ICAB AL Corporate Reporting flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Conceptual Framework asset definition

A present economic resource controlled by the entity as a result of past events, where an economic resource is a right with the potential to produce economic benefits.

Recognition criteria

An item is recognised when recognition of the asset or liability and resulting income, expenses or equity changes provides relevant information and a faithful representation of the transaction.

Fair presentation

Financial statements must faithfully represent the effects of transactions and conditions in accordance with the definitions and recognition criteria, with additional disclosure where compliance is insufficient.

Going concern assumption

Financial statements are prepared on the basis that the entity will continue in operation for the foreseeable future, assessed for at least twelve months from the reporting date.

Materiality

Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that primary users make based on the financial statements.

Current liability test

A liability is current when the entity expects to settle it in its normal operating cycle, it is held for trading, or it is due within twelve months of the reporting date.

Change in accounting estimate

A revision of the carrying amount of an asset or liability arising from new information or developments, applied prospectively and disclosed in the period of change.

Prior period error

An omission or misstatement in prior financial statements arising from failure to use reliable information available, corrected retrospectively by restating comparatives unless impracticable.

Operating segment

A component of an entity that engages in business activities, whose operating results are regularly reviewed by the chief operating decision maker, and for which discrete financial information is available.

Reportable segment threshold

A segment is reportable if its revenue, profit or loss, or assets are ten per cent or more of the total, or if it is designated by management.

IFRS 10 control

An investor controls an investee when it has power over the investee, exposure to variable returns, and the ability to use its power to affect those returns.

Goodwill on acquisition

The excess of consideration transferred plus non-controlling interest plus previously held interest over the net fair value of identifiable assets acquired and liabilities assumed.

Bargain purchase gain

Where the net fair value of identifiable net assets acquired exceeds the aggregate of consideration and NCI, the acquirer recognises the excess as a gain in profit or loss.

Non-controlling interest

The equity in a subsidiary not attributable, directly or indirectly, to the parent, presented within consolidated equity separately from owners of the parent.

Unrealised intragroup profit

Profit on assets still held within the group at the reporting date, eliminated in full on consolidation with the relevant share attributed to non-controlling interest.

Equity method

Investment initially recognised at cost and adjusted for the investor's share of post-acquisition profit or loss, other comprehensive income and dividends received.

Joint operation

A joint arrangement in which the parties have rights to the assets and obligations for the liabilities, recognising their share of assets, liabilities, revenue and expenses.

IFRS 15 five steps

Identify the contract, identify performance obligations, determine the transaction price, allocate the price, and recognise revenue when each performance obligation is satisfied.

Performance obligation

A promise to transfer a distinct good or service, or a series of distinct goods or services that are substantially the same and have the same pattern of transfer.

Variable consideration constraint

Variable consideration is included in the transaction price only to the extent it is highly probable that a significant reversal of cumulative revenue will not occur.

Contract asset versus receivable

A contract asset is a right to consideration conditional on something other than the passage of time; a receivable arises when the right becomes unconditional.

Principal versus agent

An entity is a principal and recognises gross revenue when it controls the specified good or service before transfer; otherwise it is an agent recognising a commission.

Right-of-use asset

The lessee's asset representing the right to use an underlying asset for the lease term, measured initially at the lease liability plus initial direct costs and prepayments.

Lease liability measurement

Present value of lease payments not paid at commencement, discounted at the interest rate implicit in the lease or the lessee's incremental borrowing rate.

Finance lease

A lease that transfers substantially all the risks and rewards incidental to ownership of the underlying asset to the lessee, recognised by the lessor as a receivable.

SPPI criterion

Contractual cash flows that are solely payments of principal and interest on the principal outstanding, used to determine classification of financial assets under IFRS 9.

Expected credit loss model

A probability-weighted estimate of credit losses discounted at the effective interest rate, recognised as a loss allowance with 12-month or lifetime measurement.

Significant increase in credit risk

The trigger for moving from 12-month to lifetime expected credit losses, assessed by comparing default risk at the reporting date with that at initial recognition.

Recoverable amount

The higher of an asset's fair value less costs of disposal and its value in use, compared with carrying amount to determine whether an impairment loss is required.

Value in use

The present value of the future cash flows expected to be derived from an asset or cash-generating unit, using a pre-tax discount rate reflecting current market assessments.

Cash-generating unit

The smallest identifiable group of assets that generates cash inflows largely independent of the cash inflows from other assets or groups of assets.

Impairment allocation

An impairment loss for a cash-generating unit is allocated first to goodwill, then pro rata to other assets, limited to the higher of recoverable and zero.