CPA A1.3 ADVANCED FINANCIAL REPORTING Study Manual
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- Financial Reporting Study Manual Cover Contents and Syllabus RO'Neill 8 08 12
- Study Unit Title Page
- 1 Regulatory and Conceptual Framework of Accounting 17
- Structure of IASC Foundation 18
- Development of an IFRS 20
- The Regulatory Framework 20
- 2 IAS 1 (Revised) – Presentation of Financial Statements 29
- Introduction 30
- 6 IAS 20 – Accounting for Government Grants & Disclosure of Government Assistance 81
- 8 IAS 40 – Investment Properties 103
- Assets with Both Tangible and Intangible Elements 124
- Website Development Costs 124
- Questions 124
- Objective 128
- Definitions 128
- Measurement 128
- Valuation Methods 130
- Disclosure 130
- 22 IFRS 5 – Non-Current Assets Held For Sale and Discontinued Operations 303
- 24 IAS 18 – Revenue 325
- 25 IAS 32, IAS 39, IFRS 7 – Financial Instruments 331
- Study Unit Title Page
- 27 IFRS 1 – First Time Adoption of International Financial Reporting Standards 361
- 28 IAS 34 – Interim Financial Reporting 365
- 29 IAS 41 – Agriculture 369
- 30 IFRS 8 – Operating Segments 377
- 31 Purchase of Own Shares and Distributable Profits 385
- Financial Reporting Study Manual Study Unit 1-16 RO'Neill 8 08 12 doc
- Study Unit 1
- The Regulatory and Conceptual Frameworks of Accounting
- A. Structure of IASC Foundation
- The IASC Foundation
- SAC
- IASB
- IFRIC
- a. INTRODUCTION
- B. objective
- D. components of financial statements
- E. financial review by management
- F. structure, content and reporting
- Example 1 – Statement of Financial Position
- i. statement OF COMPREHENSIVE INCOME
- A. Objective
- B. Definition
- C. Recognition
- D. Initial Measurement
- E. Subsequent Expenditure
- F. Measurement after Recognition
- G. Derecognition
- H. Depreciation
- I. Disclosure
- A. OBJECTIVE
- Income Statement
- Statement of Financial Position
- A. Definition
- B. Accounting Treatment
- C. Borrowing Costs Eligible for Capitalisation
- D. Commencement of Capitalisation
- E. Cessation of Capitalisation
- F. Suspension of Capitalisation
- G. Interest Rates
- H. Disclosure
- A. DEFINITION
- A. Introduction
- B. Definitions
- C. Recognition
- D. Accounting Treatment
- E. Repayment of Government Grants
- F. Disclosure
- G. Sundry Matters
- A. INTRODUCTION
- IAS 17 – Leases
- A. Introduction
- B. Types of Leases
- C. Accounting Treatment of Leases
- D. Detailed Treatment of Finance Leases
- E. Payments In Advance
- F. Recording Finance and Operating Leases in the Books of the Lessor
- G. Disclosure Requirements for Lessees
- H. Disclosure Requirements for Lessors
- I. Sale And Leaseback Transactions
- A. Objective
- B. Exclusions
- C. Definition
- D. Recognition and Initial Measurement
- E. Subsequent Measurement
- F. Cost Model
- G. Fair Value Model
- H. Cost Model vs. Fair Value Model
- I. Transfers
- J. Owner-Occupied Property and Investment Property
- K. Disposals
- L. Disclosure
- A. OBJECTIVE
- A. Objective
- B. Exclusions
- C. Definition
- D. Accounting Treatment
- E. Acquisition by Government Grant
- F. Exchange of Assets
- G. Internally Generated Goodwill
- H. Internally Generated Intangible Assets
- I. Research
- J. Development
- K. Measurement of Intangible Assets After Recognition
- L. Cost Model
- M. Revaluation Model
- N. Useful Life
- O. Disposals and Retirements
- P. Disclosure Requirements
- Q. Assets with Both Tangible and Intangible Elements
- R. Website Development Costs
- S. Questions
- A. OBJECTIVE
- B. EXCLUSIONS
- C. DEFINITION
- D. ACCOUNTING TREATMENT
- E. ACQUISITION BY GOVERNMENT GRANT
- F. EXCHANGE OF ASSETS
- G. INTERNALLY GENERATED GOODWILL
- H. INTERNALLY GENERATED INTANGIBLE ASSETS
- I. RESEARCH
- J. DEVELOPMENT
- K. MEASUREMENT OF INTANGIBLE ASSETS AFTER RECOGNITION
- L. COST MODEL
- M. REVALUATION MODEL
- N. USEFUL LIFE
- O. DISPOSALS AND RETIREMENTS
- P. DISCLOSURE REQUIREMENTS
- A. Objective
- B. Definitions
- C. Measurement
- D. Valuation Methods
- E. Disclosure
- A. OBJECTIVE
- A. Objective
- B. Provisions
- C. Definitions
- D. Restructuring
- E. Onerous Contract
- F. Contingent Liabilities
- G. Contingent Assets
- H. Disclosures
- I. Revision and Examination Practice Question
- A. OBJECTIVE
- If a group of items is being measured, it is the “expected value”.
- A. Objective
- B. Definition
- C. Dividends
- D. Updating Disclosures
- E. Disclosure
- F. Going Concern Considerations
- A. OBJECTIVE
- A. Introduction
- B. Definitions
- C. Accounting Policies
- D. Changes in Accounting Policies
- E. Disclosures
- F. Limitations of Retrospective Application
- G. Changes in Accounting Estimates
- H. Correction of Prior Period Errors
- I. Questions
- a. Applying the new accounting policy to transactions, other events and conditions occurring after the date as at which the policy is changed, and
- b. Recognising the effect of the change in the accounting estimate in the current and future periods affected by the change.
- C. ACCOUNTING POLICIES
- Accounting policies are determined by applying relevant IFRS or IFRIC and considering any relevant implementation guidance issued by the IASB.
- Where there is no IFRS or Interpretation that addresses a specific transaction, event or condition, then management should exercise judgement in developing and applying an accounting policy that results in information that is relevant and reliable.
- Reliable information should:
- In this regard, when exercising such judgement, management should refer to (in this order):-
- a. The requirements and guidance of the IFRS’s and IFRIC’s dealing with similar and related issues
- b. The definitions, recognition criteria and measurement concepts for assets, liabilities and expenses in the framework
- D. CHANGES IN ACCOUNTING POLICIES
- The standard highlights two types of event that do not result in the change of an accounting policy:
- In the case of non-current tangible fixed assets, a move to revaluation accounting will not result in a change of accounting policy under IAS 8 but a revaluation as per IAS 16.
- If a change in accounting policy is required by a Standard or Interpretation, then any transitional arrangements contained therein must be followed. If no such transitional arrangements are provided or an accounting policy is being changed voluntarily...
- (Prospective application is not allowed unless it is impracticable to determine the cumulative effect).
- The following disclosures are required for a change in an accounting policy:-
- 1. Reason for the change
- 2. Amount of the adjustment for the current period and for each period presented
- 3. Amount of the adjustments required for the periods prior to those disclosed in the financial statements
- 4. The fact that comparative information has been restated
- The entity should also disclose the impact of new IFRS that have been issued but have not yet come into force.
- G. CHANGES IN ACCOUNTING ESTIMATES
- It is acknowledged that the use of reasonable estimates is an essential part of the preparation of financial statements and consequently does not undermine their reliability. By their nature, these estimates may have to be revised periodically if the ...
- It is important, then, to realise that the revision of an estimate is not an error nor does it relate to prior periods.
- The effect of a change in an accounting estimate should be included in the period of the change if the change affects that period only or the period of the change and future periods if the change affects both. Any corresponding changes in assets and l...
- H. CORRECTION OF PRIOR PERIOD ERRORS
- Errors can normally be corrected through the income statement of the period when uncovered unless the errors are material. In the event that the errors uncovered relate to a previous period and they are classed as material, then it is necessary to cor...
- Only where it is impracticable to determine the cumulative effect of an error on prior periods can an entity correct the error prospectively.
- The following disclosures are required for errors uncovered:-
- 1. Nature of the prior period error
- 2. For each period, the amount of the correction (for each line item affected and, where applicable, the basic and diluted earnings per share)
- 3. The amount of the error at the beginning of the earliest prior period presented
- 4. In retrospective restatement is impracticable for a particular prior period, the circumstances that led to the existence of that condition and a description of how and from when the error has been corrected. Subsequent periods need not repeat these disc•
- A. Introduction
- B. Definitions
- C. Control
- D. Exemptions from the Requirement to Prepare Consolidated Financial Statements
- E. Accounting Dates
- F. Accounting Policies
- G. Cessation of Control
- H. Disclosure – IAS 27
- I. Acquisition Costs
- J. Mechanics and Techniques
- A. INTRODUCTION
- A. Introduction
- B. Determining the Fair Value of Net Assets
- C. Inter-Company Inventory Profit
- D. Inter-Company Profit on Sale of a Non-Current Asset
- E. Inter-Company Debts
- F. Preference Shares in a Subsidiary Company
- G. Loan Notes in a Subsidiary Company
- H. Inter-Company Dividends
- I. Acquisitions of Subsidiary During the Year
- Consolidated Statement of Financial Position H Ltd Group
- Consolidated Statement of Financial Position H Limited Group
- Inter-Company Account
- I. ACQUISITIONS OF SUBSIDIARY DURING THE YEAR
- A. Investments in Associates and Interests in Joint Ventures
- B. Equity Method of Accounting
- C. Disclosure Requirements
- D. Mechanics and Techniques
- E. Transactions Between Group and Associate
- F. Interests in Joint Ventures
- G. Disclosure
- Financial Reporting Study Manual Study Unit 17-19 RO'Neill 8 08 12 doc
- A. Introduction
- B. Non-Controlling Interest
- C. Profit and Loss - Balance Forward in Subsidiary
- D. Inter-Company Profits
- E. Dividends
- F. Transfers to Reserves
- G. Debit Balance on Income Statement at Acquisition
- H. Sales and Cost of Sales
- I. Debenture Interest
- J. Acquisition of Subsidiary During the Year
- K. Revision and Examination Practice Questions
- L. Associate Companies in the Income Statement
- M. Goodwill on Acquisition of an Associate
- Consolidated Income Statement
- A. Introduction
- E. Cash Flow Statements and Overseas Transactions
- A. INTRODUCTION
- E. CASH FLOW STATEMENTS AND OVERSEAS TRANSACTIONS
- A. Objective
- B. Definitions
- C. Operating Activities
- D. Investing Activities
- E. Financing Activities
- F. Reporting Cash Flows From Operating Activities
- G. Worked Examples
- H. Disposal of a Tangible Non-Current Asset
- I. Taxation
- J. Dividends
- K. Worked Example
- L. Consolidated Cash Flow Statements
- M. Limitations of the Cash Flow Statement
- N. Advantages of the Cash Flow Statement
- O. Surmounting a Cash Shortage
- Financial Reporting Study Manual Study Unit 20-28 RO'Neill 8 08 12 doc
- A. Objective
- B. Definitions
- C. Contracts
- D. Contract Costs
- E. Contract Revenue
- F. Recognition of Costs and Revenues
- G. Measuring Outcome Reliably
- H. Stage of Completion
- I. Presentation
- J. Disclosures
- K. Further Definitions
- A. OBJECTIVE
- A. Explanatory Note
- B. Scope
- C. Definitions
- D. Number of Shares
- E. Measurement of Basic Earnings Per Share
- F. Changes in Capital Structure
- G. Presentation and Disclosure
- H. Retrospective Adjustments
- I. Fully Diluted Earnings Per Share
- J. Share Warrants and Options
- K. Contingently Issuable Shares
- L. Convertible Bonds/Loan Stock
- M. Dilutive/Anti-Dilutive Potential Ordinary Shares
- Example 1
- Example 2
- Example 3
- Example 4
- Example
- Example
- Example
- Number of Shares
- I. FULLY DILUTED EARNINGS PER SHARE
- A. Objective
- A. OBJECTIVE
- B. ASSETS HELD FOR SALE - DEFINITION
- IAS 18 – Revenue
- A. The Timing of Revenue Recognition
- B. Recognition
- C. Critical Event –V– Accretion Approach
- D. IAS 18 Revenue - Introduction
- E. Sale of Goods
- F. Rendering of Services
- G. Interest, Royalties and Dividends
- H. Disclosure
- Liabilities and Equity
- Compound Financial Instruments
- Interest, Dividends, Losses and Gains
- Disclosure of Financial Instruments
- Terms
- Information to be Disclosed
- A. Introduction
- B. Interested Parties
- C. Profitability Ratios
- D. Liquidity Ratios
- E. Investment Ratios
- F. Limitations of Ratio Analysis
- G. Other Measures of Business Operations
- H. Worked Example
- I. Revision and Examination Practice Questions
- A. INTRODUCTION
- B. INTERESTED PARTIES
- C. PROFITABILITY RATIOS
- D. LIQUIDITY RATIOS
- E. INVESTMENT RATIOS
- F. LIMITATIONS OF RATIO ANALYSIS
- G. OTHER MEASURES OF BUSINESS OPERATIONS
- A. Introduction
- B. Accounting Policies
- C. Exemptions and Exceptions
- D. Comparative Information
- IAS 34 – Interim Financial Reporting
- A. Introduction
- B. Minimum Components of an Interim Financial Report
- C. Selected Explanatory Notes
- D. Periods for which Interim Financial Statements are Required to be Presented
- E. Materiality
- F. Seasonal or Uneven Revenue and Costs
- Financial Reporting Study Manual Study Unit 29-34 RO'Neill 8 08 12 doc
- Study Unit 29
- IAS 41 – Agriculture
- Contents
- A. Introduction
- F. DISCLOSURE
- Purchase of Own Shares and Distributable Profits
- B. Distributable Profits
- A. PURCHASE OF OWN SHARES
- 1. Premium on redemption 10,000 x RWF0.22 = RWF2,000
- A distribution is defined as every description of distribution of a company’s assets to members (shareholders) of the company whether in cash or otherwise, with the exception of:
- Calculation of Distributable Profit
- Financial Reporting Study Manual Study Unit 35 RO'Neill 8 08 12 doc