Financial Reporting - Core 1-Questions
and Already Solved Solutions.
Difference between IFRS and ASPE for Cash/Receivables - Answer No major differences
Restricted Cash - Answer Not able to use cash for general purposes
Shown separately and must be disclosed
What is the entry for AFDA/ write off of bad debts - Answer AFDA -Bad debt Exp (DR), AFDA
(CR)
Writeoff- Bad Debt Exp (DR), A/R(CR)
What is included in Inventory Cost - Answer Costs to bring inventory to present location and
condition. Storage and shipping not included
What is included in PP&E Cost - Answer Purchase price, recoverable taxes, cost to bring asset
to condition for use, inspection cost, spare parts, standby equipment, dismantling. Also includes
legal fees and comissions to make asset usable. Allocate costs seperately for building and land
Differences between ASPE and IFRS for PP&E - Answer IFRS - Revaluation or Cost (Subsequent)
ASPE - Only Cost (Subsequent)
Leasee (IFRS)- How to recognize - Answer Exceptions: Short lease or low value
ROU Asset (DR), Lease Liability (CR)
- use implicit rate first
- FV should be 0 unless guaranteed residual value is given
Leasor (IFRS) - How to recognize (criteria) - Answer 1) Title transfers
2) BPO exists
3) Lease term
4) PV is substantially of PV
5) Asset is specialized in nature
- If Yes to any finance lease if NO then operating lease (expense as rent expense)
Lease Receivable (PV w/ residual)
Revenue (PV)
Inventory (Cost)
, How to find Lease Liability - Answer Calculate PV and subtract PMT
ASPE: Leasee - how to recognize (criteria) - Answer 1) Transfer of tite
2) Usefule Life (75%)
3) PV of FV(90%)
If it does not meet criteria then it is an operating lease
When calculating use the lower of implicit rate or borrowing rate
ASPE: Leassor - how to recognize (criteria) - Answer Meets one of the criteria from the leasee
AND credit risk/costs can be reasonably estimated
Lease ASPE: If PV is higher than FV - Answer Adjust the percent so PV equals FV
Difference between ASPE and IFRS for developmental costs - Answer IFRS - have to capitalize
ASPE - choice between capitalize/expense
Difference between ASPE and IFRS for Impairment - Answer ASPE- tested when events trigger,
cannot reverse impairment
IFRS - tested annually and requires assessment of indicators every year
Criteria for Acquired Intangible - Answer 1) Probable that expected future economic benefits
will flow to the entity
2) Cost can be reliably measured
Definition Criteria for Intangible Asset - Answer 1) Identifiable non-monetary asset (separable
- can be sold to another entity OR arises from contractual rights)
2) Control
Intangibles: Difference between measurement for Finite Assets and Infinite Assets - Answer
Finite - Amortize and test annually for impairment
Infinite - assessed annually for impairment or when events indicate, not amortized
Impairment of Asset Criteria - Answer 1) Asset Grouping (CGU)
2) Impairment Indicators
3) Recoverable Amount (take higher of FV and value in use)
and Already Solved Solutions.
Difference between IFRS and ASPE for Cash/Receivables - Answer No major differences
Restricted Cash - Answer Not able to use cash for general purposes
Shown separately and must be disclosed
What is the entry for AFDA/ write off of bad debts - Answer AFDA -Bad debt Exp (DR), AFDA
(CR)
Writeoff- Bad Debt Exp (DR), A/R(CR)
What is included in Inventory Cost - Answer Costs to bring inventory to present location and
condition. Storage and shipping not included
What is included in PP&E Cost - Answer Purchase price, recoverable taxes, cost to bring asset
to condition for use, inspection cost, spare parts, standby equipment, dismantling. Also includes
legal fees and comissions to make asset usable. Allocate costs seperately for building and land
Differences between ASPE and IFRS for PP&E - Answer IFRS - Revaluation or Cost (Subsequent)
ASPE - Only Cost (Subsequent)
Leasee (IFRS)- How to recognize - Answer Exceptions: Short lease or low value
ROU Asset (DR), Lease Liability (CR)
- use implicit rate first
- FV should be 0 unless guaranteed residual value is given
Leasor (IFRS) - How to recognize (criteria) - Answer 1) Title transfers
2) BPO exists
3) Lease term
4) PV is substantially of PV
5) Asset is specialized in nature
- If Yes to any finance lease if NO then operating lease (expense as rent expense)
Lease Receivable (PV w/ residual)
Revenue (PV)
Inventory (Cost)
, How to find Lease Liability - Answer Calculate PV and subtract PMT
ASPE: Leasee - how to recognize (criteria) - Answer 1) Transfer of tite
2) Usefule Life (75%)
3) PV of FV(90%)
If it does not meet criteria then it is an operating lease
When calculating use the lower of implicit rate or borrowing rate
ASPE: Leassor - how to recognize (criteria) - Answer Meets one of the criteria from the leasee
AND credit risk/costs can be reasonably estimated
Lease ASPE: If PV is higher than FV - Answer Adjust the percent so PV equals FV
Difference between ASPE and IFRS for developmental costs - Answer IFRS - have to capitalize
ASPE - choice between capitalize/expense
Difference between ASPE and IFRS for Impairment - Answer ASPE- tested when events trigger,
cannot reverse impairment
IFRS - tested annually and requires assessment of indicators every year
Criteria for Acquired Intangible - Answer 1) Probable that expected future economic benefits
will flow to the entity
2) Cost can be reliably measured
Definition Criteria for Intangible Asset - Answer 1) Identifiable non-monetary asset (separable
- can be sold to another entity OR arises from contractual rights)
2) Control
Intangibles: Difference between measurement for Finite Assets and Infinite Assets - Answer
Finite - Amortize and test annually for impairment
Infinite - assessed annually for impairment or when events indicate, not amortized
Impairment of Asset Criteria - Answer 1) Asset Grouping (CGU)
2) Impairment Indicators
3) Recoverable Amount (take higher of FV and value in use)
