Lecture Review on Accounting Standards

Flashcards created to help students review key concepts from lecture notes on accounting standards, focusing on aspects like deferred taxes, convertible bonds, temporary vs permanent differences, and more relevant topics.

Convertible Bond

A bond that can be converted into a fixed number of shares of the issuer's ordinary shares.

Deferred Tax Asset

Recognized for all deductible temporary differences and operating loss carryforward.

Deferred Tax Liability

Recognized for all taxable temporary differences.

Permanent Differences

Items of revenue or expense included in accounting income but will never be included in taxable income.

Temporary Differences

Items that are included in both accounting income and taxable income but at different time periods.

Accounting Income

The net income for the period before deducting income tax expense.

Taxable Income

The income for the period determined by tax rules, upon which income taxes are payable.

Recognition of Deferred Tax Asset

It is recognized only when probable that taxable income will be available against which the deferred tax asset can be utilized.

Inflation

A general increase in prices and fall in the purchasing value of money.

Operating Segments

Components of an entity that engage in business activities and whose results are regularly reviewed by the chief operating decision maker.

Fair Value Measurement

The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

Bill and Hold Arrangement

A sales arrangement where the buyer places an order for a product but requests that it be held by the seller until a later date.

Customer Loyalty Program

A program that rewards customers for repeat purchases with points redeemable for discounts or free products.

Restatement of Financial Statements

Adopting accounting policies that reflect current purchase values rather than historical costs, especially in hyperinflationary economies.

Lease Liability

The obligation to make lease payments recognized on the balance sheet for finance leases.

Equity Instruments

Financial instruments that represent ownership in a company, including ordinary shares and preference shares.

Share Appreciation Rights

Cash-settled compensation arrangement allowing employees to receive the cash value of the increase in the price of shares.