relevance

faithful representation

comparability

verifiability

timeliness

understandability

going concern

2010 - a resource controlled by entity as a result of past event and from which future economic benefits are expected to flow to the entity

2018 - a present economic resource controlled by the entity as a result of past events

2010 - present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity

2018 - a present obligation of the entity to transfer an economic resource as a result of past events

the item meets the definition of an asset or a liability;

it is probable that any future economic benefit associated with the asset or liability will flow to or from the entity;

the asset or liability has a cost or value which can be measured reliably.

relevant information about the asset or the liability and about any income, expenses or changes in equity;

a faithful representation of the asset or the liability and of any income, expenses or changes in equity;

information which results in the benefits exceeding the cost of providing that information.

OCI is a subject of P/L, OCE is a subject of SOFP, and valuation surplus is a secondary subject of OCE.

items that will not be reclassified to profit or loss

items that may be reclassified to profit or loss

Cost structure

include

exclude

FIFO or weighted, LIFO is not allowed

lower of NRV and cost, if NRV is lower, need to write-down, and recognized as an expense

Dr Expense Cr Inventory

Goodwill Impairment: Expense, Non-Cash Flow

Acquisition/Disposal A/JV: Investment Cash Flow

Distributed profits A/JV: non-cash flow

A/JV dividends: investment cash flow inflow

Dividends received from subsidiaries: not reflected in consolidated statements, reflected in individual statements, investment cash flow

Acquisition/Disposal of Subsidiaries: Investment Cash Flows

Consolidated Dowry of Holdings Subsidiaries: Operating Cash Flow

rules, principles applied by an entity in preparing and presenting financial statements

Accounting confirmation, presentation will change, and retrospective changes will be made in the current period and previous periods.

an adjustment of the carrying amount resulting from reassessing in the expected future benefit and obligations associated with the asset and liability

Don’t adjust the prospective, just change the future

omissions, misstatements

Human error, information is correct and can be traced If the information is wrong, resulting in human error, there is no need to trace it back and make corrections in the current period.

further evidence of condition existing at the year end

do not affect condition of the year end, but instead disclose

Because it is not a misstatement, IAS 10 allows whitewashing the report, but disclosure is required.

Major matters such as merging subsidiaries later in the period must be disclosed

accounting profit, taxable profit, tax expense, current tax

What is not paid in the current period and the previous period is regarded as liability, and what is paid in excess in the previous period is regarded as an asset. Because there will be an inflow of controllable and measurable economic benefits in the future, it meets the definition of an asset.

tax base

tax differences

Disadvantages: Land-like valuation surplus may never be sold and will never be taxed, so a large amount of DTL will be accumulated.

Together with current tax, they constitute the tax charge in SPL.

recognized as income or expense in P/L, except the transaction in OCI When the assets corresponding to DT enter P/L, DT also enters P/L. When the assets enter OCI, the corresponding DT also enters OCI.

Dr income expense Cr DTL

1. calculate carrying amount of assets and liabilities, except deferred tax assets and liabilities

2. calculate the tax base of assets and liabilities

3. calculate the temporary differences

4. deferred tax asset / liability = temporary differences @ tax rate

Listed in the non-current liablities column

fair value, unrealised losses, retained earnings, foreign subsidiaries, own currency for cost of the non-monetary asset differences between tax purposes

The above needs to be confirmed, but some do not need to be confirmed.

There is also rental in IAS 40, but here it is about the benefits of renting to employees at low prices. IAS 40 is about making money by renting a house.

smaller items should be classified as consumables and expensed, but capitalized when they are aggregated and treated as one.

large and complex should be broken down into composite parts and each depreciated separately

those disposal parts should be de-recognized and the new amount should be included in the cost of PPE

continued operation should be regarded as a replacement, but the daily inspection should be expensed

carrying amount = cost - Acc.depreciation - impairment loss

Watermark rule: The depreciation balance is used as the watermark. The amount of the reversal exceeding the original depreciation balance is counted as gain.

carrying amount = FV(at the date of revaluation) - subsequent depreciation - impairment

evaluation result is increased

evaluation result is decrease

when revaluation increase, the additional depreciation amount could be transfer directly to the OCI. when the asset is disposed, that RS in OCI can transfer directly to RE, so it won't influence the SPL

the depreciation model should be reviewed regularly (not annually, investment real estate is annually), any change should be accounted under IAS 8

RE or OCE can be selected and transferred to one of them with depreciation, or transferred in one lump sum when disposing.

short-term benefit, post-employment benefit(after retirement)

only paid and recognized when the events occur

only when the legal or constructive obligation to make payment as result of past events & reliable estimate of the obligation

Equivalent to five insurances and one housing fund

The difference between DC and DC DC, the amount of money given to the pool is fixed every year, and it doesn’t matter how much the pool gives to employees after that. DB, the money given to employees by the pool is fixed in the end, or the calculation method is fixed, but the money invested in the pool before is not fixed.

definition

measurement

Give benefits that can be measured in money

Action, give benefits that cannot be measured in money

The premise is to purchase and build a specific NCA, and then provide certain subsidies, which generally refer to long-term assets, and current assets are not counted.

other than related to asset complement

no difference in the treatment whether increase the asset or reduct the liabilities

at fair value

Two options are available

recognized as income over the period match them to the related cost, no future related costs are expected. It can only match the costs that have already occurred, and those that will occur in the future will not be counted.

Two options are available

against any unamortised deferred income; excess recognized as expense Make reverse entries and recognize the excess as expenses.

increase the carrying amount, the cumulative additional depreciation should be recognized to the date in absense of the grant Do the opposite, make up for the depreciation, and restore the PPE to its value without subsidy for depreciation.

Functional currency is the currency mainly used in an economy. For example, RMB is used in mainland China, HKB is used in Hong Kong, and USB can be used.

Base currency presented in financial statements

The conversion is only in the financial report, but the currency category of the asset is not actually converted.

I also changed the currency category of the asset.

monetary item-restate, using closing rate

non-montary item - not restate, using the rate at the date of transaction (historical rate), valuation or fair value, use the exchange rate used for valuation or fair value

use closing rate, the exchange differences are recognized in OCI

whether the subsidiary as an extension of parent or as a net investment

factor in determining

Use the same functional currency

Use different functional currencies

1. translate the closing SOFP use the closing rate at the end of the year

2. translate the SPLOCI use the average rate(dividend should be translated at the rate when dividend was paid)

3. Translate the net assets use the closing rate at the beginning of the year (for mergers, use the exchange rate on the day of merger). The earnings after the merger are divided into: daily operations & exchange gains and losses, which are presented separately.

4. calculate the total exchange difference closing net asset at closing rate (1. ) - opening net asset at opening rate (3. ) - retained profit as translated(less any dividend) (2. ) =exchange differences to OCI

Goodwill must be recalculated every year, which means assets and liabilities must be recalculated every year using the year-end closing exchange rate, and finally a new goodwill is obtained.

NCI

qualifying asset is the asset ready for use or sale, can be ppe, inventories, investment property

It doesn’t count when work is stopped, it counts when work starts.

Use the effective interest rate, not the nominal interest rate

When multiple borrowings are made, the interest rate is calculated using the weighted average of the borrowing amount.

It can be a person or an organization

person or person's family

entity

two venturers; two entities have a same director or key management; same suppliers, customers, distributor, government...

There is a fixed rate of dividend & mandatory redemption, so it is actually liability

spill into equity and liability

convertible debt

The transaction cost should be divided into two proportionally

In the equity category, profits and losses are not included in P/L, but in OCE.

cost of an entity deducted from equity

When the following conditions are met, fin. liability and asset will offset each other, leaving a balance: 1. legally enforceable right to set off the amount 2. intend to settle on a net basis

interest, dividends, losses and gains related to financial liability should be recognized in P/L

distribution to holder of equity instrument should be deducted from issuer's equity

transaction cost of an equity transaction should be deducted from equity

The recoverable amount is the HIGHER of:

The formula: first virtual and then real, first part and then whole

1. First check if there is any NCA that is clearly impaired, and then just subtract it first and that’s it.

2. First check the specific reduction amount of a single CGU, and make the reduction according to Goodwill→NCA in a single CGU. CA does not need to be reduced.

3. Looking at the overall group, there are still some items that are not included in the CGU, and the CGU will be depreciated according to unallocated goodwill→NCA.

fair value

partial

Finally, remember to assign to parent and NCI

The reversal shall not exceed the amount before impairment (such as the amount continuously calculated using the cost model)

Reversal goodwill is prohibited

is recognized as income

liability is a present obligation as a result of past events and settlement of liability is expected to result in an outflow of resources

provision is a liability of uncertain timing or amount

pot

percentage%

Amount$

one-off events

large populations

These can be used to calculate the provision amount of the warranty and legal claim

future operating loss is completely impossible

onerous contract is completely capable

Some restructuring is possible and some is not.

Repair cannot be done, wait until it happens to confirm the expense

Warranty function, use probability to estimate EV

environment can

self-insurance cannot

The main thing is to look at these applications! ! Specifically, the judgment must be made based on the three confirmed criteria. Is it possible, is there a legal obligation or constructive obligation, and can it be reliably estimated?

Mainly to compare with conceptual framework A contingent asset can only be confirmed if it is virtually certain, but a provision can only be confirmed if it is probable, which reflects caution.

identifiable: separatable /or/ arises from contractual or other legal right (the law can specifically protect a certain identifiable intangible asset)

if no meets the criteria, should be recognized as an expense and can not reverse to asset later

research should be recog. as expense

meet the PIRATE criteria should be capitalized

internally generated goodwill should be recog. as expense

Therefore, value-added must go to OCI! ! !

Amortize after reaching the expected usable condition. IAS 16 also requires depreciation after reaching the expected usable condition.

indefinite life

definite life

If there is no definite model, just use the straight-line model directly.

As PPE, inventories do not count

IAS 16 PPE is for renting out benefits to employees at low prices, and IAS 40 is for renting houses to make money.

just like IAS 16 PPE

annual review, gain or loss must be included in SPL Note: Investment properties are annual, while PPE is periodic, not annually.

can't change unless more appropriate presentation

investment property → ppe

investment property → inventories

inventories → investment property

The difference will be included in the current SPL

ppe → investment property

exception

= Fv - cost to sell (NRV)

gain or loss included in P/L

Only the purchase price can be recognized as asset capitalization, and other related costs must be expensed.

Mulberry fish ponds are an integral asset and will affect each other. The fish and mulberry trees do not need to be recognized separately. Instead, they are recognized as a whole and the changes are included in the P/L.

= Fv - cost to sell (NRV)

gain or loss included in P/L

The government provided saplings and tree planting skills...

If Fv is used, IAS 20 does not apply, and government subsidies are directly recognized as income when received.

If cost model is used, IAS 20 applies

a contract evidences a residual interest in the assets of an entity after deducting all of its liabilities, meaning assets - liabilities = equity

Rights granted to equity instruments, including unconditional and conditional

Refers to the day the contract granting the rights is signed, not the day the stock is traded

Intrinsic value e.g. the exercise price of share option is $15, with the fair value of $20, the intrinsic value is 20 - 15 = 5 ($)

Grant conditions

EPS is hit twice

right issue to original shareholders

Equity instrument equity acquisition, equity swap, use IFRS 3 business combination

Dr expense Cr Equity

The price of stock options is given, and then the option is purchased based on this price (grant date, which is relatively low). It only needs to be adjusted every year according to the increase or decrease in the number of people.

If the goods are received once, it will be confirmed in full; if it is received multiple times, it will be confirmed during the vesting period.

Dr Expense Cr Liabilities

Prices change every year, and fair value and exercise prices are not the same. Personnel and prices have to be adjusted every year by 1/3 2/3 3/3, and the annual differences are included in expense and liability.

The confirmation period is the same as equity

increase in Fv of share-based payment

cash-settled → equity-settled

Treated as done early

treat as an acceleration of vesting, recognize the full amount immediately

No more stocks, just use some money to send them away

It is regarded as all confirmed at one time, and then cash is used to repurchase the stock, and the difference is included in P/L

Look at the equity

Read the contract

an integrated set of activities and assets that is capable or being conducted and managed to provide a return, in the form of dividends, lower costs, or other economic benefit

ED: a set of assets that currently produces no outputs is only a business if it includes an organized workforce able to convert another acquired input into an output

the cost relates to the acquisition must be expensed, not regard as asset acquisition. In fact, there are only two transaction costs that need to be expensed, and the others are capitalized. The other one is the FVTP/L fee in IFRS 9. change

measure the contingent consideration at fair value at the acquisition date

After the merger, it cannot be adjusted, but before the merger, it can be adjusted (Fv actually changed before the merger, but it is discovered later that there is conclusive evidence and it can be changed within 12 months, the 12-month principle)

it's carrying amount will be recovered primarily through a sale transaction rather than through continuing use

disposal group is a group of assets that the entity intends to dispose in a single transaction

the criteria must be met: 1. the assets are available for immediate sale in its present condition 2. sale must be highly probable Highly probable corresponds to many conditions: Within 12 months, there is a reasonable price, there is a buyer, and the management has a formal plan to sell, not just talk.

classified as held for sale

no longer classified as held for sale

Assets and related liabilities are presented separately

ASSET: non-current asset xxx current asset xxx non-current asset classified as held for sale xxx EQUITY: xxx LIABILITIES: non-current liabilities xxx current liabilitiesxxx liabilities directly associated with non-current assets classified as held for sale xxx

separate major line of business / geographical area of ​​operation

is part of a single coordinated plan to dispose the above business

is a subsidiary acquired exclusively (specially) with a view to resale and the disposal involves loss of control

earn revenue and incur expenses

regular review by the chief operating decision maker CODM

financial information is available

revenue(internal and external)

all segments not reporting a loss (or all segments in loss if greater)

assets

Similar: nature of product, service, production process...

Even if it is less than 10% thresholds, add it in

any contract that gives rise to both a financial asset of one entity and a financial liability or equity instrument of another entity.

1.cash 2. equity instrument of another entity 3. contractual right to receive cash or another financial asset

1.contractual obligation 2. deliver cash or another financial asset to another entity 3. to exchange financial instruments with another entity under conditions that are potentially unfavorable

any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities is actually assets - liabilities

1. its value changes in response to the change in a specific underlying variable 2. requires no initial investment or smaller than other contracts but has a similar response to changes 3. settle at a future date

Different from conceptual framework, others must have probable inflow or outflow of resouces, and measured reliably

This is a test center

1. the business model for managing the financial asset 2. contractual cash flow characteristics of the financial asset

amortized cost

FVTP/L

Issuing stocks and issuing derivatives

initial cost=FV

amortized cost

initial cost = transaction price

amortised cost, FVTP/L, hedging and credit risk (no other risks, only the company’s own credit risk) go to OCI

accounting mismatch

The indicators are similar to before, mainly for the amortize model and FVTOCI. The FVTP/L indicators are directly entered into the income statement without any impairment.

effect

definition

recognition

measurement

the contractual right expires

transfer to another entity (all rewards and risks)

The contract has been discharged

canceled

expiredexpired

If you modify the contract and the PV difference exceeds 10%, you need to confirm the new contract and cancel the old contract.

hedging

hedge accounting

hedged item Hedged items

If there is a relationship, you cannot say that the amount is exactly the same and it will be considered a hedge.

fair value hedges

cash flow hedges

One is to immediately enter the corresponding table, the other is to advance to the OCI buffer, and then go to P/L

It can only be terminated when the conditions are not met, and it cannot be terminated on its own. cease to meet the qualifying criteria

Owning more than 50% of the common stock is considered control, but less than 50% may also be considered control.

potential voting rights

Can not be excluded

3 months or less

more than 3 months

Usually, the accounting policies of the parent company are used to prepare a new one specifically for consolidation. However, if the compiled results are seriously distorted, it is better to use your own accounting policies.

obtain control/lose control

once no longer a subsidiary, it should be treated as an associate under IAS 28 or as an investment under IFRS 9

valuing NCI at acquisition

fair value adjustment calculations

restructuring and future losses

definition

recognition

measurement

several subsidiary companies

sub-subsidiaries

direct holdings in sub-subsidiaries: 'D' shaped groups

I shape D shape will not be tested now! !

classification

general principal 'crossing an accounting boundary'

acquisition

acquisition where control is retained Increase or decrease investments while maintaining control

disposal

Just merge your own line-by-line, and only count your own percentage. Holding means merging 100% of everything.

equity method, treated the same as IAS 28 investment in associate and joint ventures

Economic substance: 1. legal form of the separate vehicle 2. terms of the contractual arrangement 3. relevant, other facts and circumstances

In orderly trading, the trading price obtained by market participants at a certain moment in beauty date

principal market is the most liquid for asset or liability

If there is no market with high liquidity, use the market with the highest final price (minus transaction cost), and then look at the price before transaction cost as the fair value.

Because the transaction cost is the cost of the market, it may be different in different markets. If you are not satisfied with the market cost, you can directly buy and sell it privately over the counter, so it has nothing to do with fair value. But the freight should be included, because the freight is actually a reflection of the value of the location.

When market activity declines, the entity should use the valuation technique to measure Fv, there is no requirement for technique, but for input data.

125 is confirmation 34 is measurement

step1: identify the contract with the customer (confirm the contract)

step2: identifying the separate performance obligation within a contract (identifying single performance obligation)

step3: determine the transaction price

step4: allocate the transaction price to the performance obligation in the contracts (the price is allocated to individual performance obligations)

step5: recognize revenue when the entity satisfies a performance obligation (recognize revenue when each individual obligation is fulfilled)

contract acquisition cost

Contract fulfillment costs cost of fullfill the contract

If returns may be received, revenue cannot be directly recognized.

Expectations can be calculated and confirmed as refund liability to offset part of the revenue.

Commission/Principal vs. Agent

the principal controls the good or service before it is transferred to the customer

The agent recognizes commissions as income, and what is collected is not income. The agent has no inventory risk, pricing power, or credit risk.

option to purchase the warranty separately

not have the option, because there is no obligation in the contract, so it has nothing to do with IFRS 15 and uses another standard.

Selling on behalf of others, the agent above collects money on behalf of others

definition

accounting

Post-sale storage

the entity needs to determine at what point the customer obtains control of the product

criteria

purchase agreements

Discounts available when purchasing again based on a certain contract

The discount is added to the new stand-alone selling price, that is, the additional price, and is confirmed as a new contract. If the customer does not exercise the right, it will be deemed that the offer was given but others did not accept it, and no processing will be done.

Reasonably estimate the breakage amount and confirm revenue; if it cannot be estimated, revenue will be recognized last.

is charged at the beginning of the contract, such as membership fees paid to promote health care products to allow others to join a health club, but cannot be recognized as income, similar to accounts received in advance, which can only be recognized when the goods are provided.

not distinct from other products - treat as a single performance obligation

distinct from other commodities -separate performance obligation

a contract conveys the right to control the use of an identified for a period of time

The meaning of lease incentives subsidies and rebates

recognize right-of-use asset and lease liability for all leases more than 12 months, short-term and low value may charge to P/L as an expense (you can choose not to lease)

right-of-use asset

lease liability

Dr right-of-use asset Cr lease liability Cr cash(bal)

right-of-use asset

lease liability

Depreciation and interest calculation are separated, and bal will become 0 in the last year.

lessee should disclose the right-of-use assets and lease liabilities separately from other assets and liabilities

definition

recognition and measurement

manufacture or dealer lessors

IAS 16 is actually rental income, which is included in income, operating expenses are included in expense, and assets are depreciated.

Income from house sales cannot be included in operating lease because the main business is not selling houses.

combined with other criteria

The first is that control must be transferred before it is considered a sale. The definition of control is under IFRS15, which can direct its use & obtain most of the remaining benefit.

seller-lessee (p170)

buyer-lessor

There is no need to cancel or confirm the underlying asset. It is actually a mortgage loan, so the confirmation cannot be terminated.

seller-lessee

buyer-lessor

self-review

The requirements of accounting standards, how to do it in the question (copy the question), what is wrong in the question, and the impact on financial reports

IAS37 states that....... Relevant standards stipulate XXX company.....Copy the questions appropriately it's incorrect to... because... which is not comply with What is wrong and what should be done impact, overstate to specific entry impact on specific subjects

Importance of financial information, responsibilities of management and accountants, motivation, threat&principle, safeguard

users rely on F.S. to make economic decisions the importance of information director should prepare the F.S., accountability, and reduce misstatements accountant should ignore pressure, avoid creative accounting motivation: bonus, covenant, related party....motivation, link to case threat, principle breach, moral threat and principle error safeguard: discuss with TCWG, seek advice, keep record measures Focus on motivations and moral threats

financial measure of historical or future financial performance, position, cash flow, other than financial measure define in the IFRS. In addition to those in the financial report, indicators that are helpful for users to make decisions can be written into the APM.

clearer story telling about how the business perform clearer story telling about how the business perform

more freedom and flexibility to tailor more freedom and customization

can be manipulated easily manipulated

Why would it mislead investors?

narrative report relate to F.S., with historical explanations of the F.S., help understand the management objectives and strategies to achieve the business objective

provide management view of the F.S. provide management view

supplement and complement to F.S. supplementary explanation to the financial report

forward-looking looking forward

non-binding guidance document rather than IFRS, IFRS is only binding if it is not binding

communication about how an organization's strategy, governance, performance and propect, in the context of its external environment, lead to creation of value over short, medium and long term Explain to investors how the company will combine its strategy, governance, performance and propect, in the context of its external environment, lead to creation of value over short, medium and long term Achieve long-, medium- and short-term value creation for the company

improve the quality of infor. improve the quality of information

enhance accountability and stewardship improve executives' awareness of responsibility

integrate thinking, decision making focus on value creation focus on value creation

meet the definition of asset or liability

probable the future economic benefit will flow to or from the entity

the cost or value can be measured reliably

relevant information about the element

faithful representation of the element

The probability is deleted, so more assets and liabilities can be recognized.

information result in the benefit exceeding the cost

IFRS9 financial asset, as long as it becomes a party to the contract, it must be confirmed IAS 37 provision can only be confirmed if it is probable IAS 37 asset can only be confirmed with virtual certainty IAS 38, can only be confirmed if it meets the PIRATE principle

1. Contract cash flow will flow out at a specific point in the future unavoidable contractual obligation to transfer cash or other financial asset at a specified time

2. Cash flow will flow out regardless of its own performance. unavoidable contractual obligatoin for an amount independent of the entity's available economic resources

IAS32 says that both must be met to be considered a financial liability. Now only one of them is met, which means that the liability recognition conditions have become wider and the equity recognition conditions have become stricter.