Flashcards
CFE- Financial Reporting Flow
Cards in this deck (55)
- 1ASPE: Loyalty Points ProgramASPE1000.29
1. Definition of liability
2. Criteria to recognize:
a) Duty or responsibility entailing settlement of future transfer of assets
b) little to no discretion to avoid
3) obligating event already occurred - 2ASPE: Leases: Capital vs OperatingPrimary Indicators:
1. Transfer of ownership of asset (including BPO)
2. Lease term 75%+ of useful life
3. FV Payments > 90% FMV - 3ASPE3400 Revenue Recognition1. Ultimate Collection ASPE3400.4
2. Performance Achieved?
a) arrangement exists
b) delivery/services occured
c) sellers price fixed/determinable
3. Good: Performance Achievement Criteria ASPE3400.5
a) Significant R&R of ownership
b) reasonable measurement of consideration
4. Service: Performance Achievement ASPE3400.6
a) percentage of completion
b) completed contract - 4ASPE3400 Gross vs Net1. Entity principal or agent? ASPE3400.24
Principal: earning income at the end of the day
Agent: commission earner, collects on behalf of principal
2. Indicators of Principal:
a) responsibility for providing G/S
b) inventory risk
c) freedom to make prices
d) credit risk - 5ASPE3800 Government AssistanceGovernment assistance related to expenses of future income periods must be deferred and amortized to income as related expenses are incurred
- 6ASPE3061 PPEAllocate cost of significant separate components when practical, estimate of useful lives can be made
- 7HB1651 Foreign Currency TranslationsExchange gain/loss of reporting enterprise arising on translation or settlement of foreign currency item must be included in determination of net income for current period
- 8ASPE3064 Intangible Assets 1. Recognition FLOW 2. Internally Generated FLOW1. Definition ASPE3064.08
a) Identifiable
b) non-monetary asset
c) without physical substance
2. Recognition ASPE3064.21
a) future economic benefits
b) cost reliably measured
3. Internally Generated? ASPE3064.34
a) research phase
b) development phase
i. capitalization criteria (6)
ii. expense if not - 9IFRS 3 Business Combinations1. Definition
a) control of acquiree
b) Business has been purchased
2. Recognition- only identifiable assets
Identifiable: either meets contractual legal or separability criterion
3. Measurement @acquisition date FV - 10IFRS15 Revenue Recognition1. Identify Contract with Customer
2. Identify Separate Performance Obligations
3. Determine Transaction Price
4. Allocate transaction price to each Performance Obligation
5. Recognize Revenue when each obligation satisfied - 11IFRS15 Revenue Recognition: Identifying the contract with the customer criteriaa) approval
b) identify rights
c) identify payment terms
d) commercial substance
e) probable collection (intention and ability to pay)
*this can be skipped if official contract indicated - 12IFRS15 Revenue Recognition: Identifying separate performance obligations1. Distinct Goods/Services criteria: a) customer can benefit from G/S on its own or together
b) Entity's promise to transfer is separately identifiable
2. Series criteria
a) pattern of transfer criteria (each G/S meets criteria as PO satisfied over time, and same method used to measure progress) - 13IFRS15 Revenue Recognition: Determine transaction priceAmount of consideration expected to be entitled to in exchange for transferring promised G/S to customer
-excludes amounts collected on behalf of third parties (ie sales tax) - 14IFRS15 Revenue Recognition: Allocate transaction price to separate performance ObligationsAllocate according to stand alone selling prices
- 15IFRS15 Revenue Recognition: Determine when Performance Obligation is complete, revenue can be recognizedAsset transferred when customer obtains control of asset:
a) consumption of benefits
b) creation or enhancing of asset
c) no alternative use, no enforceable right to pay - 16IFRS15. B28 Warranties, Non-Refundable Price Premium1. Determine if the warranty has option to purchase separately: if so,= PO, recognized using IFRS15
2. If not, use IAS37 Provisions, considers factors:
a) warranty required by law
b) length of coverage period
c) nature of tasks entity promises to perform - 17IFRS16 Leases1. Identifying the lease
2. Determining the relevant lease term
3. Recognition of the lease @ commencement: right of use and lease liability
4. Recognition of the lease @ subsequently: right of use asset and lease liability - 18IAS2 Inventories1. Definition of inventory
a) held for sale in ordinary course of business
c) in the process of production for sale
c) in the form of materials and supplies to be consumed
2. Measurement of inventory
a) lower of cost and nrv - 19IAS16 PPE Recognition1. Definition
a) tangible item
b) held for use in production/supply of G/S
c) expected use of 1 period+
2. Recognition Criteria:
a) Probable future economic benefits
b) reliable measurement at cost
3. Measurement of PPE
a) purchase price
b) costs directly attributable to bringing to use
c) initial estimate of dismantling, removing, restoring - 20IAS16 PPE- Capitalize or Expense?Capitalized costs of PPE
-measured at cost
-NO financing costs unless qualifying asset (ie takes substantial period of time to get ready- ie more than a year)
-no repairs and maintenance
a) purchase price
b) costs directly attributable to bring asset to location and condition necessary for use
c) initial estimate of costs of dismantling and removing - 21IAS16 PPE - Componentization- Each part of PPE with cost significant in relation to total cost depreciated separately
- Allocate amount initially recognized to significant part,s separately depreciate - 22IAS16 PPE - DerecognitionCarrying amount derecognized when:
a) on disposal, or
b) no future economic benefits expected from use or disposal - 23IAS16 PPE - Non-Monetary Exchange1. Measurement of cost
a) lack of commercial substance, or
b) FV for both assets nonreliably measurable
2. Criteria to determination of commercial substance
a) configuration of cash flows
b) entity specific portion of operations changes
c) difference in 2 above significant relative to FV assets exchanged - 24IAS28 Investments in Associates and Joint Ventures: cost or equity method?1. significant influence? 20%+ and 5 criteria
If no=cost
If yes=equity - 25IAS36 Impairment of Assets1. Indication of impairment? internal & external factors
2. if yes, determine recoverable amount (scroll for FV-costs of disposal, value in use)
3. Is carrying value> recoverable amount? if so book impairment loss
4. Depreciation considerations for asset, impact - 26IAS37 Provisions, Contingent Liabilities, and Contingent Assets: measurement of a provision1. Definition for Provision
a) liability of uncertain timing/amount
b) liability criteria:
a) present obligation,
b) arise from past events,
c) settlement expected to result in outflow of economic benefits
2. Recognition of provision
a) present obligation from past event
b) probable outflow of resources
c) reliable estimate for amount of obligation
3. Measurement of provision: best estimate, expected value or midpoint (similar prob) - 27IAS37 Onerous Contract1. Definition of onerous contract
2. recognition criteria of Provision
a) present obligation from past event
b) probable outflow of resources
c) reliable estimate for amount of obligation
3. Measurement of onerous contract - 28IAS38 Intangible Assets1. Definition
a) identifiability
b) control
c) future economic benefits
2. Recognition
a) probability of future economic benefits
b) cost measured reliably - 29IAs38 Research and Development Costs1. Definition of intangible asset
a) identifiability
b) control
c) future economic benefits
2. Recognition criteria of intangible asset
a) probability of future economic benefits
b) cost reliably measurable
3. development cost criteria (6 criteria)
4. measurement - 30IAS41 Recognition of Biological Asset1. Definition
2. Recognition
a) control resulting from past events
b) probable flow of future economic benefits
c) FV or costs to sell can be measured reliably - 31SIC32 Website Development Costs1. Determine if website qualifies as intangible asset using IAS38
2. Determine which components of the website development costs can be capitalized using SIC32 - 32Situation: Impairment of AR (bad debt?)ASPE3956 Financial Instruments:
1. Indications of Impairment
2. Reduce carrying amount of asset to highest of:
a) PV cash flows expected by holding
b) amount by selling
c) amount by exercising right to collateral - 33Situation: Impairment of financial asset (ie investment in company)1. indications of impairment ASPE3856.16
2 Impairment: Reduce carrying amount, recognize impairment loss in net income ASPE3856.17 - 34Obsolete Inventories ASPE30311. Measurement: lower of cost and NRV
2. Recognition as expense: In period where related revenue recognized - 35Costs Capitalized/Expensed into inventory ASPE30311. Costs capitalized into inventory ASPE3031.11 all costs of conversion, purchase, incurred in bringing inventories to present location and condition
2. Costs NOT capitalized into inventory ASPE3031.16, 17: Other costs to extent incurred to bring to present location and condition, and specifically excluded costs - 36a) Cancellable sales arrangements b) Right of return arrangements c) Price protections/inventory credit arrangements d) Refundable fee for service arrangementsUse the ASPE3400 revenue standard with the paragraph 10 on seller's price being fixed or determinable
- 37Recognizing the revenue of government assistance1. Definition of gov assistance
2. capital or non-cap item?
3. if non-cap, current exp/rev added in net income
4. if cap, a) deducted from asset w dep on net amount, b) deferred and amortized to income on same basis as dep - 38Assets Held for Sale ASPE34751. Recognition Criteria ASPE3475.08 (6)
2. Measurement: lower of carrying amount or FV-costs to sell - 39When there is a change in useful life, which standard do you use to account for the accounting policy change?Use change in accounting estimate ASPE1506.23
- 40Bill and Hold Criteria under ASPE3400 (not in handbook- memorize)1. Goods identified as belonging to customer
2. Goods ready for shipment
3. Entity cannot use product for another customer
4. Reason is substantive
If criteria met, revenue can be recognized in advance of delivery - 41Difference in discount rate chosen for Leases- ASPE vs IFRSASPE: lower of incremental borrowing rate and rate implicit in lease
IFRS: rate implicit in lease, if not available, incremental borrowing rate - 42ASPE Capitalize or expense?Betterment: improves the service potential = capitalize.
Criteria constituting improvement of service potential:
-increase physical output
-lowering operating costs
-extend useful life
-improve quality of output - 43IFRS vs ASPE: Accounting policy choices for accounting for income taxesIFRS: deferred income tax method
ASPE: future income tax method, taxes payable method - 44When can a deferred income tax asset or liability be recognized?Only when probable that taxable profits will be available in the future to use against (cap loss must be used against cap gains)
- 45Asset Retirement Obligations- IFRS what standard to use1) Explain issue
2) Recognize Provision Criteria
3) Initial + subsequent measurement - 46ASPE: contingent liabilityAccrue when:
1) likely to occur (higher threshold than IFRS)
2) amount reasonably estimable
Measure: minimum of range if across range equally likely - 47Assets Held for Sale Classification IFRS53+6;
a) carrying amount principally recovered through sale transaction
b) available for sale in present condition
c) highly probable sale: 6 conditions in IFRS5.6,7,8 - 48Is the segment a discontinued op? IFRS?1. Definition of component: operations and cash flows can be clearly distinguished from rest of entity
2. Definition of discontinued op: component of entity a) has been disposed, or b) is held for sale
3. Criteria Held for sale (3+6)
4. Additional presentation criteria
5. Measurement - 49FLOW: Functional Currency IAS21Functional Currency: IAS21.9.9,10,11
Primary Factors:
a) influences sales prices
b) competitive forces and regulations
c) influences labour, material other costs
Secondary Factors
Additional Factors - 50ASPE3064 Impairment of Long Lived Assets1. Test for recoverability (events/changes in circumstance)
2. grouping Assets
2. Cash flow test for recoverability
3. Impirment loss recognized when carrying amount of long-lived asset not recoverable, exceeds FV - 51IFRS Principal vs AgentGross: if principal
Net: if agent
Definition B36
Indicators B37 - 52IFRS NMT1) can we use IFRS15?
2) 4 steps: * determine transaction price:
-FV of noncash consideration, if not reasonably estimable; indirectly by stand-alone selling price of G/S promised - 53IFRS Penalty variable consideration1. Variable consideration- valued at expected value or most likely amount
2. Only included to extent highly probable
3. Factors indicating highly probable - 54IFRS right of refund variable consideration (portion of price)1. Variable consideration- valued at expected value or most likely amount
2. Only included to extent highly probable
3. Factors indicating highly probable - 55IFRS right of RETURN variable consideration1. Variable consideration- valued at expected value or most likely amount
2. Only included to extent highly probable
3.Factors indicating highly probable
4. Refund liability recognized (if not highly probable)
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- Flashcards on CFE- Financial Reporting Flow, created by A H on 27/08/2019.
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- A H
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