Financial Accounting and Reporting
What the exam tests
Financial Accounting and Reporting tests how well you apply the Myanmar Financial Reporting Standards (MFRS) to prepare and present general-purpose financial statements. Expect the conceptual framework, revenue, leases, property plant and equipment, impairment, provisions, inventories and presentation disclosures.
Core rules
- MFRS 15 uses the five-step model: identify the contract, identify performance obligations, determine transaction price, allocate the price, and recognise revenue when control transfers.
- MFRS 16 puts lessees on a single balance-sheet model: recognise a right-of-use asset and lease liability, with limited short-term and low-value exceptions.
- MFRS 116 requires component depreciation and reviews of useful life and residual value.
- MFRS 36 requires impairment testing when indicators exist; goodwill impairment cannot be reversed.
Worked example
A vendor sells equipment with installation for 120,000. Standalone selling prices are 90,000 for equipment and 30,000 for installation. Total standalone price is 120,000, so allocate 90,000 to equipment and 30,000 to installation. Recognise equipment when control transfers. Recognise installation over time only if the installation is distinct and the over-time criteria are met; otherwise treat it as part of the equipment obligation. If consideration were 108,000, allocate 81,000 and 27,000 using the same 75:25 ratio.
Traps that cost marks
Allocating a discount only to selected obligations; treating installation as separate when it is not distinct; capitalising staff training; reversing goodwill impairment; ignoring lease renewal options that are reasonably certain; and presenting exempt income without the required disclosure.