Professional Documents
Culture Documents
Week 10 Lecture 2 Slides
Week 10 Lecture 2 Slides
ADVANCED FINANCIAL
ACCOUNTING PRACTICE
AND THEORY
Omiros Georgiou
Information effects:
Internal users saw the new standard as both a compliance
exercise and as an opportunity for improved understanding of
the transactions
Concerns about negative effects for external users’ understanding
of transactions
12
Real effects:
Implementation and application costs
◼ Investmentsin information systems and related processes
◼ Increased audit fees
Potential contractual changes
◼ E.g.changes to certain aspects of contracts to allow
recognition of revenue over time
Potential behavioural effects
◼ E.g. changes to sales and remuneration structures
Potential tax effects
◼ E.g. bringing revenue forward and paying tax earlier
FRC 2020 – thematic review of IFRS
13
15 – key findings
14
Exam style question
15
If a customer opts for the bundled product, what is the transaction price allocated to
the performance obligation of providing the machinery to the customer?
a) £250,733
b) £240,050
c) £285,000
d) £313,000
16
WORKINGS:
Machinery 285,000
Service 1 28,000
Service 2 28,000
Total 341,000
Discount £41,000
Machinery £250,733.14
Service 1 £24,633.43
Service 2 £24,633.43
£300,000.00
Revision of the topics we learned
17
together
▪ Leases
▪ Explain what is meant by a lease under IFRS 16
▪ Determine whether a contract is a lease
▪ Be able to prepare the lease accounts for:
▪ Lessees
▪ Provisions
▪ Explain key concepts of provisions, contingent liabilities and contingent assets
▪ Understand and discuss what is meant by the climate change emergency and its
impact on financial reporting practices
▪ Be able to explain how contingent liabilities and provisions relate to this -
Provisions for BP’s Deepwater Horizon case
▪ Understand and discuss the importance of preparing appropriate disclosures
when it comes to uncertainty – FRC thematic review of IAS 37
Fair value accounting (1)
18
Tuesdays 13.30-15.00
Fridays 10.30-12.00