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SBR Key Definitions

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10 views

SBR Key Definitions

Uploaded by

Aziz Hasan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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SBR Key Definitions

What is the definition of Joint


Control
• IFRS 11 Joint Arrangements defines joint
control as the contractually agreed sharing
of control of an arrangement, which exists
only when decisions about the relevant
activities require the unanimous consent
of the parties sharing control.
• IFRS 10 states that control requires power
over the investee which gives the investor
the ability to direct the relevant activities.
What is the definition of control in
Business Combination
• An acquirer is the entity which has assumed control
over another entity. An investor controls an investee
where it has:
1. power over the investee, ( eg voting rights , appoint
key management)
2. exposure or rights to variable returns from its
involvement with the investee, (eg dividend)
3. the ability to use its power over the investee to
affect the amount of the investor's returns.
What is a functional currency
 the functional currency is the currency of the primary economic environment in
which the entity operates. Since transactions are initially recorded in an entity's
functional currency, the results and financial position would need to be retranslated
where this differed to the presentation currency.
 In determining its functional currency, should consider the following primary factors:
the currency which mainly influences the sales price for their goods, the
currency of the country whose competitive forces and regulations determine
the sales price and also the currency which influences labour, material and
overhead costs.

• Secondary factors include the currency in which financing activities are obtained
and the currency in which receipts from operating activities are retained
What is an intangible asset
• Intangible asset as an identifiable non monetary
asset without physical substance.
• Critical attributes of an intangible asset are:
1.Identifiability-a customer contract must either be
capable of being used or sold separately, or it
must arise from legal or contractual right
2.Control (power to obtain benefits from the asset)
3.Future economic benefits
Explain what is HFS
An asset or disposal group should be classified as held for sale if the carrying
amount will be primarily recovered through a sales transaction. For
this to be the case, IFRS 5 Non-current Assets Held for Sale and Discontinued
Operations states that:
1. The asset must be available for immediate sale in its present
condition and the sale must be highly probable
2. The sale must be expected to be complete within 12 months
3. The asset must be actively marketed at a reasonable price
4. Management must be committed to a plan of sale and it is unlikely that
any significant changes to the plan will be made.
Exception is permitted where the sale is still deemed to be highly
probable and the delay was caused by events which were unforeseen and
beyond the control of management. be classified as a disposal group held for
sale.
• measured at fair value less costs to sell with any subsequent
decreases in fair value less costs to sell taken to consolidated profit
What is criteria that must be
satisfied for a provision to be
recognised.
A provision for restructuring costs should only be recognised in the financial statements
of Bagshot Co where all of the following criteria are met:
 A reliable estimate can be made of the amount of the obligation
 It is probable that an outflow of resources embodying economic benefits will be
required to settle the obligation
 There is a present obligation as a result of a past event.
What is stewardship ?
• Stewardship is an ethical principle which embodies the
responsible planning and management of resources.
• The effectiveness of stewardship can only be assessed if
an entity's financial statements faithfully
represent its performance, position and cash flows.
What are key characteristics of
Associate
1. Significant influence
2. Board membership
3. 20-50% ownership

Significant influence is the ability to participate in the


financial and operating policy decisions of the investee,
but is not control or joint control over these policies.
Explain the steps for a further
acquisition
• The additional purchase would step acquisition.
• Goodwill will be calculated as the amount by which the
fair value of the consideration exceeds the fair
value of the identifiable net assets on acquisition.
• Remeasure its previously held equity interest in at
its acquisition fair value and recognise the
resulting gain or loss in the consolidated
statement of profit or loss.
• Goodwill will be calculated by including both the fair
value of the previously held equity interest and
the fair value of the additional consideration.
How are FX gain/losses treated
• FX gains/losses OCI
• disposal of the subsidiary and the subsequent recycling
out of OCI and into profit
What are the key characteristics of
an Subsidiary
• Control – Power over investee/ Exposed to variable
returns/ ability to use power to affect return
• 50% ownership
What are the principles for
capitalisation
• Development costs can only be capitalised if the project
is profitable,
• the company intends to use or sell the product,
• resources are available to complete the project,
• the company has the ability to use or sell the
product,
• the project is technically feasible and the
expenditure is identifiable.
What is the definition of FV
• IFRS 13 Fair Value Measurement states that the fair
value is the price which would be received to sell an
asset or paid to transfer a liability in an orderly
transaction between market participants at the
measurement date.

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