Accounting
SUMMARY
Alixia Le Grange
,CONCEPTUAL FRAMEWORK ....................................................................................... 7
The Conceptual framework consists of: ....................................................................... 7
Qualitative Characteristics ........................................................................................... 7
Elements of the financial statements: Definitions ......................................................... 8
RECOGNITION CRITERIA: ......................................................................................... 9
Measurement basis: .................................................................................................... 9
IAS 12: INCOME TAXES .............................................................................................. 10
DEFERRED TAX ....................................................................................................... 10
IAS 12 Principles Applied........................................................................................... 10
Objective of IAS 12: To prescribe accounting treatment for income taxes. ................. 10
DEFFERRED INCOME TAX OVERVIEW .................................................................. 11
CURRENT TAX CALCULATION ............................................................................... 12
Permanent differences ............................................................................................... 16
Unused tax losses ..................................................................................................... 17
Tax rate change effect. .............................................................................................. 18
IAS 12 Disclosures .................................................................................................... 20
Unused tax losses of a period: ................................................................................... 22
IFRS 15: Revenue from contracts ................................................................................. 23
IFRS 15 applies to ALL contracts with customers except for: ..................................... 23
IFRS 15: Introduces the 5-step module for Revenue recognition. (15.2) .................... 23
Step 2: Identify performance obligations. (15.22) ....................................................... 25
Step 3 : Determine the transaction price: ................................................................... 26
Step 4: Allocate transaction price to performance obligations .................................... 29
Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation.
(15.31 – 46) ............................................................................................................... 31
Other ITEMS:............................................................................................................. 32
Disclosures: IFRS 15 ................................................................................................. 34
Example: ................................................................................................................... 37
IFRS 15: Special cases ............................................................................................. 40
IFRS 16: Leases - Lessee: ............................................................................................ 42
Accounting by the lessee: .......................................................................................... 42
Sale-and-leaseback of the seller (Lessee) ................................................................. 42
Accounting by the lessor: Finance leases: ................................................................. 42
Manufacturer or dealer: ............................................................................................. 42
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, Operating leases: ...................................................................................................... 43
Sale and leaseback of the buyer: (Lessor) ................................................................. 43
Accounting by lessee: @ Commencement Date: ....................................................... 43
Lessee’s Perspective Overview: ............................................................................... 45
Measurement of Right-of-use asset: .......................................................................... 47
Subsequent measurement lease liability: ................................................................... 48
Tax implications: ........................................................................................................ 49
Example: VAT is Financed......................................................................................... 50
Instalment Sales agreement: (ISA) ............................................................................ 50
Sub-Leases ............................................................................................................... 51
Lesse: Lease modifications........................................................................................ 52
Presentation and Disclosure (IAS 16.47) ................................................................... 52
IFRS 16: Leases - Lessor’s Perspective: Classify lease: ............................................... 60
Finance lease: ........................................................................................................... 60
Operating lease ......................................................................................................... 60
Finance leases: Lessor .............................................................................................. 61
Initial recognition: ....................................................................................................... 61
Subsequent Recognition: ........................................................................................... 63
Finance leases – Not a manufacturer or dealer: ........................................................ 64
Lessor - Operating lease............................................................................................ 68
Initial recognition: ....................................................................................................... 69
Lessor: Modifications ................................................................................................. 71
IFRS 16: Reassessment: Lessor ............................................................................... 72
IFRS 16: Sale and lease back ................................................................................... 74
Transfer not a sale: .................................................................................................... 77
Presentation and Disclosures for IFRS 16: ................................................................ 78
IFRS 13: Fair value measurement: ................................................................................ 84
Applying IFRS 13: ...................................................................................................... 85
Fair value of liabilities and own equity instruments..................................................... 86
Fair value @ initial recognition. .................................................................................. 87
IAS 40: Investment property .......................................................................................... 90
Initial Measurement: .................................................................................................. 90
Subsequent Measurement: ........................................................................................ 90
Measurement Models ................................................................................................ 91
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, Disclosures: ............................................................................................................... 93
Sub-leasing................................................................................................................ 96
Deferred Tax.............................................................................................................. 98
Depreciable Asset...................................................................................................... 99
IAS16: Property, Plant, and Equipment ....................................................................... 100
Elements of Cost: .................................................................................................... 100
Subsequent Cost: .................................................................................................... 100
Measurement @ Recognition .................................................................................. 101
Measurement after recognition ................................................................................ 101
Disclosure: ............................................................................................................... 104
General Notes: ........................................................................................................ 106
Capital gains tax: ..................................................................................................... 108
IAS 38: Intangible asset .............................................................................................. 114
Recognition.............................................................................................................. 114
Subsequent measurement: ...................................................................................... 116
Disclosure: ............................................................................................................... 117
New Acquisition method .......................................................................................... 119
IAS 36: Impairment of assets ...................................................................................... 121
Individual assets: ..................................................................................................... 121
Value in use: (PV of cash flows) (IAS 36.31)............................................................ 121
Disclosure → IAS 36. 126/130 ................................................................................. 122
Tax implications for impairment of Revalued assets: ............................................... 123
Cash-generating unit (CGU) .................................................................................... 123
Disclosure: IAS 36. 126 +130 +131. ........................................................................ 124
Cash genrating unit – Subsidiary ............................................................................. 127
IFRS 5: Non-current assets held for Sale and discontinued operations ....................... 128
Requirements of IFRS 5 .......................................................................................... 129
Measurement of disposal groups: ............................................................................ 132
Specific aspects ....................................................................................................... 134
Presentation and disclosure requirements ............................................................... 135
Discontinued operations .......................................................................................... 136
IAS 8: Accounting policies, changes in accounting estimates and Errors: ................... 141
Changes in accounting estimates ............................................................................ 141
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SUMMARY
Alixia Le Grange
,CONCEPTUAL FRAMEWORK ....................................................................................... 7
The Conceptual framework consists of: ....................................................................... 7
Qualitative Characteristics ........................................................................................... 7
Elements of the financial statements: Definitions ......................................................... 8
RECOGNITION CRITERIA: ......................................................................................... 9
Measurement basis: .................................................................................................... 9
IAS 12: INCOME TAXES .............................................................................................. 10
DEFERRED TAX ....................................................................................................... 10
IAS 12 Principles Applied........................................................................................... 10
Objective of IAS 12: To prescribe accounting treatment for income taxes. ................. 10
DEFFERRED INCOME TAX OVERVIEW .................................................................. 11
CURRENT TAX CALCULATION ............................................................................... 12
Permanent differences ............................................................................................... 16
Unused tax losses ..................................................................................................... 17
Tax rate change effect. .............................................................................................. 18
IAS 12 Disclosures .................................................................................................... 20
Unused tax losses of a period: ................................................................................... 22
IFRS 15: Revenue from contracts ................................................................................. 23
IFRS 15 applies to ALL contracts with customers except for: ..................................... 23
IFRS 15: Introduces the 5-step module for Revenue recognition. (15.2) .................... 23
Step 2: Identify performance obligations. (15.22) ....................................................... 25
Step 3 : Determine the transaction price: ................................................................... 26
Step 4: Allocate transaction price to performance obligations .................................... 29
Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation.
(15.31 – 46) ............................................................................................................... 31
Other ITEMS:............................................................................................................. 32
Disclosures: IFRS 15 ................................................................................................. 34
Example: ................................................................................................................... 37
IFRS 15: Special cases ............................................................................................. 40
IFRS 16: Leases - Lessee: ............................................................................................ 42
Accounting by the lessee: .......................................................................................... 42
Sale-and-leaseback of the seller (Lessee) ................................................................. 42
Accounting by the lessor: Finance leases: ................................................................. 42
Manufacturer or dealer: ............................................................................................. 42
PAGE 1
, Operating leases: ...................................................................................................... 43
Sale and leaseback of the buyer: (Lessor) ................................................................. 43
Accounting by lessee: @ Commencement Date: ....................................................... 43
Lessee’s Perspective Overview: ............................................................................... 45
Measurement of Right-of-use asset: .......................................................................... 47
Subsequent measurement lease liability: ................................................................... 48
Tax implications: ........................................................................................................ 49
Example: VAT is Financed......................................................................................... 50
Instalment Sales agreement: (ISA) ............................................................................ 50
Sub-Leases ............................................................................................................... 51
Lesse: Lease modifications........................................................................................ 52
Presentation and Disclosure (IAS 16.47) ................................................................... 52
IFRS 16: Leases - Lessor’s Perspective: Classify lease: ............................................... 60
Finance lease: ........................................................................................................... 60
Operating lease ......................................................................................................... 60
Finance leases: Lessor .............................................................................................. 61
Initial recognition: ....................................................................................................... 61
Subsequent Recognition: ........................................................................................... 63
Finance leases – Not a manufacturer or dealer: ........................................................ 64
Lessor - Operating lease............................................................................................ 68
Initial recognition: ....................................................................................................... 69
Lessor: Modifications ................................................................................................. 71
IFRS 16: Reassessment: Lessor ............................................................................... 72
IFRS 16: Sale and lease back ................................................................................... 74
Transfer not a sale: .................................................................................................... 77
Presentation and Disclosures for IFRS 16: ................................................................ 78
IFRS 13: Fair value measurement: ................................................................................ 84
Applying IFRS 13: ...................................................................................................... 85
Fair value of liabilities and own equity instruments..................................................... 86
Fair value @ initial recognition. .................................................................................. 87
IAS 40: Investment property .......................................................................................... 90
Initial Measurement: .................................................................................................. 90
Subsequent Measurement: ........................................................................................ 90
Measurement Models ................................................................................................ 91
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, Disclosures: ............................................................................................................... 93
Sub-leasing................................................................................................................ 96
Deferred Tax.............................................................................................................. 98
Depreciable Asset...................................................................................................... 99
IAS16: Property, Plant, and Equipment ....................................................................... 100
Elements of Cost: .................................................................................................... 100
Subsequent Cost: .................................................................................................... 100
Measurement @ Recognition .................................................................................. 101
Measurement after recognition ................................................................................ 101
Disclosure: ............................................................................................................... 104
General Notes: ........................................................................................................ 106
Capital gains tax: ..................................................................................................... 108
IAS 38: Intangible asset .............................................................................................. 114
Recognition.............................................................................................................. 114
Subsequent measurement: ...................................................................................... 116
Disclosure: ............................................................................................................... 117
New Acquisition method .......................................................................................... 119
IAS 36: Impairment of assets ...................................................................................... 121
Individual assets: ..................................................................................................... 121
Value in use: (PV of cash flows) (IAS 36.31)............................................................ 121
Disclosure → IAS 36. 126/130 ................................................................................. 122
Tax implications for impairment of Revalued assets: ............................................... 123
Cash-generating unit (CGU) .................................................................................... 123
Disclosure: IAS 36. 126 +130 +131. ........................................................................ 124
Cash genrating unit – Subsidiary ............................................................................. 127
IFRS 5: Non-current assets held for Sale and discontinued operations ....................... 128
Requirements of IFRS 5 .......................................................................................... 129
Measurement of disposal groups: ............................................................................ 132
Specific aspects ....................................................................................................... 134
Presentation and disclosure requirements ............................................................... 135
Discontinued operations .......................................................................................... 136
IAS 8: Accounting policies, changes in accounting estimates and Errors: ................... 141
Changes in accounting estimates ............................................................................ 141
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