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CorporateEntities

Chapter8

TermDefinition
AASB 101 sets the basic requirements for the presentation of general-purpose financial reports.
Financial reports comprise: Statement of Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity, Statement of Cash Flows & Notes
Notes to the Financial Statements would usually be arranged in the following order 1. Summary of significant accounting policies, 2. supporting notes for items in the f'cial s'ment (each item should be cross-referenced & 3. other disclosures not appearing in the f'cial s'ment such as: (Contingent Liabilities & Contractual Commitments)
Accounting Policies: are the specific principles, bases, conventions, rules and practices applied by a company in preparing and presenting financial reports. If not applicable, or a choice is available, management can use their own judgment to adopt accounting policies.
AASB 101 requires comparative amounts for the previous period be given in the financial reports including: the balance sheet, income statement, statement of changes in equity, statement of cash flows &the notes thereto.
Specific instances where comparatives might be changed include: Change to accounting policies (AASB 101 & 108), Changes to accounting estimates affecting assets, liabilities or equity in prior periods (AASB 108 & 110), Corrections of errors in prior periods (AASB 108 & 110)
An entity is required to prepare either one complete Statement of Comprehensive Income or two separate statements:
Under AASB 101 presentation of expenses may be: By their nature (such as occupancy costs and employee benefits By their function depending on what is more reliable and relevant.
Material Items AASB101 Requires separate disclosure of the nature and amount of material income and expense items.
“Material” is defined as items that could individually or collectively influence the economic decisions of users of the financial report.
Examples of Material Items Material write-downs of inventory or property, plant and equipment. Material disposals of property, plant and equipment or investments. Legal settlements.
Income Taxes AASB112 Requires disclosure of how the taxation calculation was affected by permanent differences.
Statement of Changes in Equity. This statement shows all changes in equity arising from transactions with owners in their capacity as owners. Must show: total comprehensive income, the effect of revised accounting standards for components of equity, amounts of transactions with owners & reconciliation between the opening & closing balances of components of equity.
AASB 101 contains specific requirements: Assets and Liabilities are to be classified as current or non-current - except when a presentation based on liquidity is more reliable and relevant.
Current asset definition Expected to be consumed during an operating cycle, or Held primarily to be traded, or Expected to be realised within twelve months from the reporting date, or Cash or cash equivalent
Non-current asset definition All non-current assets, including deferred tax assets.
Current liabilities definition Expected to be settled during an operating cycle, or Held primarily to be traded, or Expected to be settled within 12 months from the reporting date, or There is no unconditional right to defer settlement beyond twelve months.
Non-current liabilities definition All liabilities not current liabilities, including deferred tax liabilities (always non-current).
Operating Cycle (assuming credit sales &credit purchases) is the time between the acquisition of inventory &its realisation in cash or cash equivalents (sales receipts).
If a company’s operating cycle is longer than 12 months, assets expected to realise after twelve months from the reporting date can be classified as current.
Items required to be listed as assets are: Cash&cash equivalents,.... Trade&other receivables, Investments in associates, Available-for-sale investments, Other financial assets, Inventories, Property, plant&equip., Investment property, Goodwill, Other intangible assets, Biological assets, Deferred tax assets
Report separate information for each operating segment: Segment revenue, Segment expenses, Segment profit or loss, Segment assets, Segment liabilities, A reconciliation of segment profit, assets &liabilities to corresponding whole-entity amounts
A reportable segment is a component of business... whose results are independently reviewed by the entity’s management.
Related Party Disclosures: AASB 124 Disclosures required include: The parent of the company and, if applicable, the ultimate parent.
Commitments: The disclosure must include details of amounts payable: within 12 months, between 12 months to 5 years & later than 5 years.
Contingencies are potential assets or liabilities not recognised in the balance sheet. Such as: A loan guarantee that will only result in a liability if a default occurs. A law suit is pending resolution and the settlement cannot be estimated.
held for sale definition if the carrying value of a non-current asset will be recovered through a sale transaction rather than through its continued use, it is classified as a "held for sale" asset.
discontinued operation definition a separate component of a company's business that has either been sold or is classified as held for sale.
Created by: oliverawesome