the service period if it is not substantially before the start of the service period

Front 10

Which entity should recognise group settled share based payment?

Back 10

The entity receiving the goods recognises them, regardless of which entity settles the transaction, this must be on an equity-settled or a cash-settled basis assessed from the entities own perspective (this might not be the same as the amount recognised by the consolidated group)

Front 11

In which cases ifrs 3 does not apply?

Back 11

Ifrs 3 does not apply to joint arrangements, acquisition of assets which is not considered business and a combination of entities or business under common control.

Front 12

How to treat acquisition cost under ifrs 3 business combination?

Back 12

Acquisition cost:

>> Cannot be capitalised, must instead be expensed in the period they are incurred>> Costs to issue debt or equity are recognised in accordance with IAS 32 and IFRS 9.

Front 13

How to account for acquired assets, liabilities and NCI interests under ifrs 3 (business combination)?

Back 13

■ The acquired assets and liabilities are required to be measured at their acquisition-date fair values.

■ NCI interests are measured at acquisition-date fair value or at the NCI’s proportionate share in net assets

Front 14

How to treat gain from bargain purchase under ifrs 3 (business combination)?

Back 14

A gain from burgain purchase is immediately recognised in profit or loss.

Front 15

How to account for step acquisition under ifrs 3 (business combination)?

Back 15

At the date The Entity takes control, all of its previous equity Holdings are remeasured at fair value at the date of acquisition. Any gain or loss resulting from this re-measurement is recognised in profit loss statement.

Front 16

Which accounting method is used for acquisition where no transfer of consideration takes place?

Back 16

Acquisition method for business combination is used in these circumstances. Examples of these circumstances are minority voting rights are lapsed, Aquarer and aquaree combines business by contract alone etc.

Front 17

What is fair value hierarchy in ifrs 7 financial instrument disclosure?

Back 17

All financial instruments measured at fair value must be classified into the levels below (that reflect how fair value has been determined):Level 1: Quoted prices, in active marketsLevel 2: Level 1 quoted prices are not available but fair value is based on observable market dataLevel 3: Inputs that are not based on observable market data.

Front 18

For level 3 FV method which disclosures are required under ifrs 7 financial instruments disclosure?

Back 18

For level 3, a reconciliation between opening and closing balances, incorporating; gains/losses, purchases/sales/settlements, transfers and significant changes in fair value due to changes in single or multiple inputs in a reasonably alternative model.

Front 19

What are the disclosure requirement for statement of financial position either in note or on the face of a statement under ifrs 7 financial instrument disclosure?

Back 19

>> Total carrying value of each category of financial assets and liabilities on face of the statement of financial position or in the notes

>> Financial liabilities designated as at fair value through profit and loss

>> details of financial assets pledged as Collateral & Collateral held

>>Reconciliation of allowance account for credit losses.>>Compound financial instruments with embedded derivatives>>Details of defaults and breaches of loans payable

Front 20

What are the disclosure requirement for statement of comprehensive income under ifrs 7 financial instrument disclosure?

Back 20

>> Gain or loss for each category of financial assets and liabilities in the statement of comprehensive income or in the notes>> Total interest income and interest expense (effective interest method)>>Fee income and expense>>Interest on impaired financial assets>>Amount of impairment loss for each financial asset.

Front 21

What are the disclosure requirement for the nature and extent of risks arising from financial Instruments under ifrs 7?

Back 21

Both qualitative disclosure like Exposure to risk and how it arises, objectives and processes for risk management and quantitative risks such as quantitative data about exposure to risk and risk concentration are required.

Front 22

What are the liquidity risk disclosure requirement under ifrs 7?

Back 22

■Maturity analysis for financial liabilities that shows the remaining contractual maturities■Time bands and increment are based on the entities’ judgement■How liquidity risk is managed.

Front 23

What are the credit risk disclosure requirement under ifrs 7?

Back 23

■Maximum exposure to credit risk without taking into account collateral■Collateral held as security and other credit enhancements■Information of financial assets that are either past due (when a counterparty has failed to make a payment when contractually due) or impaired■Information about collateral and other credit enhancements obtained.

Front 24

What are the market risk disclosure requirement under ifrs 7?

Back 24

A sensitivity analysis showing interdependencies between risk variables which is used manage financial risks or

A sensitivity analysis (including methods and assumptions used) for each type of market risk exposed, showing impact on profit or loss and equity

Front 25

What are the scope of ifrs 8 operating segments?

Back 25

IFRS 8 applies to the annual and interim financial statements of an entity. It applies to the separate or individual financial statements of an entity and to the consolidated financial statements of a group with a parent who is or in the process of being a public limited company.

Front 26

What are the quantitative threshold for the disclosure of operating segments under ifrs 8?

Back 26

An Operating segment will be reported if it's reported revenue (including inter segment transfer) comprises 10% or more of the company's total revenue.

If the segment's reported profit or loss is 10% or greater than the combined reported profit (only profit making segments) or combined reported loss of other operating segments.

If the segment's asset is 10% or more of the company's combined assets of all operating segments.

Front 27

What to do in cases where the total revenue of reported segments comprise less than 75% of the company's total revenue?

Back 27

In these cases, additional segments will be reported until the combined revenue from reported segments is at least 75% of the company's total revenue.

Hint 27

IFRS 8

Front 28

What are the aggregation criteria for two or more operating segments under ifrs 8?

Back 28

They can be aggregated only if the operating segment's nature of products, service and processes, type or class of customers, distribution method and regulatory environment are similar

Front 29

What are the major disclosures required under ifrs 8 operating segments?

Back 29

■ A measure of profit, loss & total Assets of each reported segments if it is regularly provided to CODM (responsible for strategic decision making & resource allocation) and other information if specific amounts reported to CODM.

■Description of the operating segments that have been aggregated.

■Operating segment information disclosed must be reconciled back to IFRS amounts disclosed in the financial statements

■Revenues from external customers, both attributed to the entity’s country of domicile and attributed to all foreign countries and location of the entities non current assets.

Front 30

When an entity needs to provide information on the extent of it's reliance on a major customer under ifrs 8 operating segments?

Back 30

If revenues from transactions with a single external customer amount to 10% or more of an entity’s revenues, the entity discloses that fact.

Front 31

What are classified as discontinued operation in IFRS 5?

Back 31

These are:

>>Represents a separate major line of business or geographical area>>Is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations>>Is a subsidiary acquired exclusively with a view to resale.

Front 32

What is the accounting treatment in cases where a non current asset in a group meets the measurement requirements under ifrs 5?

Back 32

If a non-current asset in the group meets the measurement requirements in IFRS 5, then IFRS 5 applies to the group as a whole. The entire group is measured at the lower of its carrying amount and fair value less costs to sell

Front 33

What are the scopes of ifrs 5?

Back 33

It is applied when classified assets are:

held for sale; orheld for distribution to owners.

It is only considered if its carrying amount will be principally recovered from the sale of assets, not continuing use or is abandoned.

Non-current assets to be abandoned cannot be classified as held for sale.

Hint 33

When is this considered e.g held or distribution to someone

Front 34

What are excluded from measurement requirement under ifrs 5?

Back 34

Transactions which fall under IAS 19, IAS 39, IAS 40, IAS 41 and IFRS 4 are excluded.

Front 35

For which types of assets ifrs 5 is used?

Back 35

IFRS 5 is used for all non current assets except the excluded treatments mentioned in IFRS 5. If the non current asset or disposal group falls under the measurement criteria of ifrs 5 then it is reclassified as current asset.

Front 36

When and how discontinued operations are classified under ifrs 5?

Back 36

>>Classification as a discontinued operation depends on when the operation also meets the requirements to be classified as held for sale>>Results of discontinued operations are presented as a single amount in the statement of comprehensive income. An analysis of the single amount is presented in the notes or in the statement of comprehensive income

Front 37

How to get subsequent increase in fair value after impairment under ifrs 5?

Back 37

Subsequent increases in fair value cannot be recognised in profit or loss in excess of the cumulative impairment losses that have been recognised with this IFRS or with IAS 36 Impairment of Assets

Front 38

When an asset is recognised at amortised cost under ifrs 9?

Back 38

Asset is measured at amortised cost if both of the following conditions are met:>>the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and>>the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Front 39

When an asset is recognised at fair value through other comprehensive income under ifrs 9?

Back 39

Financial assets are classified and measured at fair value through other comprehensive income if they are held in a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets.

Available only for investments in equity instruments (within the scope of IFRS 9) that are not held for trading.

Front 40

When an asset is recognised at fair value through profit and loss under ifrs 9?

Back 40

Any financial assets that are not held in one of the two business models mentioned are measured at fair value through profit or loss.

Front 41

What is the effect of changes in an entity's business model of its financial assets management on ifrs 9?

Back 41

When, and only when, an entity changes its business model for managing financial assets it must reclassify all affected financial assets.

Front 42

How financial liabilities are organised and measured under ifrs 9?

Back 42

All financial liabilities are measured at amortised cost, except for financial liabilities at fair value through profit or loss. Such liabilities include derivatives (other than derivatives that are financial guarantee contracts or are designated and effective hedging instruments), other liabilities held for trading, and liabilities that an entity designates to be measured at fair value through profit or loss.After initial recognition, an entity cannot reclassify any financial liability.N.B. An entity may, at initial recognition, irrevocably designate a financial asset or liability irrespective of its usual treatment if the recognition results in significantly reduced inconsistency and/or more relevant information.

Front 43

What is the first stage of recognition in financial instruments' impairment measurement under ifrs 9?

Back 43

Stage 1—as soon as a financial instrument is originated or purchased, 12-month expected credit losses are recognised in profit or loss and a loss allowance is established. This serves as a proxy for the initial expectations of credit losses. For financial assets, interest revenue is calculated on the gross carrying amount (ie without deduction for expected credit losses).

Front 44

What is the second stage of recognition in financial instruments' impairment measurement under ifrs 9?

Back 44

Stage 2—if the credit risk increases significantly and is not considered low, full lifetime expected credit losses are recognised in profit or loss. The calculation of interest revenue is the same as for Stage 1.

Front 45

What is the third stage of recognition in financial instruments' impairment measurement under ifrs 9?

Back 45

Stage 3—if the credit risk of a financial asset increases to the point that it is considered credit-impaired, interest revenue is calculated based on the amortised cost (ie the gross carrying amount less the loss allowance). Financial assets in this stage will generally be assessed individually. Lifetime expected credit losses are recognised on these financial assets.

Front 46

What are the three types of hedging relationships under ifrs 9?

Back 46

These are:

>>fair value hedge: a hedge of the exposure to changes in fair value of a recognised asset or liability or an unrecognised firm commitment

>>cash flow hedge: a hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with all

>>hedge of a net investment in a foreign operation as defined in IAS 21

Front 47

What indicates possible credit risk increase which leads to progression from stage 1 to stage 2 in impairment model under ifrs 9?

Back 47

When payments are 30 days past due, a financial asset is considered to be in stage 2 and lifetime expected credit losses would be recognised unless the entity has reasonable information that indicates the credit risk has not increased.

Front 48

What is the simplified approach for impairment recognition under ifrs 9?

Back 48

IFRS 9 allows entities to apply a 'simplified approach' for trade receivables, contract assets and lease receivables. It is always used for these mentioned assets, for other assets the choice is optional. The simplified approach allows entities to recognise lifetime expected losses on all these assets without the need to identify significant increases in credit risk.

Front 49

How subsequent measurements are done for debt instruments under ifrs 9?

Back 49

>>Fair value, with all gains and losses recognised in other comprehensive income>>Changes in fair value are not subsequently recycled to profit and loss.