Financial Accounting Review - ASPE and IFRS Flashcards

A comprehensive set of vocabulary flashcards covering key financial accounting standards, concepts, and formulas across ASPE and IFRS based on the lecture transcript.

ASPE 3400 Sale of Goods Revenue Recognition Criteria

Revenue on the sale of goods can be recognized when: (1) risks and rewards have been transferred, (2) amount of revenue and extent of returns can be measured, and (3) collection is reasonably assured.

ASPE 3400 Sale of Services Revenue Recognition Criteria

Revenue on the sale of services can be recognized when: (1) performance is achieved using either the percentage of completion or completed contract method, (2) amount of revenue is measurable, and (3) collection is reasonably assured.

ASPE 3400 Performance Criteria Unmet Situations

Situations where performance criteria may not have been satisfied include consignment sales, customer acceptance provisions, upfront fees, bill and hold arrangements, unpredictable or unusual rights of return, and bundled sales.

Principal vs. Agent Revenue Recognition Factors

Principal status (gross revenue) is indicated by primary responsibility, inventory risk, pricing latitude, and credit risk. Agent status (net revenue) is indicated by predetermined commission earnings as a fixed fee or percentage.

IFRS 15 Five-Step Approach

1. Identify the contract(s) with a customer. 2. Identify the performance obligation(s) in the contract. 3. Determine the transaction price. 4. Allocate the transaction price to performance obligations. 5. Recognize revenue when (or as) the entity satisfies a performance obligation.

IFRS 15 Step 1 Contract Criteria

IFRS 15 applies to a contract if: approved (written, oral, or customary), rights identified, payment terms identified, commercial substance exists, and collection of consideration is probable.

IFRS 15 Performance Obligation

A promise to transfer to the customer either a distinct good or service (or bundle) or a series of distinct goods or services that are substantially the same and have the same pattern of transfer.

Variable Consideration Estimation Methods (IFRS 15)

Estimated using either the Expected Value Method (sum of probability-weighted amounts for large numbers of similar contracts) or Most Likely Amount (most likely outcome for contracts with two choices), subject to a constraint against significant reversals.

Significant Financing Component Treatment (IFRS 15)

If consideration is received over 1 year after provision, discount consideration to PV and record remainder as interest revenue. If received over 1 year before, record interest expense on consideration held with an offsetting credit to deferred revenue.

IFRS 15 Performance Obligations Satisfied Over Time

Satisfied over time if: (1) customer simultaneously receives and consumes benefits, (2) vendor creates or enhances an asset controlled by customer, or (3) vendor's performance creates no alternative use asset and vendor has enforceable right to payment.

IFRS 15 Bill and Hold Criteria

Revenue is recognized if: (1) reason for arrangement is substantive, (2) product is identified separately as customer's, (3) product is ready for physical transfer, and (4) vendor cannot use or direct product to another customer.

Intangible Asset Definition (ASPE 3064 / IAS 38)

A non-monetary asset without physical substance that meets criteria for identifiability (separable or arising from contractual/legal rights), control (ability to access benefits and restrict others), and future economic benefit.

Development Stage Capitalization Criteria

To capitalize development costs, an entity must demonstrate: technical feasibility, intention to complete, ability to use or sell, how future economic benefits will be generated, availability of resources, and ability to measure expenditures reliably.

Impairment Assessment Triggers (ASPE 3063 vs. IAS 36)

ASPE 3063 tests long-lived assets whenever events or changes in circumstances indicate carrying value may not be recoverable. IAS 36 assesses for indications at each reporting period, plus mandatory annual testing for indefinite-life intangibles, unready intangibles, and goodwill.

Impairment Measurement (ASPE 3063 vs. IAS 36)

ASPE 3063 assesses impairment using undiscounted future cash flows and writes down to fair value. IAS 36 assesses and writes down to recoverable amount, defined as the higher of fair value less costs to sell and value in use (discounted cash flows).

Impairment Loss Reversal Rules

Impairment losses cannot be reversed under ASPE 3063. Under IAS 36, impairment losses can be reversed for all assets except goodwill when there is a change in estimates used to determine the recoverable amount.

Held for Sale (HFS) Conditions

Requires six conditions: committed plan to sell, immediate availability, active buyer search, sale probable within 1 year, actively marketed at reasonable price, and unlikely significant change to plan.

Held for Sale Accounting Impact

Assets held for sale are measured at the lower of carrying value and fair value less cost to sell. Amortization ceases, and the asset is presented separately on the balance sheet.

Discontinued Operation Definition

A component of an entity disposed of or classified as HFS that represents a separate major line of business or geographic area, is part of a single coordinated disposal plan, or is a subsidiary acquired exclusively with a view to resale.

Government Assistance for Capital Assets Accounting

Entities can choose to either: (1) deduct the grant from the cost of the capital asset and amortize the net amount, or (2) defer the grant and amortize it into income on the same basis as the capital asset depreciation.

Significant Influence Indicators

Presumed with ownership of $20\times 10^{-2}$ ($20[\text{percent}]$) or more of voting shares. Indicators include board representation, policy-making participation, material intercompany transactions, interchange of managerial personnel, or provision of essential technical information.

Joint Control Definition

Joint control exists when decisions regarding the financial and operating policies of an arrangement require the unanimous consent of the parties sharing control.

Business Combination Definition

An event where one entity obtains control over another entity, accomplished through either the purchase of assets or the purchase of shares.

Goodwill Calculation Formula

$$\text{Goodwill} = [\text{Consideration paid} + \text{NCI}] - \text{FV of } 100\text{\% of identifiable assets and liabilities}$$

Inventory Lower of Cost and NRV Requirement

Inventories must be recorded at the lower of cost and net realizable value (NRV). Permissible costing methods are FIFO or weighted average cost; LIFO is not acceptable.

Asset Retirement Obligation (ARO) Definition

A legal or contractual obligation associated with the retirement of a tangible long-lived asset, measured at the present value of expected future cash outflows.

Commercial Substance Criteria

A transaction has commercial substance if the entity's expected future cash flows change significantly, due to a significant difference in cash flow configuration or entity-specific value relative to fair value.

IFRS 9 Financial Instrument Categories

1. Amortized cost. 2. Fair Value Through Other Comprehensive Income (FVOCI). 3. Fair Value Through Profit or Loss (FVTPL).

Compound Instrument Presentation (ASPE 3856 vs. IAS 32)

Compound instruments are split into debt and equity components. ASPE 3856 allows allocating proceeds between debt/equity or placing full proceeds in liability. IAS 32 requires the residual method (debt valued first, residual to equity).

Biological Assets vs. Agricultural Produce (IAS 41)

Biological assets are living animals or plants (measured at fair value less costs to sell). Agricultural produce is the harvested product (measured at fair value less costs to sell at harvest point).

Investment Property Measurement Models (IAS 40)

Property held to earn rentals or for capital appreciation. Entities choose either the Fair Value Model (measured at FV, changes to net income, no depreciation) or the Cost Model.

Basic EPS Calculation Formula

$$\text{Basic EPS} = \frac{\text{Net earnings (loss) available to common shareholders}}{\text{Weighted average common shares outstanding (WACSO)}}$$

Diluted EPS Calculation Formula

$$\text{Diluted EPS} = \frac{\text{Net earnings (loss) available to common shareholders} + \text{Income impact of POS}}{\text{WACSO} + \text{Share impact of POS}}$$

Operating Segment Quantitative Thresholds (IFRS 8)

A segment is reportable if it meets any 10% threshold: reported revenue (external and internal) $\to 10\text{\%}$, absolute profit/loss $\to 10\text{\%}$ of greater of combined profit or combined loss, or assets $\to 10\text{\%}$ of combined assets.

NPO Accounting Methods (Part III)

NPOs choose between the Deferral Method (matches restricted contributions to expenses, usually single-column) and the Restricted Fund Method (reports restricted contributions immediately in restricted funds, multi-columnar).

Net Defined Benefit Obligation Formula (IAS 19)

$$\text{Net Defined Benefit Asset (or Liability)} = \text{Present Value of Defined Benefit Obligation (DBO)} - \text{Fair Value of Plan Assets}$$

Deferred Tax Calculation Rules (IAS 12)

Deferred tax assets (DTAs) equal deductible temporary differences $\times$ applicable tax rate (recognized if future taxable profit is probable). Deferred tax liabilities (DTLs) equal taxable temporary differences $\times$ applicable tax rate.