Ultimate Accounting 3A Theory Summary

ACCOUNTING
THEORY
CONCEPTUAL FRAMEWORK – (A1)


(para 4.3-4.4) – Asset definition
(para 4.6(a)(i) and (ii)) – What’s a right
(para 4.14-15) – Potential to produce EB
(para 4.19-20 and 22) – Control


(para 4.26-27) – Definition of liability
(para 29-30) – Obligation
(para 37-38) – Transfer economic resource
(para 42-43) – As a result of past event


(para 63) – Definition of Equity


(para 68-69) – Definition of Income and expense


Recognition criteria
(para 5.12a and b) – Relevance
(Para 5.14) – Existence uncertainty look at 4.13 and 35
(para 5.15-16) – Probability of EB look at 4.15 and 38


(para 5.19) - Faithful representation look at 2.19
(para 5.19 and 20b)- Measurement uncertainty

, REVENUE – IFRS 15 (A1)


Step 1 – Identifying the contract
(para 9) – 5 criteria for step 1


Step 2 – Identifying PO
(para 22) – a. Distinct G+S
- b. Series of distinct G+S e.g. maintenance over couple years
(para 27) – Definition of distinct
Conclude and name each distinct PO.
Self- installation, separate service (Not required to be installed or maintained)


Step 3 – Determine TP
(para 47) – Definition
(para 48) – Things affecting TP….48c important
(para 60-65) – Significant financing component and > 1 year
TP equal to PV of instalments
Conclude the TP, say if there were any significant components




Step 4 – Allocating TP to PO
(para 74) – Definition
(para 76-78) – Opening lines (SASP’s)
(para 79) – 3 methods 1. Adjusted market assessment approach
2. Expected cost-plus margin approach
3. Residual Approach