Topic Pages Module Definition/ Description/ Notes
Module 1: The role and importance of Finanical Reporting
Accounting for share based payments
Chapters included within Conceptual Framework 12 1 Table 1.2
Disclosures 52 1 -The role and purpose of disclosures
-Criteria for determing whether disclosure is required
-The importance of a consistent approach to disclosure
Employee Benefits 43 1 1) Short Term Employee benefit
2) Long Term Employee benefit
Investment Property (IAS40) 49 1 Recognize using Fair Value Model/ Cost Model
Lease 38 1 Short Term lease and low value lease to be exempt from Lease standard.
Long Service Leave 46 1 With a calculation example of LSL on p.47
Professinoal judgement 51 1
Qualitative characteristics of useful financial information 15 1 - Relevance -> Materiality
- Faithful representation
- Enchancing qualitative characteristics
Recognition criteria for the lessor 41 1 1) Operating lease / Finance lease
Revision of accounting estiamte and correction of errors 72 - Prospective adjustments or Retrospective adjustments
Main Point to Focus
Lease: Initial Measure of "Right of use" asset Measure at cost (para.23), there is a table show how to calculate the lease liability on the ppt slips
Lease: Initial Measure of "Lease Liability" asset 38 1 Measure the PV of the lease liability (para 26)
IFRS 16, para. 26
Going Concern 15 1 IAS 10 does not permit an entity to prepare its financial statements on a going concern basis if
management determines after the reporting period that it either intends to liquidate the entity or cease
trading, or has no realistic alternative but to do so (IAS 10, para. 14).
Fair Value Measurement 32 1 IFRS 13 establishes a hierarchy for the measurement of fair value:
Level 1: Quoted market prices for identical assets/ liabilities
Level 2: Estimated using a model with no significant unobservable inputs
Level 3: Use best available information on assumptions market participants would use to value an A/L
Measurement of elements of F/S 27 1 - Historical costs
- Amortised costs
- Fair value
- Current costs
- Fair value less costs of disposal
- Net realisable value
- Value in use
Share based payments 48 1 1. Cash settled
2. Equity settled
Module 2: Presentation of financial statement
,IAS 1: Presentation of Financial Statements 61-67 2 Complete set of FS/ Fair presentation/ Going concern/ Accrual basis/ Materiality/ Offsetting/
Comparative information/ Consistency of presentation
- the requirement of IAS 1 also apply to interim financial report (IAS34 para5)
IAS 8: Accouting Policies, Changes in Accounting Estimate and Errors 68 2 Select and application of accounting policies/ Consistency/ Changes/ Disclosure of changes in
accounting policies
Changes in accounting estimates and Error
IAS 10: Events after the Reporting Period 2 Adjusting events after the reporting period/ non-adjusting events/ Dividends/ Disclosures
- Disclosure (for non-adjusting event) required para. 21
- Notes to financials includes: a) nature of the event. b) estimate of financial effect.
IAS 2: Inventory 2 In terms of IAS 2, inventory must be valued at the lower of cost or net realisable value.
If the current value can be lower than the purchase cost of the inventory, it usually tells that the
company is using NRV to its inventory cost.
Adjusting/ non-adjusting event 75-77 2 It occurs between the reporting date 30 June and the date before BOD sign off the financial report (30
Sep).
- Adjusting event: Adjust the F/S
- Non-adjusting event: Make the disclosure in the notes.
Examples in books or study notes
Changes in Accounting estimate 72 2 According to IAS 8, a change of accounting estimate cannot be recognised retrospectively. It must be
recognised prospectively by including it in the profit or loss in:
Changes in Accounting Policies 70 2 IAS 8 permits an entity to change its accounting policies only if the changes:
- is required by an IFRS; or
- Voluntary Change (that to provide more relevant and reliable information.)
Management should first determine the applicability of IFRSs before selecting accounting policies
appropriate for their entity.
Components of Other Comprehensive Income 83 2 Other comprehensive income = Items of income and expense not recognised in profit or loss as
required or permitted by other IFRSs (para. 7)
IAS 1 states that the components of other comprehensive income include: P.83
(Read the book for examples)
Exceptions that include in the OCI If items satisfy the below means go into OCI
- IAS 8 (correction of errors)
- IAS 16+38 (revaluation gain/ surplus)
- IAS 19 (defined benefit plan)
- IAS 21 (gain or loss from translating foreign operation
- IFRS 9 (specific inquiry to be include into OCI)
Foreign operation (P&L, OCI) 85 2 Reclassification adjustment at disposal
Read the study notes
Line item discloses in Profit and Loss 86 2 Examples in the books P.86
(Item not in the list = is not required to disclose)
Line item in Statement of Financial Position 94 2 Examples in the books P.94 or study notes
,Material Errors 73 2 IAS 8 acknowledges that an error could include mathematical mistakes, mistakes in applying
accounting policies, oversights or misinterpretations of facts or fraud (IAS 8, para. 5).
The error must be corrected by either:
(a) restating the comparative amounts for the prior period(s) presented in which the error occurred; or
(b) if the error occurred before the earliest prior period presented, restating the opening balances of
assets, liabilities and equity for the earliest prior period presented (IAS 8, para. 42).
In other words, IAS 8 requires material errors relating to prior reporting periods to be corrected
retrospectively.
OCI: General Entries for revaluation In the study notes, GL for common examples like:
- Asset Revaluation increments/ loss
- unrealized gains and loss
- actuarial gains and loss
- unrealized foreign exchange gains/ loss
Offsetting 66 2 Examples of offsetting
Exceptions: it is not considered to offsetting as it refers to 'measuring assets net of valuation
allowances' IAS 1, para. 33. like net of allowance of doubtful debt or inventory net of obsolescence
allowances.
Segement Reporting 63 2 - IFRS 8 required disclosure
- Operating segment
Statement of cash flows This reports on performance on a cash basis. It includes cash inflows and outflows for the period and
helps users assess the entity’s ability to generate cash flows.
Statement of changes in equity 91 2 This shows other changes in net assets for an entity. This statement discloses changes in each
component in equity and reconciles the opening and closing balance of each component.
Statement of financial position This provides information about the financial position of the entity. It comprises assets, liabilities and
equity items.
Main Point to Focus
Statement of profit or loss and other comprehensive income: 84 This reports on performance on an accrual basis. It includes revenues, expenses and items of other
(2.6) comprehensive income.
- As per IAS 1 para 10, there are 2 approaches to do total comprehensive income statement
- single statement approach
- two statements approach
Calculation - Cash flow in Opearting activities 102 In the study notes, see the Formula method
Common methods adopted on how to prepare a statement of cash flows
Calculation - Investing activities cash flow Purchase of PPE:
= O/P PPE - historical cost of asset sold - C/B PPE
Proceeds from Sale of PPE
= asset amount sold
Loan to CEO
= C/B Loan to CEO - O/B Loan to CEO
- If positive, outflow increase (loan to director)
- If negative, inflow increase (as CEO repaid the loan)
, Calculation - Financing cash flow Three common cf from financing activities:
Bank loan
= (Opening balance of borrowings - closing balance of borrowings)
- A negative value indicates the loan balance has increased, cash inflow.
- A posiitive value means a repayment of borrowings, cash outflow
Dividend paid
= (O/P of final dividend payable + interim dividend paid + final dividend paid - C/B final diviend
payable)
Proceed Shares issued/ shares buy back
= O/P Share capital - C/B Share capital
- A positive value means new shares issued, cash inflow
- A negative value indicates payment for shre repurchase, cash outflow.
Module 3: Revenue from contracts with customers, Provisions, Contingent liabilities and assets
Constructive obligation 144 3 Defined in IAS 37
Contingent Assets 151 3 IAS 37
A contingent asset is defined in IAS 37 as: … a possible asset that arises from past events and whose
existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future
events not wholly within the control of the entity (IAS 37, para. 10).
The criteria of a contingent asset
- Possible Asset (>50% chance to happen)
- Uncertain future event
- Not within entity's control
IAS 37 para 4, probability greater than 50% is equal to probable
Probability Criterion
- if virtually certain > recognise as asset
- if probable > disclose as contingent asset
- if not probable > not action required
(In terms of IAS 37, when a contingent assets fails is not probable, no disclosure is required.
Therefore, the first option is correct.)
Contingent assets are not recognised in the statement of financial position but are disclosed in the
notes to the financial statements. Para. 31 of IAS 37 states "An entity shall not recognise a contingent
asset."
Module 1: The role and importance of Finanical Reporting
Accounting for share based payments
Chapters included within Conceptual Framework 12 1 Table 1.2
Disclosures 52 1 -The role and purpose of disclosures
-Criteria for determing whether disclosure is required
-The importance of a consistent approach to disclosure
Employee Benefits 43 1 1) Short Term Employee benefit
2) Long Term Employee benefit
Investment Property (IAS40) 49 1 Recognize using Fair Value Model/ Cost Model
Lease 38 1 Short Term lease and low value lease to be exempt from Lease standard.
Long Service Leave 46 1 With a calculation example of LSL on p.47
Professinoal judgement 51 1
Qualitative characteristics of useful financial information 15 1 - Relevance -> Materiality
- Faithful representation
- Enchancing qualitative characteristics
Recognition criteria for the lessor 41 1 1) Operating lease / Finance lease
Revision of accounting estiamte and correction of errors 72 - Prospective adjustments or Retrospective adjustments
Main Point to Focus
Lease: Initial Measure of "Right of use" asset Measure at cost (para.23), there is a table show how to calculate the lease liability on the ppt slips
Lease: Initial Measure of "Lease Liability" asset 38 1 Measure the PV of the lease liability (para 26)
IFRS 16, para. 26
Going Concern 15 1 IAS 10 does not permit an entity to prepare its financial statements on a going concern basis if
management determines after the reporting period that it either intends to liquidate the entity or cease
trading, or has no realistic alternative but to do so (IAS 10, para. 14).
Fair Value Measurement 32 1 IFRS 13 establishes a hierarchy for the measurement of fair value:
Level 1: Quoted market prices for identical assets/ liabilities
Level 2: Estimated using a model with no significant unobservable inputs
Level 3: Use best available information on assumptions market participants would use to value an A/L
Measurement of elements of F/S 27 1 - Historical costs
- Amortised costs
- Fair value
- Current costs
- Fair value less costs of disposal
- Net realisable value
- Value in use
Share based payments 48 1 1. Cash settled
2. Equity settled
Module 2: Presentation of financial statement
,IAS 1: Presentation of Financial Statements 61-67 2 Complete set of FS/ Fair presentation/ Going concern/ Accrual basis/ Materiality/ Offsetting/
Comparative information/ Consistency of presentation
- the requirement of IAS 1 also apply to interim financial report (IAS34 para5)
IAS 8: Accouting Policies, Changes in Accounting Estimate and Errors 68 2 Select and application of accounting policies/ Consistency/ Changes/ Disclosure of changes in
accounting policies
Changes in accounting estimates and Error
IAS 10: Events after the Reporting Period 2 Adjusting events after the reporting period/ non-adjusting events/ Dividends/ Disclosures
- Disclosure (for non-adjusting event) required para. 21
- Notes to financials includes: a) nature of the event. b) estimate of financial effect.
IAS 2: Inventory 2 In terms of IAS 2, inventory must be valued at the lower of cost or net realisable value.
If the current value can be lower than the purchase cost of the inventory, it usually tells that the
company is using NRV to its inventory cost.
Adjusting/ non-adjusting event 75-77 2 It occurs between the reporting date 30 June and the date before BOD sign off the financial report (30
Sep).
- Adjusting event: Adjust the F/S
- Non-adjusting event: Make the disclosure in the notes.
Examples in books or study notes
Changes in Accounting estimate 72 2 According to IAS 8, a change of accounting estimate cannot be recognised retrospectively. It must be
recognised prospectively by including it in the profit or loss in:
Changes in Accounting Policies 70 2 IAS 8 permits an entity to change its accounting policies only if the changes:
- is required by an IFRS; or
- Voluntary Change (that to provide more relevant and reliable information.)
Management should first determine the applicability of IFRSs before selecting accounting policies
appropriate for their entity.
Components of Other Comprehensive Income 83 2 Other comprehensive income = Items of income and expense not recognised in profit or loss as
required or permitted by other IFRSs (para. 7)
IAS 1 states that the components of other comprehensive income include: P.83
(Read the book for examples)
Exceptions that include in the OCI If items satisfy the below means go into OCI
- IAS 8 (correction of errors)
- IAS 16+38 (revaluation gain/ surplus)
- IAS 19 (defined benefit plan)
- IAS 21 (gain or loss from translating foreign operation
- IFRS 9 (specific inquiry to be include into OCI)
Foreign operation (P&L, OCI) 85 2 Reclassification adjustment at disposal
Read the study notes
Line item discloses in Profit and Loss 86 2 Examples in the books P.86
(Item not in the list = is not required to disclose)
Line item in Statement of Financial Position 94 2 Examples in the books P.94 or study notes
,Material Errors 73 2 IAS 8 acknowledges that an error could include mathematical mistakes, mistakes in applying
accounting policies, oversights or misinterpretations of facts or fraud (IAS 8, para. 5).
The error must be corrected by either:
(a) restating the comparative amounts for the prior period(s) presented in which the error occurred; or
(b) if the error occurred before the earliest prior period presented, restating the opening balances of
assets, liabilities and equity for the earliest prior period presented (IAS 8, para. 42).
In other words, IAS 8 requires material errors relating to prior reporting periods to be corrected
retrospectively.
OCI: General Entries for revaluation In the study notes, GL for common examples like:
- Asset Revaluation increments/ loss
- unrealized gains and loss
- actuarial gains and loss
- unrealized foreign exchange gains/ loss
Offsetting 66 2 Examples of offsetting
Exceptions: it is not considered to offsetting as it refers to 'measuring assets net of valuation
allowances' IAS 1, para. 33. like net of allowance of doubtful debt or inventory net of obsolescence
allowances.
Segement Reporting 63 2 - IFRS 8 required disclosure
- Operating segment
Statement of cash flows This reports on performance on a cash basis. It includes cash inflows and outflows for the period and
helps users assess the entity’s ability to generate cash flows.
Statement of changes in equity 91 2 This shows other changes in net assets for an entity. This statement discloses changes in each
component in equity and reconciles the opening and closing balance of each component.
Statement of financial position This provides information about the financial position of the entity. It comprises assets, liabilities and
equity items.
Main Point to Focus
Statement of profit or loss and other comprehensive income: 84 This reports on performance on an accrual basis. It includes revenues, expenses and items of other
(2.6) comprehensive income.
- As per IAS 1 para 10, there are 2 approaches to do total comprehensive income statement
- single statement approach
- two statements approach
Calculation - Cash flow in Opearting activities 102 In the study notes, see the Formula method
Common methods adopted on how to prepare a statement of cash flows
Calculation - Investing activities cash flow Purchase of PPE:
= O/P PPE - historical cost of asset sold - C/B PPE
Proceeds from Sale of PPE
= asset amount sold
Loan to CEO
= C/B Loan to CEO - O/B Loan to CEO
- If positive, outflow increase (loan to director)
- If negative, inflow increase (as CEO repaid the loan)
, Calculation - Financing cash flow Three common cf from financing activities:
Bank loan
= (Opening balance of borrowings - closing balance of borrowings)
- A negative value indicates the loan balance has increased, cash inflow.
- A posiitive value means a repayment of borrowings, cash outflow
Dividend paid
= (O/P of final dividend payable + interim dividend paid + final dividend paid - C/B final diviend
payable)
Proceed Shares issued/ shares buy back
= O/P Share capital - C/B Share capital
- A positive value means new shares issued, cash inflow
- A negative value indicates payment for shre repurchase, cash outflow.
Module 3: Revenue from contracts with customers, Provisions, Contingent liabilities and assets
Constructive obligation 144 3 Defined in IAS 37
Contingent Assets 151 3 IAS 37
A contingent asset is defined in IAS 37 as: … a possible asset that arises from past events and whose
existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future
events not wholly within the control of the entity (IAS 37, para. 10).
The criteria of a contingent asset
- Possible Asset (>50% chance to happen)
- Uncertain future event
- Not within entity's control
IAS 37 para 4, probability greater than 50% is equal to probable
Probability Criterion
- if virtually certain > recognise as asset
- if probable > disclose as contingent asset
- if not probable > not action required
(In terms of IAS 37, when a contingent assets fails is not probable, no disclosure is required.
Therefore, the first option is correct.)
Contingent assets are not recognised in the statement of financial position but are disclosed in the
notes to the financial statements. Para. 31 of IAS 37 states "An entity shall not recognise a contingent
asset."
