Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
28 Cards in this Set
- Front
- Back
- 3rd side (hint)
|
CRITERIA FOR NON-CURRENT ASSETS HELD FOR SALE |
1. It is available for immediate sale in its present condition. 2. Management commits to a plan to sell 3. active program to locate a buyer 4. actively marketed to a sale at a price that is reasonable in relation to its FMV 5. Sale is highly probable and is expected to occur within 1 year 6. actions required to complete the plan indicate that it is unlikely that they will withdraw |
six factors |
|
|
What is the criteria for determining discontinued operations |
1. A component of an entity that has been disposed of or is classified as held for sale: a. represents a major line of business b. single co-ordinated plan to dispose c. subsidiary acquired with view to resale.
|
|
|
|
What is the criteria for an Accounting Policy change & how do you apply it |
1. Required by IFRS 2. If it results in the f/s providing reliable and more relevant information
Apply retroactively unless it is impracticable to do so |
|
|
|
What is the criteria for a change in Estimate and how is applied? |
A change in an estimate occurs when changes in circumstances on which the estimate is based on new information or more experience
Apply in period of the change and then prospectively |
|
|
|
How do you apply errors |
Apply retrospectively |
|
|
|
In construction contracts what are the types contracts you can use to recognize revenue |
1. Fixed price contract (4 criteria must be met) 2. Cost plus contract (2 criteria must be met) |
Use percentage of completion method to recognize revenue and expenses when the out come of a construction contract can be estimated reliably. |
|
|
When outcome of a construction contract can be estimated reliably what are conditions needed to use Fixed price contract |
1. Total contract revenue can be measured reliably 2. It is probable that the economic benefits associated with the contract will flow to the entity 3. Both the contract costs to complete the contract and the percentage complete can be measured reliably 4. contract costs attributable to the contract can be clearly identified and measured reliably so that actual contract costs incurred can be compared with prior estimates |
4 criteria must be met |
|
|
When outcome of a construction contract can be estimated reliably what conditions are needed to use Cost plus contract |
1. it is probable that the economic benefits associated with the contract will flow to the entity 2. the contract costs attributable to the contract, whether or not specifically reimbursable, can be clearly identified and measured reliably |
2 criteria must be met |
|
|
What happens when the outcome of a construction contract cannot be estimated reliably |
-recognize revenue only to the extent of contract costs incurred that is probable will be recoverable
-recognize contract costs as an expense in the period in which they are incurred. |
|
|
|
How do you account for non-monetary transactions |
-Measure cost at fair value -IF exchange transaction lacks commercial substance or the fV of neither the asset received/given up is reliably measurable -- MEASURE AT CARRYING VALUE OF ASSET GIVEN UP |
|
|
|
What is commercial substance |
Commercial substance exists when: i. RISK, TIMING, & AMOUNT of the cash flows of the asset differ from that of the asset transferred ii. Entity-specific value of the portion of the entity's operations affected by the transaction changes as a result of the exchange iii. Difference in either of the above factors is significantly relative to the FV of the assets exchanged |
Commercial substance exists when: |
|
|
What should you consider when dealing with PP&E |
1. Impairment 2. De-recognition: -carrying value (asset cost and related acc. amort) is taken off b/s: i. on disposal, or ii. when no future economic benefits are expected from its use or disposal |
|
|
|
What are the criteria to determine finance lease |
- Transfer of ownership (BPO) - Lease is for the major part of the economic life of the asset - PVMLP amounts to substantially all of the FV of the leased asset - Leased asset are specialized nature
SECONDARY FACTORS - IF the lessee can cancel the lease, the lessor's losses are borne by the lessee - gains/losses from FV of residual accrue to the lessee -lessee has the ability to continue the lease for a second period |
Four factors only need to one to classify as finance lease + secondary factors |
|
|
Sale of goods are recognized as revenue when? |
- Entity has transferred to the buyer the significant risks and rewards of ownership
- Entity retains neither continuing managerial involvement to the degree of ownership
-amount of revenue can be measured reliably
-probable that the economic benefits will flow through the company
-costs incurred can be measured reliably |
5 factors must be present in order to recognize revenue |
|
|
Rendering of service when can you recognize revenue?? |
1. amount of revenue can be measured reliably
2. probable that future economic benefits will flow through the entity
3. Stage of completion can be measured reliably
4. Costs incurred and costs to complete the transaction can be measured reliably |
All 4 factors must be met |
|
|
Government grants, including non-monetary grants at FV, can not be recognized until when? |
1. Entity will comply with the conditions attaching to them; and 2. grant will be received |
|
|
|
Government grants related to capital assets can be accounted for: |
1. deduct from the cost of the capital asset 2. set up as deferred income on b/s and amortize on the same bases as depreciation |
2 ways to set up government grants related to capital assets |
|
|
How do you treat repayment of government grants |
Treat as a change in accounting estimate, prospectively |
|
|
|
How do you determine asset maybe impaired |
Asset is impaired when its carrying amount exceeds its recoverable amount |
Assess impairment at the end of each reporting period. |
|
|
How do you determine recoverable amount? |
-Recoverable amount = highers of an assets FV - cost to sell or its value in use
-value in use = discounted future cash flows derived from continuing use of the asset and from its ultimate disposal |
|
|
|
What are the criteria needed to determine a provision? |
Recognize when: 1. an entity has a present obligation as a result of a past event.
2. it is probable that an outflow of resources will be required to settle the obligation
3. a reliable estimate can be made of the amount |
provision - a liability of uncertain timing or amount |
|
|
How do you apply a change in a provision? |
- Adjust prospectively - if criteria for a provision no longer met, reverse the provision |
|
|
|
how do you determine a contingent liability |
- a possible obligation that arises from past events, or
- a present obligation that arises from past events but is not recognizable b/c i. it is not probable that an outflow of resources will be required to settle the obligation ii. the amount of the obligation cannot be measured reliably |
|
|
|
How do you identify an intangible asset |
1. Identifiability i. it is seperable (capable of being sold, transferred, licensed, rented/exchanged. ii. It arises from a contractual/other legal right
2. Control - an entiy controls an asset if it has power to obtain the future economic benefits, by restricting access of others to those benefits (copy rights, patents)
3. Future economic benefits will flow through the entity |
Intangible asset - an identifiable non-monetary asset |
|
|
How do you recognize an intangible asset |
Recognize if: -Expected future benefits are probable -Cost can be measured reliably |
Remember must assess if it is an intangible asset by Identifiability, Control, Future economic benefits |
|
|
What are the six criteria for capitalizing development costs |
1. Technical feasibility 2. Intention to complete it 3. Ability to use it or sell it 4. Probable future economic benefits will be generated 5. Availability of adequate technical, financial and other resources 6. Ability to measure reliably the expenditures |
|
|
|
what internally generated costs should be expensed |
- research costs - internally generated brands, mastheads, publishing titles, customer lists -start-up activities -training activities -advertising and promotion -relocation/reorganization |
|
|
|
What are the criteria for using financial assets/liabilities at FVTPL |
-it is acquired principally for the purpose of selling or repurchasing -part of a portfolio that are managed together for short term profit taking -it is a derivative |
3 criteria only needs to meet 1 |
