CA Final Financial Reporting key terms

An optional relief under Ind AS 101 that lets a first-time adopter avoid full retrospective restatement for specified items, such as business combinations or deemed cost of property, plant and equipment.

An amount used as a substitute for carrying amount at the date of transition, such as fair value or a previous GAAP revaluation, permitted under Ind AS 101 for specified assets.

The beginning of the earliest comparative period presented in the first Ind AS financial statements, from which the opening Ind AS balance sheet is prepared.

Correcting the recognition, measurement and disclosure of amounts as if a new accounting policy had always been applied, or an error had never occurred, with comparatives adjusted.

An omission or misstatement in prior-period financial statements arising from failure to use reliable information that was available when those statements were authorised for issue.

An operating segment, or aggregation of segments, that exceeds quantitative thresholds of revenue, profit or loss, or assets, or is designated as reportable by management.

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

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

The amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services, adjusted for variable consideration, significant financing and non-cash consideration.

Consideration that can change based on discounts, rebates, refunds, incentives, penalties or contingencies, estimated using the expected value or most likely amount and constrained.

Recognising revenue as performance progresses when the customer simultaneously receives benefits, the entity creates or enhances an asset the customer controls, or the asset has no alternative use with a right to payment.

A measure of progress towards satisfying a performance obligation based on resources consumed, such as costs incurred, labour hours or machine time, relative to total expected inputs.

An asset representing a lessee's right to use an underlying asset for the lease term, measured initially at the lease liability plus initial direct costs and adjusted for lease incentives and restoration obligations.

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

The rate of interest a lessee would pay to borrow over a similar term, with similar security, the funds needed to obtain an asset of similar value in a similar economic environment.

The smallest identifiable group of assets that generates cash inflows largely independent of the cash inflows from other assets or groups of assets, used for impairment testing.

The higher of an asset's fair value less costs of disposal and its value in use, used to determine whether an impairment loss should be recognised.

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

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

The use of a non-financial asset by market participants that would maximise its value, considering physical, legal and financial feasibility, whether or not the current owner intends that use.

Unobservable inputs for an asset or liability that reflect the reporting entity's own assumptions about the inputs market participants would use, requiring detailed disclosure.

A method of calculating amortised cost using the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument.

The amount at initial recognition minus principal repayments, plus or minus cumulative amortisation using the effective interest method, adjusted for loss allowance.

The probability-weighted present value of cash shortfalls over the expected life of a financial instrument, recognised regardless of whether a loss event has occurred.

The trigger for moving a financial instrument from a twelve-month to a lifetime expected credit loss measurement, assessed at each reporting date relative to initial recognition.

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

The power to govern the financial and operating policies of an entity so as to obtain benefits from its activities, assessed through power over the investee, exposure to variable returns and the ability to use power to affect returns.

The power to participate in the financial and operating policy decisions of an investee but not control or joint control, presumed when holding twenty per cent or more of voting power.

A method of accounting for associates and joint ventures whereby the investment is initially recognised at cost and adjusted thereafter for the investor's share of post-acquisition profit or loss and other comprehensive income.

An asset representing future economic benefits arising from assets acquired in a business combination that are not individually identified and separately recognised, measured as residual consideration.

The excess of the acquirer's interest in the fair value of net identifiable assets acquired over the consideration transferred, recognised in profit or loss after reassessing the measurement.

The present value of expected future payments required to settle employee service in the current and prior periods, measured using the projected unit credit method and actuarial assumptions.

Actuarial gains and losses and the return on plan assets excluding interest, recognised in other comprehensive income and never recycled to profit or loss.

An actuarial technique that attributes benefit to each period of service, projecting future salary and benefit levels to determine the present value of the defined benefit obligation.

Conditions that determine whether an entity receives the services that entitle the counterparty to a share-based payment, comprising service conditions and performance conditions.

The cost recognised over the vesting period for equity-settled or cash-settled awards, measured at grant-date fair value or the liability's fair value respectively.

The amount of income taxes payable in future periods in respect of taxable temporary differences, measured at the tax rates expected to apply when the liability is settled.

A difference between the carrying amount of an asset or liability and its tax base, which may be taxable or deductible and gives rise to deferred tax.

The amount of income taxes recoverable in future periods in respect of deductible temporary differences and unused tax losses, recognised only to the extent recovery is probable.

The currency of the primary economic environment in which an entity operates, determined by considering the currency that mainly influences sales prices and costs.

The currency in which the financial statements are presented, which may differ from the functional currency, with assets and liabilities translated at the closing rate.

The difference resulting from translating a given number of units of one currency into another at different exchange rates, recognised in profit or loss or other comprehensive income.

The value of a fund's total assets less its total liabilities, divided by the number of units outstanding, used to price mutual fund units.

Measuring positions at current market prices rather than historical cost, with unrealised gains and losses recognised, commonly used by broker-dealers and funds.

A measure of a bank's capital expressed as a percentage of risk-weighted assets, ensuring sufficient capital to absorb unexpected losses under prudential regulation.

A concise communication about how an organisation's strategy, governance, performance and prospects create value over the short, medium and long term, structured around content elements and capitals.

The resources and relationships used and affected by an organisation: financial, manufactured, intellectual, human, social and relationship, and natural capital.

A matter is material if it could substantively affect the organisation's ability to create value over the short, medium or long term, assessed by effect on strategy, governance and performance.

A statutory spend requirement for eligible companies, commonly two per cent of average net profits of the preceding three financial years, with unspent amounts transferred to specified funds.

Assistance by government in the form of transfers of resources to an entity in return for past or future compliance with certain conditions, recognised when reasonable assurance exists.

A method of accounting for government grants by recognising them in profit or loss on a systematic basis over the periods in which the entity recognises related costs.

The estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale, used to measure inventory.

Property held to earn rentals or for capital appreciation, or both, rather than for use in production or supply of goods or services or for sale in the ordinary course of business.

Cash generated from operations after capital expenditure and working capital changes, available to service debt and distribute to providers of capital, used in valuation.

The total value of an entity's operating assets, calculated as market capitalisation plus debt and minority interest less cash, used as a valuation benchmark.

A valuation technique estimating the present value of expected future cash flows using a discount rate reflecting the time value of money and the risks specific to those cash flows.

A court- or tribunal-approved restructuring between a company and its members or creditors, involving amalgamation, demerger, reconstruction or capital reduction with prescribed accounting.

A method for common control combinations in which assets and liabilities are recorded at their existing carrying amounts and no new goodwill arises.

An accounting method for restructurings that are not common control combinations, applying acquisition accounting with fair value measurement of identifiable net assets.