SBR: Strategic Business Reporting Lecture Notes Flashcards

Comprehensive vocabulary flashcards covering the key accounting standards and concepts in the Strategic Business Reporting (SBR) syllabus, including IAS and IFRS requirements.

Depreciation

The systematic allocation of cost of an asset over its useful life.

Impairment

A sudden fall in the value of an asset.

Market Capitalization

$$\text{Total \# of shares} \times \text{Market price}$$

Recoverable Amount

The higher of an asset's Fair Value less Cost to sell and its Value in Use.

Value in Use (V.I.U)

The present value of future cash flows, including disposal cash flows, expected from an asset.

Historical Carrying Value

The carrying value that would have been recorded if there had been no impairment in the past.

Cash Generating Unit (CGU)

The smallest group of assets that generates independent cash flows, such as a classroom or a subsidiary.

Non-Current Asset Held for Sale (HFS)

An asset whose carrying value is principally recovered through a sale transaction rather than from continuing use.

Discontinued Operation

A component of an entity with separately identifiable revenues, costs, and cash flows that represents a product or geographical area of business.

Abandoned Asset

Assets which an entity has discontinued using but has no intention to sell, therefore not classifiable as Held for Sale.

Biological Asset

A living plant or animal.

Agricultural Produce

The output of a biological asset at the point of harvest, such as milk from a cow or wool from a sheep.

Bearer Plant

A plant expected to be used for more than one period in the production of agricultural produce, and not intended to be sold as produce itself except for scrap.

Provision

A liability of uncertain timings or amount.

Constructive Obligation

An obligation created by past practices or policies that establishes a valid expectation in other parties.

Onerous Contract

A contract where the future economic benefit is less than the unavoidable costs, such as a non-cancellable lease on a machine that can no longer be used.

Intangible Asset

An asset that has no physical substance, is non-monetary, and is identifiable or separable/arising from legal rights.

Functional Currency

The currency of the primary economic environment where the entity operates.

Presentation Currency

The currency in which the entity presents its financial statements.

Monetary Assets

Cash and amounts to be received in fixed and determinable amounts of money, such as receivables or loan notes.

Investment Properties

Property held to earn rentals, for capital appreciation, or both.

Fair Value (IFRS 13)

The exit price to sell an asset or price paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Level 1 Inputs

Unadjusted quoted prices of identical goods in an active market, such as a stock exchange.

Level 3 Inputs

Unobservable inputs or management guesses, such as the present value of future cash flows.

Government Grant

An economic benefit provided by the government through the transfer of resources in exchange for compliance with certain conditions.

Accounting Policies

Rules, regulations, and principles applied in accounting, such as FIFO, AVCO, or the Cost Model vs. Revaluation Model.

Accounting Estimates

Judgments used in accounting for items with uncertain values, such as useful life, scrap value, or doubtful debts.

Joint Venture

A joint arrangement using a separate vehicle where the parties have interest in the net assets, accounted for using the equity method.

Related Party Transaction

A transfer of resources, services, or obligations between related parties, regardless of whether a price is charged.

Key Management Personnel

Individuals directly (Executive Directors) or indirectly (Non-Executive Directors) involved in planning, control, and decision making of the organization.

Right Of Use (R.O.U) Asset

An asset representing a lessee's right to use an underlying asset for the period of a lease.

Finance Lease

A lease that transfers substantially all risks and rewards of ownership to the lessee, typically for the major part of the asset's life.

Defined Contribution Plan

A pension plan where the employee bears the risk and the employer simply pays a fixed contribution to the fund.

Defined Benefit Plan

A pension plan where the employer bears the risk of providing a specific benefit to the employee at retirement.

Current Service Cost

The pension amount earned by an employee in the current period that will be paid in the future.

Share Appreciation Right (SAR)

A cash-settled share-based payment where the employer promised to pay cash equal to the market price of shares in excess of an exercise price.

Financial Instrument

Any contract that generates a financial asset for one entity and a financial liability or equity instrument for another entity.

Hedged Items

Transactions to which risk pertains, such as inventory or shares, that are protected through hedging.

CODM

The Chief Operating Decision Maker; a function that reviews the performance of operating segments and makes resource allocation decisions.

Qualifying Asset

An asset that takes a substantial period of time to complete, such as the construction of a building or a machine.

Adjusting Event

An event occurring after the reporting period that provides evidence of conditions that existed at the statement of financial position date.

EBITDA

Earnings Before Interest, Tax, Depreciation, and Amortization; often referred to as 'Cash Profit'.