BUSI2143 ICR Accounting Standards and Financial Reporting

A comprehensive vocabulary flashcard set for BUSI2143 ICR, covering IFRS/IAS principles, financial statement components, accounting standards, and financial ratios for exam preparation.

Conceptual Framework

The foundation behind IFRS financial reporting explaining the objective of reporting, elements of financial statements, and recognition/measurement ideas.

Fundamental Qualitative Characteristics

Relevance and faithful representation.

Relevance

Information that makes a difference to decisions; includes predictive value, confirmatory value, and materiality.

Faithful Representation

Information representing economic substance which is complete, neutral, and free from error (CNF).

Enhancing Qualitative Characteristics

Comparability, verifiability, timeliness, and understandability (CVTU).

Accrual Basis

Recognizing income when earned and expenses when incurred, rather than when cash is exchanged.

Current Asset

An asset realized or consumed in the normal operating cycle, held for trading, or expected to be realized within $12$ months.

Tax Paid Formula

$$\text{Opening tax payable} + \text{tax expense} - \text{closing tax payable}$$

Interest Paid Formula

$$\text{Opening interest payable} + \text{finance cost} - \text{closing interest payable}$$

PPE Disposal Proceeds Formula

$$\text{Carrying amount disposed} \pm \text{gain/loss on disposal}$$

Accounting Policy Change

Treated retrospectively by restating comparatives and adjusting opening equity.

Accounting Estimate Change

Treated prospectively, affecting the current and future periods without restating old years.

Adjusting Event

An event after the reporting date providing evidence of a condition that existed at the reporting date.

Non-adjusting Event

An event showing a condition arising after the reporting date; requires disclosure if material but no adjustment.

Deferred Tax Formula

$$\text{Temporary difference} \times \text{tax rate}$$

Property, Plant and Equipment (PPE) Recognition

Recognized when future economic benefits are probable and cost can be measured reliably.

Straight-line Depreciation Formula

$$\frac{\text{Cost or valuation} - \text{residual value}}{\text{useful life}}$$

Qualifying Asset

An asset that necessarily takes a substantial period of time to get ready for its intended use or sale.

Research Expenditure

Costs that must be expensed immediately in the statement of profit or loss.

Development Recognition Criteria

Technical feasibility, intention to complete, ability to use/sell, resources available, probable benefits, and reliable measurement (T-I-A-R-B-M).

Recoverable Amount

The higher of value in use (VIU) and fair value less costs of disposal (FVLCD).

Impairment Loss Formula

$$\text{Carrying amount} - \text{recoverable amount}$$

Capital Grant Methods

Deferred-income method (release over life) or Netting method (deduct from asset cost).

Lease Definition

A contract conveying the right to control the use of an identified asset for a period of time for consideration.

Lease Liability Roll-forward

$$\text{Closing liability} = \text{opening liability} + \text{interest} - \text{lease payment}$$

IFRS 15 Five-Step Model

1. Identify contract, 2. Identify obligations, 3. Determine price, 4. Allocate price, 5. Recognize revenue (COPAR).

Provision Recognition Criteria

Present obligation from a past event, probable outflow of resources, and reliable estimate (P-P-R).

Held for Sale (HFS) Measurement

Measured at the lower of carrying amount and fair value less costs to sell (FVLCTS).

Inventory Measurement

Measured at the lower of cost and net realisable value (NRV).

Net Realisable Value (NRV) Formula

$$\text{Estimated selling price} - \text{estimated completion costs} - \text{estimated selling costs}$$

Biological Assets Measurement

Measured at fair value less costs to sell (FV - selling costs) under IAS 41.

Sustainability Disclosure Areas

Governance, strategy, risk-management processes, and performance/metrics/targets (G-S-R-P).

Gross Profit Margin Formula

$$\frac{\text{Gross profit}}{\text{Revenue}} \times 100\%$$

Gearing Formula

$$\frac{\text{Debt}}{\text{Debt} + \text{Equity}} \times 100\%$$

Harmonisation

The process of making accounting standards in different countries more similar.

Standardisation

The use of identical accounting standards and processes across different countries.