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(A) EQUITY INVESTMENTS AT FAIR

VALUE THROGH PROFIT OR LOSS


(B) EQUITY INVESTMENTS AT FAIR
VALUE THROUGH OTHER
COMPREHENSIVE INCOME
(C) INVESTMENT IN ASSOCIATE

Initially recognized at purchase


price, which is the market value at
purchase date. -FVTPL
The income recognized in profit or
loss includes change in market
value, cash and property dividends
received and realized gains and
losses on disposal.
FVTPL
At the date of the disposal of the
securities, the equity account
existing for the difference between
market and cost may be transferred
to another equity account.
FVTOCI
Impairment loss and reversal of
impairment are both taken as parts
of other comprehensive income.
-FVTOCI
Change in market value is not
recognized, unless there is
permanent impairment in value.
-Investment in Associate
Dividends received are reported as
a decrease in the carrying amount
of the investment.
-Investment in Associate
Any difference between the cost of
investment and the share in the fair
value of the net identifiable assets
is amortized and is considered as an
adjustment to the recognized
income from this investment.
-Investment in
Associate
On reporting date, measured at
market value. - FVTPL
- FVTOCI
Generally, dividends received or
receivable are recorded as dividend
revenue.
FVTPL
-FVTOCI

Initially recognized at purchase


price plus transaction costs.
- FVTOCI
- Investment in
associate
Bonus issue is not separately
recognized in a formal accounting
entity.
FVTPL
-FVTOCI
-Investment in Associate
MEASUREMENTS

CASH- at FACE VALUE/FAIR VALUE


CASH in Foreign CurrencyCURRENT EXCHANGE RATE

ACCOUNTS RECEIVABLEInitial measurement at FACE


VALUE or original invoice amount.
Subsequent measurement at
Net Realizable Value (LCNRV)[amount of cash expected to be
collected or the estimated
recoverable amount]
Short term receivables- FAIR
VALUE is equal to the FACE VALUE
or original invoice amount.
Long term interest- bearing
recievableInitial measurement- FACE
VALUE
FAIR VALUE is equal to the FACE
VALUE
Long term noninterest-bearing
rec.Initial measurement- PRESENT
VALUE
FAIR VALUE is equal to the
PRESENT VALUE of all future cash
flows discounted using the
prevailing rate of interest for
similar receivables.

NOTES RECEIVABLE
Initial measurement at PRESENT
VALUE.
SHORT-TERM notes receivableFACE VALUE

Cost of an inventory comprises:


A. Cost of purchase
-comprises the purchase price,
import duties and irrecoverable
taxes, freight, handling and other
costs directly attributable to the
acquisition of finished goods,
materials and services.
-trade discounts, rebates and other
similar items are deducted in
determining the cost of purchase.
B. Cost of conversion
-includes cost directly related to the
units of production such as direct
labor. Also includes systematic
allocation of fixed and variable
production overhead that is incurred
in converting materials into finished
products.
C. Other cost incurred in bringing
the inventory to its present
location and condition.

LOAN RECEIVABLE
Initial measurement at FAIR VALUE
plus TRANSACTION COSTS that are
directly attributable to the acquisition.
(i.e Direct origination costs/ origination
fees)
FAIR VALUE is normally the
TRANSACTION PRICE, meaning, the
amount of loan granted.
Subsequent measurement
(BUSINESS MODEL) at AMORTIZED
COST using the EFFECTIVE
INTEREST METHOD
The amortized cost is the amount
at which the receivable is measured
initially minus principal repayment,
plus or minus the cumulative
amortization of any difference
between the initial amount
recognized and the principal
maturity amount, minus reduction
for impairment or uncollectibility.
If the initial amount recognized is
lower, than the principal amount,
the amortization of the difference is
added to the carrying amount.
If the initial amount recognized is
higher, than the principal amount,
the amortization of the difference is
deducted to the carrying
amount.

If the net realizable value is


lower than cost- the inventory is
measured at net realizable and the
decrease in value is recognized as
expense.

LONG TERM NOTES RECEIVABLE


Interest bearing- FACE VALUE
which is actually the PRESENT
VALUE upon issuance.
Non-interest bearing- PRESENT
VALUE which is the discounted value
of the future cash flows using the
effective interest rate.

INVENTORIES
Measured at LOWER OF COST or NET
REALIZABLE VALUE (LCNRV)
If the cost is lower than net
realizable value- the inventory is
stated at cost and the increase in
value is not recognized.

BIOLOGICAL ASSET
PAS 41 is applied to agricultural
produce AT THE POINT OF
HARVEST.
Initial measurement :
BIOLOGICAL ASSET at FAIR VALUE
less COSTS to SELL
AGRICULTURAL PRODUCE at FAIR
VALUE less COSTS to SELL at the
POINT of HARVEST in all cases and
can always be measured reliably.
Fair value measurement stops AT
THE TIME OF HARVEST.

FAIR VALUE MEASUREMENT:


If estimates of fair value are
unreliable, biological asset shall
be measured at cost less
accumulated depreciation and any
accumulated impairment loss.

If becomes measurable, it shall be


at FAIR VALUE LESS COSTS to SELL.
On initial recognition, a gain or
loss arising in biological asset
and agricultural produce at fair
value less costs to sell and any
subsequent changes shall be
included in profit or loss.
An unconditional government
grant related to a biological asset
that has been measured at fair
value less cost to sell shall be
recognized in profit or loss when
the grant becomes receivable.
If conditional, the grant shall be
recognized in profit or loss only
when the conditions attaching
to the grant are met.
If a government grant relates to a
biological asset measured at cost
less any accumulated depreciation
and any accumulated impairment
losses, PAS 20 on government
grant is applied.

FINANCIAL ASSET
Initial measurement at FAIR VALUE
plus TRANSACTION COSTS that are
directly attributable to the
acquisition.
Initially, an entity may designate a
financial asset as measured at fair
value through profit or loss even
the financial asset satisfies the
measurement at amortized cost.
Subsequent measurement at FAIR
VALUE or AMORTIZED COST
depending on the entitys business
model for managing financial assets.

Classification of Financial
Asset:
A. Financial assets at Fair value
B. Financial assets at amortized
cost
The FAIR VALUE of a financial
asset is usually the TRANSACTION

PRICE, meaning the fair value of


the consideration given.
Transaction costs include fees and
commissions paid to agents,
advisers, brokers and dealers,
levies by regulatory agencies and
securities exchanges, and transfer
taxes and duties.
However, for TRADING
SECURITIES or FVTPL,
transaction costs are treated as
outright expense.
Unrealized gains and losses
arise from investments that are
measured at FAIR VALUE (i.e
TRADING SECURITIES)
Financial assets that do not meet
the conditions for amortized
cost measurement shall be at FAIR
VALUE.

EQUITY SECURITY- encompasses


any instrument representing
ownership interest in an entity.
Ownership shares include ordinary,
preference and other share capital.
DEBT SECURITY- any security that
represents a creditor relationship
with an entity.
INVESTMENT IN EQUITY
SECURITIES

Dividends shall be recognized as


revenue on the date of
declaration.
CASH DIVIDENDS treated as
income but if the equity method is
used, the same should be credited to
the investment account.
PROPERTY DIVIDENDS treated as
income at the fair value of the
property received.
LIQUIDATING DIVIDENDS return of
investment and therefore are not
income.

STOCK DIVIDENDS are not income


and in the form of issuing entitys own
share. IAS term is bonus issue.

Provides for an equal or uniform


amount of premium or discount
amortization each accounting
period.
2) BOND OUTSTANDING METHOD
Applicable to serial bonds.
3) EFFECTIVE INTEREST METHOD
Increasing amount of amortization.

INVESTMENT IN ASSOCIATE

If an investor holds, directly or


indirectly, less than 20% of the
voting power of the investee, it is
presumed that the investor does not
have significant influence, unless
such influence can be clearly
demonstrated.
If an investor holds, directly or
indirectly,
more than 20%
of the voting power of the investee,
it is presumed that the investor have
significant influence, unless it can
be demonstrated that this is not the
case.
EQUITY METHOD is applicable when
the investor has significant
influence over the investee.
Investment must be in ORDINARY
SHARES.
If PREFERENCE SHARES, (nonvoting equity) Equity method is
invalid.
May be accounted for at FVTPL,
FVTOCI or nonmarketable
investment.
A substantial or majority ownership
by another investor does not
necessarily preclude an investor from
having significant influence.
FINANCIAL ASSET at AMORTIZED
COST
Noncurrent asset
Include investment in bonds and
other debt instruments.
Financial assets that do not meet
the conditions for amortized cost
measurement shall be measured at
FAIR VALUE
3 METHODS OF AMORTIZING BOND
PREMIUM OR BOND DISCOUNT
1) STRAIGHT LINE METHOD

INVESTMENT PROPERTY
Initial measurement at COST.
Includes TRANSACTION COSTS.
Comprises its purchase price and any
directly attributable expenditure.
(i.e professional fees for legal
services, property transfer taxes and
other transaction costs.
Subsequent measurement either
at:
(A) FAIR VALUE MODEL- carried at FAIR
VALUE. No depreciation recorded.
(B) COST MODEL- carried at COST less
any accumulated depreciation
and any accumulated
impairment losses.

DERIVATIVES
Measured at FAIR VALUE

PROPERTY, PLANT and EQUIPMENT

Initial measurement at COST


Cost- amount of cash or cash
equivalent paid and the fair value
of the consideration given to
acquire an asset at the time of
acquisition or construction.
Subsequent measurement either
at: (applied to an entire class of
PPE)
(A) COST MODEL carried at cost less
accumulated depreciation and
any accumulated impairment
loss.
(B) REVALUATION MODEL- carried at
revalued amount, being the fair
value at the date of revaluation
less any subsequent
accumulated depreciation and

subsequent accumulated
impairment loss.
COST OF ASSET ACQUIRED ON
ACCOUNT
-invoice price minus the discount
whether taken or not.
ON INSTALLMENT- cash price
equivalent. Excess recognized as
interest expense over the credit
period.
-no established cash price, equal
to the PRESENT VALUE of all
installment payments using market
rate of interest.

ISSUING CAPITAL- proceeds


measured at FAIR VALUE of the
proceeds received.
ACQUIRED in a COMBINATION of
NONMONETARY and MONETARY
EXCHANGE
(A) On the part of PAYOR- FAIR
VALUE of asset GIVEN plus
cash payment
(B) On the part of RECIPIENT- FAIR
VALUE of asset GIVEN minus
cash received.