Flashcards
Accounting standards for liabilities
Cards in this deck (9)
- 1Define a Liability as outlined in the "Conceptual Framework for Financial Reporting"A present obligation of the entity to transfer an economic resource as a result of past events.
- 2State the standards that relate to liabilitiesIAS 12 (Income Taxes)
IFRS 16 (Leases)
IAS 37 (Provisions, contingent liabilities & contingent assets)
IAS 10 (Events after the reporting period - 3Where is the current years tax liability recognised on the SPOL & SOFP?SPOL - After the "Operating profit" figure
SOFP - Current liability - 4Define a provisionA provision is a liability of uncertain timing or amount. E.G. A warranty is given by the seller where customers are covered for the cost of repairs for any manufacturing defects within a stated time period.
- 5Define a contingent liabilityA contingent liability is EITHER a possible obligation arising from past events whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events. OR a present obligation that arises from past past events but is not recognised because it is not probable that an outflow of economic benefits will be required to settle the obligation
- 6Define a contingent assetA contingent asset - E.G. a legal case taken out by the entity against a supplier, which is pending - is a possible asset arising from past events whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the entity's control.
- 7Define an adjusting event (IAS 10)Adjusting events provide evidence of conditions that exited at the end of a reporting period. If material, adjustments should be made to the amounts shown in the financial statements. I.E. - Trade receivables where a customer has become insolvent.
- 8Define a non-adjusting event (IAS 10)Non-adjusting events are indicative of conditions that arose after the end of the reporting period. No adjustment is made to the financial statements: instead, if material, they are disclosed by the way of notes which explain the nature of the event & where possible give an estimate of its financial effect.
- 9What is the five-step process to recognise revenue in accordance with the core principle of IFRS 15Step 1 - Identify the contract with a customer
Step 2 - Identify the performance obligations in the contract
Step 3 - Determine the transaction price
Step 4 - Allocate the transaction price to the performance obligations in the contract
Step 5 - Recognise revenue when a performance obligation is satisfied
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- Flashcards on Accounting standards for liabilities, created by Michael Carroll on 30/01/2025.
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- Michael Carroll
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