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cuongtd Last update 25/11/2019 Analysis of cash flows provides a introduction on how to…. How to use the cash flows in the statement of cash flows to form a opinion on the performance of a business under the slogan: CASH is KING! See operating, financing and investing activities for a technical explanation of the components of … Read more
Last update 11/12/2019 The cash flow hedge is one of three hedges defined in IFRS 9, the others are the fair value hedge and the hedge of a net investment. Hedge accounting can bring a number of advantages over traditional accounting methods. The core benefit is that by addressing the timings mismatch associated with standard derivative … Read more
Last update 12/11/2019 Adjustment of an error in previously issued financial statements is not an accounting change. Such errors include mathematical mistakes, mistakes in the application of accounting principles, or oversight or misuse of facts that existed at the time financial statements were prepared. – IN SHORT – Adjustments of accounting errors. If detected in … Read more
Last update 03/08/2019 Cash is defined as ‘Cash on hand and demand deposits’. Cash equivalents is defined as ‘Short-term, highly liquid investments that are readily convertible to known amounts of cash and that are subject to an insignificant risk of changes in value’. That cash (and cash equivalents) matters makes sense: CASH IS KING is … Read more
Last update 26/11/2019 Alternative performance measures is about what needs to be improved in financial reporting, more relevance, more transparency, more accuracy, more fair value? Effective communication in financial statements is also supported by considering entity-specific information is more useful than standardised descriptions, sometimes referred to as ‘boilerplate’ [IAS 1 7.6] Although financial statements are … Read more
Last update 05/01/2020 Cash accounting – IFRS only accepts accounting for financial reporting on an accrual basis, see below. [IAS 1 27] However, tax authorities sometimes allow (smaller) entrepreneurs to prepare Financial Statements for tax filing purposes on a cash basis. The cash basis is much simpler, but its financial statement results can be very … Read more
Last update 30/09/2019 Many measurements in financial reporting involve allocations of costs and revenues to different accounting periods and different assets. These allocations inevitably include an element of arbitrariness and therefore subjectivity. Just to name a few obvious items: Depreciation of fixed assets involves judgmental allocation decisions (See explanation below). Where assets are bought for … Read more
Last update 12/12/2019 A business model assessment is needed for financial assets that meet the SPPI criterion, to determine whether they meet the criteria for classification as subsequently measured at amortised cost or FVOCI. [IFRS 9 B4.1.1 ] Financial assets that do not meet the SPPI criterion are classified as at FVPL irrespective of the … Read more
Last update 18/11/2019 Allocation between Controlling and Non-controlling interest is about consolidation, obtain control over but not hold 100% in another entity/subsidiary. When a parent entity first obtains control over another entity, it recognises any non-controlling interest in the new subsidiary’s net assets as illustrated in the example below. In subsequent periods the parent allocates … Read more
Last update 02/08/2019 A business combination is: a transaction or event in which acquirer obtains control over a business (e.g. acquisition of shares or net assets, legal mergers, reverse acquisitions). Transactions sometimes referred to as ‘true mergers’ or ‘mergers of equals’ are also business combinations as that term is used in IFRS 3. The three … Read more