Financial Accounting and Reporting
Financial Accounting and Reporting tests whether you can apply IFRS recognition, measurement, presentation and disclosure rules and produce statements that stand up against statutory reporting in Kazakhstan. Items are usually applied: a short fact pattern, a figure to compute, and a treatment to justify in one or two sentences.
Recurring standards
- IAS 1: going concern, accrual, consistency, materiality and comparatives; expenses classified by function or by nature.
- IFRS 15: identify the contract, separate performance obligations, determine and allocate the transaction price, recognise when control transfers.
- IAS 2: inventory at the lower of cost and net realisable value; cost excludes abnormal waste and storage unless the storage is a necessary production stage.
- IAS 16: capitalise directly attributable costs, depreciate significant components separately, and revalue an entire class if the revaluation model is chosen.
- IAS 37: a provision needs a present obligation from a past event, a probable outflow and a reliable estimate.
- IFRS 9 and IFRS 10: amortised cost with expected credit losses; control means power, exposure to variable returns and the ability to use that power.
Worked example
Inventory cost is 1,000,000 KZT. Expected selling price is 1,150,000 KZT, completion costs are 100,000 KZT and selling costs 150,000 KZT. Net realisable value is 1,150,000 − 100,000 − 150,000 = 900,000 KZT, so write the inventory down by 100,000 KZT and charge it to profit or loss. NRV is entity-specific and uses the price the entity expects, not fair value and not replacement cost. A later reversal is permitted, but only up to the original cost.
Traps
- Reversing a write-down above original cost when prices recover.
- Putting recoverable VAT, trade discounts or abnormal freight into inventory cost.
- Recognising revenue on a bill-and-hold sale before control passes.
- Offsetting deferred tax assets against liabilities of a different tax authority.