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8/26/2016

INCOME
STATEMENT
IAS 1, IAS 8 and IFRS 5
August 16, 2016

QUIZ ANSWERS
1) Verifiability/Comparability/Understandability/Timeliness
2) Purpose:

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9) Financial/Physical 10) 2010 IAS 1 Presentation of Financial Statements 2 . 8/26/2016 QUIZ ANSWERS 3 – 6) 7 – 8) Consistency is the method to achieve comparability (goal). Consistency is having the same processes and method applied to same items. Comparability is being able to compare the information to information of other companies or information within the same company but in different periods.

95 . Amount of change in fair value attributable to credit risk for particular liabilities designated as FVPL (IFRS 9) . Remeasurements of defined benefit plans (IAS 19) . Disposal of a foreign operation . P7 . Changes in the value of options related to time value when only the changes in intrinsic value is designated as hedging instrument (IFRS 9) . Foreign exchange translation gain/loss from a foreign operation (IAS 21) . 8/26/2016 IAS 1: OCI Items Items that of OCI – Definitions. Changes in the value of forwards related to the forward element when only the changes in spot element is designated as hedging instrument. Effective portion of gains and losses on hedging instruments in a cash flow hedge and gains and losses on hedging instruments that hedge investments in equity instruments measured at fair value through OCI (IFRS 9) . Fair value gains/loss from FVOCI reclassified to FVPL 3 . Cash flow hedge . Changes in revaluation surplus (IAS 18 and IAS 38) . Gains and losses from FVOCI financial assets/investment in equity instruments(IFRS 9) . and changes in the value of the foreign currency basis spread of a financial instrument when excluding it from the designation of that financial instrument as the hedging instrument (IFRS 9 IAS 1: OCI Items Items that can be reclassified to P&L – P82.

or is classified as held for sale. operationally and for financial AN ENTITY reporting purposes. and DISCONTINUED (a) Represents a separate major line of business or geographical area of operations (b) Is part of a single co-ordinated plan to dispose of a OPERATIONS separate major line of business or geographical area of operations or (c) A subsidiary acquired exclusively with a view to resale 4 . from the rest of the entity Component of an entity that either has been disposed of. 8/26/2016 IFRS 5 Non-current Assets Held for Sale and Discontinued Operations IFRS 5: Definitions COMPONENT OF Comprises operations and cash flows that can be clearly distinguished.

investing and financing activities of the discontinued operations* • Amount of income from continuing and discontinued operations attributable to owners of the parent *not required for disposal groups that are newly acquired subsidiaries that meet the criteria to be classified as held for sale on acquisition IAS 5: Disclosures Others • Post-disposal transactions still classified separately as income/loss from discontinued operations • Cessation of classification as discontinued operations – reclassify income reported from discontinued operations to continuing operations for all periods presented • Committed plan to sell a subsidiary involving loss of control • Gain/loss on the remeasurement of a non-current asset classified as held for sale but does not meet definition of a discontinued operations 5 . 8/26/2016 IAS 5: Disclosures Disclosures • Single amount in the statement of comprehensive income comprising the total of: a) Post-tax profit or loss of the discontinued operations b) Post-tax gain or loss recognized on the measurement to fair value less cost to sell or on the disposal of the assets or disposal group(s) constituting the discontinued operation • Analysis of profit or loss and gain or loss from discontinued operations separately indicating the related income tax expense* • net cash flows attributable to the operating.

Changes in Accounting Estimates and Errors 6 . 8/26/2016 IAS 8 QUIZ IAS 8 Accounting Policies.

neutral.Conceptual Framework 7 . in descending order: .use of management judgment .faithful representation . complete.IFRSs dealing with similar and related issues .substance over form .management’s guiding principle: resulting information should be: (i) relevant (ii) reliable .Sources. prudent .apply the specific IFRS b) Absence of a specific IFRS . Dependent on the kinds of transactions recorded a) Specific IFRS is applicable . 8/26/2016 IAS 8: Background Objective • Prescribe criteria for selecting and changing accounting policies • Prescribe accounting treatment and disclosure of: • Changes in accounting policies • Changes in accounting estimates • Correction of errors IAS 8: Accounting Policies Selection and application .

Adjust the opening balance of each affected component of equity for the earliest period APPLICATION presented .In the absence of transitional provisions. 8/26/2016 IAS 8: Accounting Policies Consistency . Change of policy . use retrospective application b) Voluntary change . Criteria for changing an accounting policy: (a) required by an IFRS (b) will result in more reliable and relevant information . Consistent accounting policies for similar transactions .Adjust other comparative amounts disclosed for each prior period presented 8 . Depends on the kind of change being applied a) Change due to initial application of an IFRS .specified transitional provisions . If specifically required or permitted to categorize items for which different policies may be appropriate.retrospective application As if the new accounting policy had always been RETROSPECTIVE applied: . consistency is achieved on that category level. Not a change in accounting policies: (a) application of accounting policy for items that differ in substance from those previously occurring (b) application of a new accounting policy for items that did not occur previously or were immaterial IAS 8: Accounting Policies Application .

8/26/2016 IAS 8: Accounting Policies Limitations to retrospective application a) When impracticable to determine period-specific effects .prospective application PROSPECTIVE Applying the new accounting policy after the date as APPLICATION at which the policy is changed IAS 8: Accounting Policies Disclosures Initial application Voluntary change Title of IFRS  If in accordance with transitional provisions.apply accounting policy at the earliest period for which retrospective application is practicable . description of such provisions and possible effect on  future periods Nature of change   Amount of adjustment for the current period and each prior period presented   Amount of adjustment relating to periods before those presented   Circumstances leading to impracticability of retrospective application and description of how and   from when the change in policy has been applied Reasons for more reliable and relevant information  9 .make a corresponding adjustment to the opening balance of each affected component of equity for that period b) When impracticable to determine cumulative effect .

Change in circumstances on which the estimate was based . Warranty obligations Causes of change in accounting estimate: . Title of new IFRS . Nature of change or impending change in policy . Fair value of financial assets or liabilities . Date of required application .This fact . Inventory obsolescence . Either (i) Discussion of expected impact (ii) In the absence of (i). Useful lives and pattern of consumption . Bad debts . Result of new information or more experience PROSPECTIVE Recognizing the effect of the change in the current or APPLICATION future periods affected by the change 10 .Known or reasonably estimable information relevant to assessing the possible impact that application of the IFRS will have on the FS in the period of initial application * . Date of planned initial application . statement that impact is not know or reasonably estimable IAS 8: Change in Accounting Estimates Examples: . 8/26/2016 IAS 8: Accounting Policies Disclosures Disclosures for new IFRS that are not yet effective and applied .

If error occurred before the earliest period presented. Omissions from. and misstatements in. 8/26/2016 IAS 8: Change in Accounting Estimates Disclosures . Nature of change . the entity’s financial statements for one or more prior periods arising from a failure to use.Restating the comparative amounts for the prior period(s) presented in which the error occurred RESTATEMENT .Current period . and b) could reasonably be expected to have been obtained and taken into account in the preparation of those financial statements As if a prior period had never occurred: RETROSPECTIVE . liabilities and equity for the earliest period presented 11 . or misuse of. reliable information that: a) was available when the financial statements for those period were authorized for issue. Amount of change . restating the opening balances of assets.Future period (unless impracticable) IAS 8: Prior Period Errors Definition .

other event or condition occurred. liabilities and equity for the earliest period for which retrospective restatement is practicable b) When impracticable to determine cumulative effect .prospective restatement from the earliest date practicable Disclosures .Amount of correction at the beginning of the earliest period presented .Nature of prior period error . Retrospectively applying an accounting policy or correcting a prior period error requires distinguishing information that: a) provides evidence of circumstances that existed on the date(s) as at which the transaction.Circumstances leading to impracticality of retrospective restatement and a description of how and from when the error has been corrected IAS 8: Impracticability Distinguishing of information: . 8/26/2016 IAS 8: Prior Period Errors Limitations to retrospective restatement a) When impracticable to determine period-specific effects . and b) would have been available when the financial statements for that prior period were authorized for issue 12 .Amount of correction for each period presented .restate the opening balances of assets.

Reliable 9) False 10) True 11) False 12) False 13) True 14) True 15) True 13 . 8/26/2016 IAS 8 Quiz Answer Key 1) Accounting policies 2) Change in accounting estimate 3) Prior period errors 4) Retrospective application 5) Retrospective restatement 6) Impracticable 7) Prospective application 8) Relevant.