Intermediate Accounting 1

1. FAR 1: ASSETS
GATO, Abdul Barri Indol
MSU - Main Campus
09452146094
Cash and Cash Equivalents
Bank Reconciliation
Receivables
Biological Assets
Inventories
Investment
Property, Plant and Equipment
Government Grants
Borrowing Costs
Depletion
Investment Property
Intangible Assets
Funds and Other Investments
Impairment of Assets

2. CASH
CASH EQUIVALENTS
BANK RECONCILIATION
Cash on Hand Cash in Bank Cash funds
‘tao’ checks
traveler’s
manager’s
cashier’s
Money order
Bank drafts
Demand/current account
Savings account
Compensating balances
- if unrestricted or
informal
Petty Cash fund
Dividend fund
Interest fund
Revolving fund
Tax fund
Bank
Overdraft
GR: Current Liability
Except:
Multiple accounts
in one bank
Immaterial
Can be offset
against Cash
Criteria
Original maturity
OR
Acquired before maturity
3 months
or less
Components
Treasury bills
Time deposit
Certificate of deposit
Commercial papers
Money market placements
Mandatory redeemable
preferred share
Silent:
Treasury notes
Treasury bonds
NCA
Savings
Savings certificate
Cash
Cash Equi
If criteria met
Proof of Cash
Per Bank
Deposits in Transit
Outstanding Checks
July
August
July
August
Per Book
JULY RECEIPTS DISBURSEMENTS AUGUST
Credit Memo
July
August
Debit Memo
July
August
Notes & Interest
collected by bank
Book errors
Bank service charge
NSF or DAIF checks
Book errors
Exclude
cancelled
checks
Errors
UNDER receipt
OVER disbursement
OVER receipt
UNDER disbursement
xx xx
xx xx
xx xx
xx xx
UNADJUSTED BALANCES xx xx xx xx
xx xx
xx xx
xx xx
xx xx
xx xx
xx xx
xx
xx
xx
xx
xx xx
xx xx
xx xx
xx xx
July
August
July
August
July
August
July
August
ADJUSTED BALANCES xx xx xx xx
SPECIAL CASES
Prior month error: check journal entry if to add or deduct
Current month error: check nature of error
Error on receipt - all receipts item
Error on disbursement - all disbursements item
1) NSF checks redeposited during the current month
Affected items:
BANK (Receipts) (Disbursements)
2) Errors prior month corrected in the current month
Affected items:
BOOK (July) (August)
or
July August
UNADJUSTED BALANCES xx xx xx xx
ADJUSTED BALANCES xx xx xx xx
UNDER receipt
xx xx
July
OVER receipt
xx
xx
July
Debited July Credited receipts
Credited July Debited disbursements
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3. TRADE AND OTHER RECEIVABLES
BIOLOGICAL ASSETS
S
I
P
hipping pt
n (freight)
repaid (freight)
+ Accounts Rec’ble
D
O
C
estination
ut (freight)
ollect (freight)
- Accounts Rec’ble
DELIVERY?
There is revenue No revenue despite delivery
FOB Shipping Point
Installment sale
Lay away sale
Bill & Hold
Agricultural produce
Upon delivery Before delivery Sale with repurchase
Sale on approval / trial
FOB Shipping Point: FOB Seller / CIF / FAS / Place of Shipper
FOB Destination: FOB Buyer / Ex-ship / Place of Buyer
Bad debt % =
Write offs - Recoveries
Net Sales
TRADE RECEIVABLES NON- TRADE RECEIVABLES
- even > 12 months
Accounts receivable
Notes receivable
Interest receivable
pledged
discounted
assigned
factored
hypothecated
Current: < 1 yr or less
Advances to employees
Advances to suppliers
Non-current:
Advances to affiliates
Security deposit
Subscription receivable
- deduct from SHE if current
NOTE RECEIVABLES LOAN RECEIVABLES
RECEIVABLE FINANCING
1) PLEDGE
2) FACTORING
3) ASSIGNMENT
4) DISCOUNTING
Measurement
Short-term:
Long-term:
Face Value
Fair value
+ Direct costs
Initial Subsequent
Face Value
Amortized cost
Measurement
Fair / Present value
+ Direct costs
- Origination fees
Initial
Subsequent Amortized cost
Impairment
- Discount new cash
flows still at the
ORIGINAL EFFECTIVE %
No effect to the receivable balance
Still owner of receivables pledged
AR-assigned Loans Payable
Balance xx
Collection xx
Sales discounts xx
Sales returns xx
Write-off xx
End xx
Balance xx
Interest expense xx
Payments xx
End xx
- = Equity portion
Disclosed in the
notes to
financial
statements
Coverage
Bio assets except bearer plants
Agricultural produce @ pt of harvest
Unconditional gov’t grants relating to BA
PAS 41
Bearer
Plants
Animals
Consumable
Plants
Animals
PPE
Tea bush
Grape vine
Fruit-bearing trees
Oil palms
Rubber tree
BIO ASSET
Animals for recreation (zoo): PPE
Ocean fishing
Deforestation
Forest hunting
Fish farming
Plantation
Hurticulture
Measurement
Initial: FV less Costs to Sell
Subsequent: FV less Costs to Sell
Commission to brokers
Levies by regulatory agencies
Transfer taxes and duties
Gains/Losses due to:
1) Price change
2) Physical change
= [Beg. Age x (Change in Price)] x Quantity
= (End. Price x End. Age) - (End. Price x Beg. Age)] x Qty
+ FV less CTS of Newborn @ date of birth
BIO ASSET
Beg. xx
Purchases xx
Change in FV
(gain usually) xx
End xx
Sales xx
Harvest of
consumable xx
If FV less CTS not given
Amount factored xx
Service fee xx
Factor’s holdback xx
Interest charged xx
Net Proceeds xx
G/L on factoring?
- recognize if with recourse only
- if factor’s holdback is returnable,
exclude it from G/L
Maturity value xx
(CA of note + Interest
up to maturity)
Discount charge
(Mat. value x Discount % from
discount date to maturity) xx
Net Proceeds xx
Net Proceeds xx
CA of note + interest xx
already accrued
G/L on Discounting xx
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4. INVENTORIES PAS 2
Not covered
Financial Instruments (PFRS 9)
Biological Assets
Agricultural produce @ pt of harvest
Inventories of producers of
- agri products
- forest products
- mineral products
Inventories of commodity brokers/traders
As to recognition
As to measurement
Recognition
BUYER:
SELLER:
FOB Shipping Point / FOB Seller / CIF / FAS / Place of Shipper
Bill & Hold arrangements / Installment sale / Sale or return
FOB Destination / FOB Buyer / Ex-ship / Place of Buyer
Lay Away sales / Pacto de retro sales
BORROWER: Loan or Pledge of Inventories
Measurement
GR: who owns the goods, shoulders the costs
1) Purchase Price
Regular: at Invoice Price
Deferred settlement: Price under normal credit terms
Lump-sum: allocate using FV method
2) Import Duties
3) Irrecoverable Taxes
4) VAT by NON-VAT Taxpayer
5) Freight & Handling
6) Insurance while IN TRANSIT
7) Broker’s Commission
8) Conversion Costs (Labor & Overhead)
9) Normal Losses
10) Storage for goods in process
INITIAL: @ COST
SUBSEQUENT:
Lower of Cost & Net
Realizable Value (LCNRV)
Net Realizable Value
Finished Goods: Estimated
Selling Price (ESP) less
Estimated Costs to Sell (ECTS)
Work in Process: ESP less
ECTS less Estimated Costs to
Complete (ECTC)
Raw Materials: Current
Replacement Costs but only
if related Finished Goods is
also wrote down to its NRV
Accounting
PERIODIC SYSTEM PERPETUAL SYSTEM
- maintain a Cost of Goods sold account
- inventory count is required
- for inventories that have high volume &
turn-over and low valued items
- no Cost of Goods sold account
- inventory count is encouraged
- for inventories that have
high volume & turn-over and
low valued items
Methods:
FIFO
Weighted Average
Methods:
FIFO
Moving Average
INVENTORY ESTIMATION
1) Gross Profit Method
2) Retail Method
Interim reporting
Annual reporting
Gross Profit %
Trend
Average
GPR
Overall
GPR
Observe increase in % per year
GPR1 + GPR2 + GPR3 + ...
n
Total Gross Profit
Total Sales
Silent
FAQs
Notes
Estimated Ending inventory
Loss on casualty i.e fire
Inventory shortage
consider Sales returns only
Sales allowances
Sales discounts
PURCHASE COMMITMENTS
Cost Retail
Beginning Inventory
Purchases
Freight-in
Purchase Discounts
Purchase Returns & Allow.
Departmental Transfer-In
Departmental Transfer-Out
Abnormal Loss
Net Markup
Net Markdowns
TGAS @ Cost / @ Retail
Ending Inventory at Retail
Sales
Sales Returns
Employee Discounts
Normal Losses
Net Sales
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
a. Average Retail Method
b. FIFO Method
c. Conservative Retail Method
EI @ Cost =
COGS =
EI @ retail X
TGAS @ Cost
TGAS @ Retail
TGAS @ Cost - EI @ cost
EI @ Cost =
COGS =
EI @ retail X
TGAS @ Cost -
BI @ Cost
TGAS @ Retail -
BI @ Retail
TGAS @ Cost - EI @ cost
EI @ Cost =
COGS =
EI @ retail X
TGAS @ Cost
TGAS @ Retail -
Net Markdowns
TGAS @ Cost - EI @ cost
- recognize losses
- recognize gains but up til the loss recognized
Amount of Purchases: Price @ Settlement Date
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5. EQUITY DEBT
Business Model Test
Held for Trading? To hold financial asset and
collect contractual cash flows
To collect contractual cash
flows and sell financial assets
FV-OCI option used?
FV-P&L option used?
YES
YES
YES
YES
NO
NO
NO
NO
NO
YES
@ Amortized Cost
@ FV - P&L
@ FV - OCI
INVESTMENT IN EQUITY SECURITIES
Classification
FV-P&L
FV-OCI
Initial
FV
FV + Transaction costs
Changes
P&L
OCI
INVESTMENTS PFRS 9
- no reclassification allowed
Reclassification
% of ownership PREFERRED SHARES ORDINARY SHARES
< 20%
20% - 50%
> 50% - 100%
FV-P&L
or
FV-OCI
FV-P&L / FV-OCI
Investment in Associate
Investment in Subsidiary
*Exclude dividend-on
Dividend Income?
Cash
Property
Shares
Same class: memo entry
Different class: allocate using FV method
Shares in lieu of cash dividend
Cash in lieu of shares dividend
- ‘
as if sold’ treatment
- cost of investment is reduced
Stock Rights
1) Selling right-on
2) Selling ex-right
- use FV of stock right
- when FV not available,
use theoretical value:
Value of
one right
=
FV of stock
right-on -
Exercise
price
# of rights to
purchase one share
Special Assessment?
- additional cost of investment
but no increase in # of shares
Stock Splits
@ Cost
@ FV-P&L
@ FV-OCI
- memo entry
shares
par
Entry:
FV-P&L xx
Unrealized Gain-P&L xx
FV-OCI xx
Unrealized Gain-OCI xx
Subsequent
FV
Entry:
Value of
one right
=
FV of stock
right-on -
Exercise
price
# of rights to
purchase one share
+ 1
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6. INVESTMENT IN DEBT SECURITIES
INVESTMENT IN ASSOCIATE
Reclassification
- allowed if there is change in business model only
- reclassification date: first day of reporting
period following change in business model
- for Investment @ AC, use effective rate @ date
of reclassification
Classification
FV-P&L
FV-OCI
@ AC
Initial
FV
FV + Transaction costs
FV + Transaction costs
Changes
P&L
OCI
-
Subsequent
FV
FV
@ AC
Disposal
- no partial disposal for FV-OCI
- all realized G/L thru disposal (arrow) P&L
Impairment
FV-P&L
Impairment Loss = Recoverable Amount - Amortized Cost
FV or PV @ orig. effective rate
Impairment Reversal
FV @ Balance Sheet date
@ AC if not impaired
@ AC after impairment
UG-OCI
Reversal of
impairment
OCI @ AC
@ AC @ FV-OCI
Effective rate: AS IS
Interest Income: AS IS
G/L: OCI
No G/L
Significant
Influence:
20% - 50% (presumed unless stated)
Representation in BOD
Participation in policy-making
Material transactions between
investor & investee
Interchange of managerial personnel
Provision of essential technical info
Potential Ordinary
shares?
Included in determining significant influence
Excluded in determining share in NI / dividends
Measurement @ COST
Beg. xx
Share in NI * xx
Share in increase in OCI xx
End. xx
Dividends received xx
Share in Net Loss ** xx
Amortization of excess
(excluding goodwill) *** xx
Impairment Loss (PAS 36) xx
Share in decrease in OCI xx
Investment in Associate
*NI adjustments
Under (-) or over (+)
valuation of
Preference dividends
(Current year only)
Inventory - - - - - - - - (-) or (+)
Land - - - - - - - - - - - - (-) or (+)
Depreciable Asset - - - - (-) or (+)
Cumulative
Not cumulative
Mandatory
redeemable PS
Deduct (declared or not)
Deduct IF actually declared only
IGNORED (interest expense sya)
*** Goodwill is impliedly part of initial cost of investment
Gain on bargain purchase? Addition to cost of investment
Net Investment Income
Amortization of excess
(excluding goodwill) xx
Impairment Loss xx
Share in Net Income
(Including gain on
bargain purchase)
** In case of heavy losses, loss recognition shall be in this order:
1) CA of investment in associate
2) Investment in preferred shares
3) Unsecured long-term receivables
4) Any further losses, recognize promptly with a credit to liability
Total
Interest
Recovery of heavy losses?
Just reverse the order to
recover losses
vs
vs
xx
when
sold
- over
life of
asset
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7. PROPERTY
, PLANT & EQUIPMENT PAS 16
Exploration & Evaluation assets
Lease or
Rental?
Operating
Finance
Land &
Building
Others
Investment
Property
PPE
Spare Parts
GR: Inventory or Prepaid Expense
Exc: PPE
Major & Long-lived Standby equipments
Measurement
Initial: COST MODEL + DACs
Subsequent: COST or REVALUATION MODEL
Initial Cost of Dismantling: if required by law/contract
Cash Discounts: deducted whether taken or not
DACs (Directly Attributable Costs)
Testing
Installing
Professional fees
Site Preparation
Initial Delivery & Handling
Employee benefits
Exchange of PPE
1) with commercial substance (material)
Order of Priority:
a. FV of Asset given +/- boot
b. FV of Asset received
c. CA of Asset given
Gain/Loss computation: exclude the boot
2) without commercial substance (immaterial)
- no gain/loss (@ carrying amount)
Land & Building
- ff. costs shall be allocated between the two (if silent)
Purchase price
Brokers commission
Escrow
Relocation
Mortgages
Taxes
Payments to tenants to vacate premises
Option contract on taken properties
Allocated
costs to old
building?
Unusable
Tear down and
erect new
building
Allocate to LAND
Expensed
Demolition costs:
allocate to new building
(do not deduct salvage proceeds)
Depreciation Important Notes
Declining balance method:
the only method that ignores residual value
Composite % =
Total annual SLM depreciation
Total Cost of Assets
Composite Life = Total Depreciable Amount
Total annual SLM depreciation
Composite Method
- no gain/loss upon disposal
(close to accumulated depreciation)
- depreciation every year-end
Retirement Method
Gain/Loss = (# of retired x FIFO cost) - Proceeds
Replacement Method
Gain/Loss = (# of retired x Replacement cost) - Proceeds
Inventory Method
Beg. x
Purchases x
End. x
Disposed x
Depreciation x
Revaluation Model
Subsequent Costs
1) Revenue Expenditures
2) Capital Expenditures
- expensed
Useful life
Capacity / efficiency
Safety
Addition / Expansion
Betterment / Improvement
Replacement
Repairs & Inspection
Reinstallation
- capitalized if it:
Revalued amount: FV or Depreciated Replacement Cost
Revaluation Surplus
Use new residual value but
useful life remains unless stated
- net of tax in Comprehensive Income (changes)
a. Lump-sum realization: asset upon de-recognition
b. Piecemeal: result of time passage
for depreciable assets
Presentation?
OCI - changes / realization in revaluation surplus
Balance Sheet - cumulative balance
Subsequent depreciation?
- update first the class of PPE it
belongs to then compute depreciation
Environment & Safety equipments ⑥
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8. GOVERNMENT GRANTS
BORROWING COSTS
Monetary grants Non-monetary grants
Cash
Receivables
Forgivable Loans
@ Face Value
@ Fair Value
CA of Loan
@ Fair Value plus Direct Costs
Start of accounting: When conditions are started to be fulfilled
Kinds of Grants
1) Grant related to Asset 2) Grant related to Income
Gross method:
Net method:
Recognize Deferred Income
- govt grant
Asset balance: CA less
govt grant
Other Income (income
from govt grant)
Related expense (expenses
from govt grant)
Repayment of Grant
Grant related to
Income
Asset
Gross method Net method
Approach 1
Approach 1 Approach 1
Approach 2
Approach 1
Approach 2
Disclosure
Not required: Name of govt agency
PAS 20
PAS 23
Balance: close Deferred Income - govt grant
Excess: recognize Loss in P&L
Increase CA of asset as result of repayment
Recognize additional cumulative depreciation
Coverage
Inventories
PPE
Intangible Assets
Investment properties under cost model
Long period of time
Commencement
Expenditures incurrence
Borrowing started
Activities (blueprint; permits) started
All met
Suspension
Cessation
Only if major delay
Asset being constructed is
substantially complete
Accounting
- Avoidable Borrowing Costs accounting
GENERAL BORROWING
SPECIFIC BORROWING MIXED BORROWING
- borrowing specifically for the
construction project
Capitalizable BC = Actual BC less Investment Income
- borrowing for general purposes
Capitalizable BC = Lower Actual BC
Maximum BC
Maximum BC = Weighted Average Expenditures (WAEx)
x Weighted Average Interest % (WAIR)
WAIR = Total Interest on General Borrowings
Total General Borrowings
1) Traditional method (silent)
2) Contemporary method (in practice)
Disclosures
Amount of Capitalizable BC
WAIR
WAEx - Specific Borrowings =
WAEx (general borrowings) X WAIR
= Maximum BC
- deduct fully the specific borrowings
to the early dated expenses then
weighted average the remaining
expenses
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9. DEPLETION
INVESTMENT PROPERTY
PFRS 6
- based on management’s policy first
EXPLORATION & EVALUATION ASSETS
- right to explore must be obtained first
Includes
Acquisition costs
Exploratory costs
Before technical
feasibility &
commercial viability
Measurement
Initial:
Subsequent:
@ Cost
Cost or Revaluation model
Presentation
Tangible:
Intangible: PAS 38 (Intangible Assets)
WASTING ASSETS
- natural or mineral resources
- consumable / non-renewable
Includes
Acquisition costs
Residual Value of Wasting Assets
= value of land when restored
Exploration costs
- whether successful efforts or full cost method
Development costs
Tangible
Intangible
PPE
Movable
Immovable
Depreciation
Own useful life (SLM)
Shorter
Own useful life
Useful life,
wasting assets
SLM
Output
method
(Wasting asset)
Example: road construction (since di naman to
usually sinisimento kaya intangible ang dating)
Restoration costs @ PV
Silent: capitalize
Not required to restore: ignore
Depletion Method
When wasting assets starts to be extracted
Rule: No extraction, no depletion
Depletion rate =
Wasting Assets - Residual Value
Total Estimated # of Reserves
X
Change in estimate? Account prospectively
Presentation of depletion?
Sold: Cost of Goods Sold
Unsold: Ending Inventory
Shutdown?
Depletion: ZERO
Depreciation:
(Immovable tangible devt cost)
Must be SLM after shutdown
If resumed promptly, back to
original depreciation
WASTING ASSET DOCTRINE
RE, unappropriated
Add: Accumulated Depletion less
Depletion in Ending Inventory
Less: Capital liquidated, prior yr
Maximum Dividend to be declared
X
X
X
X
PAS 40
Includes
Land / Building or both
Lease under operating lease (as lessor)
Lease under finance lease (as lessee)
L&B for capital apreciation
Classification Issues
1) Operating lease to employees
- treat as Owner-Occupied Property (OOP)
2) Partly Investment Property, Partly OOP
Could be sold separately: account separately
Couldn’t be sold separately: majority rules
3) Ancillary services are provided to tenants
Incidental / insignificant services: Inv Property
Significant: OOP
4) Intra-company rentals
Separate FS: Inv Property
Conso FS: OOP
Measurement
Initial: @ COST + DACs
Subsequent:
Cost Model or
FV Model
Properties under
Finance Lease?
Properties under
Operating Lease?
Fair Value
PV of Minimum
Lease payments
Lower
@ Fair Value
Changes in Accounting Policy
Cost to FV model
FV to Cost model
- prospective
Changes: P&L
Transfers
- OOP to Inv Prop and vice versa
Allowed only if there is change in use ONLY
Measurement:
1) @ Cost - @ CA, no Gain/Loss
2) @ FV
From Inv Prop to OOP
To Inv Prop from
Inventory
PPE
Inventories
PPE
recognize G/L in P&L
the change in FV
Gain/Loss:
A. Impairment Loss
B. Remaining:
Revaluation Surplus
PAS 16 (PPE)
Actual
extraction
E&E Assets
Wasting Assets
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10. INTANGIBLE ASSETS PAS 38
Characteristics
Non-monetary
Identifiable
Sole control of benefits
Separable
Contractual
Measurement
Initial: @ COST (same with PPE, except)
INTERNALLY-GENERATED INTANGIBLE ASSETS
1) Research Phase
GR: Expensed
Exc: Capitalize when acquired as
in-process R&D
2) Development Phase Keyword: ‘design’
GR: Expensed
Exc: Met all 6 criteria (stated in problem)
Probable
Measurable
Technically feasible
Intention to complete such
Sufficient resources to complete such
Available for use / sale
Cost of PPE, materials or
Intangible Asset used in R&D
With alternative use:
Without alternative use:
Depreciate but
classified as
R&D Expense
ALL R&D
Expense
Not Intangible Assets if
internally-generated:
Brands
Masthead
Publishing Titles
Goodwill
Customer Lists
Subsequent:
Cost model
Revaluation model only if there is active market for such asset
Amortization
With finite life:
With indefinite life:
Cost - Residual Value
Useful life
None, only annual impairment test
Presumed ZERO
except if stated
3rd party is committed to buy
such @ end of its life
There is active market for such
Shorter: Legal or Useful Life
Major Categories
MARKETING-RELATED
1) Trademark
Internally-generated
Acquired separately No amortization
2) Masthead
- acquired separately
3) Website development costs
Purpose Internal
External (customers can use)
Stages Application & Infrastructure stage
Graphical design stage
If all 6
criteria are
met
Cost of Litigation: expensed
ARTISTIC-RELATED
1) Copyright
- lifetime of author + 50 yrs after death
CONTRACT-RELATED
1) Franchise (franchisee)
Total expenses
Initial Franchise Fee (amortization)
Continuing Franchise Fee
Legal Fees
Interest Expenses
Shorter: Useful Life or Period granted
2) Leasehold or Lease Right/Bonus (lessee)
- other than the lease payments
Amortization period: lease term
Leasehold Improvement: PPE
(ignore residual value)
TECHNOLOGY-RELATED
1) Patent
Internally-generated
Acquired separately
Amortization
2) Computer Software
GOODWILL
20 yrs or useful life, shorter
Competitive patent to protect original patent:
- remaining life of original patent
Patent to extend old patent:
- all patent shall use extended life
Integral part of PPE: PPE
For licensing / rental:
Intangible Asset if technically feasible
Reproduction of product masters for resale:
Inventory
Cost of Coding
Cost of producing
product masters
- acquired in business combination
- average earnings > normal earnings
Average Net Income X % Average Net Assets X %
Methods:
1) Residual: Purchase Price - FV of Net Assets
2) Direct Method
A. Purchase of excess earnings
GW = (Ave. Earnings - Normal Earnings) X yrs
B. Capitalization of excess earnings
GW = (Ave. Earnings - Normal Earnings) / Cap. %
C. PV of excess earnings
GW = (Ave. Earnings - Normal Earnings) X PV Ordinary Annuity
D. Capitalization of Average earnings
- work back from purchase price = Ave. Earnings / Cap. %
Subsequent Costs
GR: Expensed
Exc: all 6 criteria met
CUSTOMER-RELATED
1) Customer List
- acquired separately
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11. FUNDS & OTHER INVESTMENTS
IMPAIRMENT OF ASSETS
CASH SURRENDER VALUE
BOND-SINKING FUND
OTHER LONG-TERM FUND INVESTMENTS
Whole life insurance only
Beneficiary: entity itself
Initial Payments: allocated over holding period (usually 3 yrs)
CSV account: Initial + Increase in CSV - Decrease in CSV
Life Insurance account: Decrease in CSV - Increase in CSV
- Cash dividend - Initial payment (current year only)
Gain on settlement:
Proceeds
Less: CSV + Unexpired insurance premium
Gain (usually) on settlement
X
X
X
Up to settlement / death of officer
1) Administered by entity
2) Administered by
trustee (bank)
What to record? Interest Income?
Every transaction
Additional
contribution
Increase/decrease
in fund balance
Settlement
When earned
Upon receipt of
Statement of Fund
Balance
RE appropriation for
increases in fund balance
Bond Sinking Fund (BSF)
Beg. xx
Additional Contri xx
Investment Income xx
End. xx
Investment Loss xx
Expenses paid xx
Consider time
value of money
(future value)
Note: any acquisition or sale of BSF Assets don’t affect the BSF balance
1) Preferred Shares redemption fund
2) Asset replacement & expansion fund
3) Contingency fund
When? Carrying Amount > Recoverable Amount
Scope
PPE
Investment Property under cost model
Intangible Assets
Investments in
Associate
Joint Venture
Subsidiary
GR: No indicator, no impairment testing
Exc:
Intangible assets with indefinite life
PPE / Intangible assets not yet ready for use
Goodwill acquired in business combination
(Annual impairment testing)
Recoverable Amount? HIGHER FV less Costs to Sell
Value in Use (discounted)
IMPAIRMENT OF CASH GENERATING UNIT
Impairment Loss 1) Goodwill write-off
2) All non-cash asset prorata based on carrying amount
But each non-cash asset’s CA should not be below its
own recoverable amount
REVERSAL OF IMPAIRMENT LOSS
1) Individual Asset
Cost Revaluation
Recoverable Amount
CA, if not impaired (max limit)
CA, before reversal
Revaluation
surplus
Gain on
revaluation
OCI, net of tax
P&L
2) Cash Generating Units (CGUs)
- allocated pro-rata using own CA
but not to be increased above the LOWER of:
Recoverable Amount
CA if not been impaired
PAS 36
FAQs:
order
vs
vs
:
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⑥
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