a [@ Secure | httos//lesmicpa.ph/courses/toke/financial-accounting-study-guide/texts/2310823-agncuiture € y a Agriculture Summary oF IAS 41 PAS 41 prescribes the accounting treatment, financial statement presentation and disclosures related to agricultural activity. Recognition and Measurement biological assets should be measured at their fair value less estimated point-of-sale costs, except where fair value cannot agricultural produce harvested from an enterprise vs biological assets should be measured at its fair value less estimated However, this Standard does net deal with processing of agricultural produce after harvest. PAS 2: Inventories, or another should be applied in accounting for agricultural produce after the point of harvest; there is a presumption that fair value can be measured reliably for a biological asset. However, that presumption can be r asset for which market-determined prices or values are not available and for which alternative estimates of fair value are value of such a biological asset becomes reliably measurable, an enterprise should measure it at its fair value less estimat if an active market exists for a biological asset or agricultural produce, the quoted price in that market is the appropriate t an active market does not exist. an enterprise uses market-determined prices or values (such as the most recent market t in some circumstances, market-determined prices or values may not be available for an asset in its current condition. In t value of expected net cash flows from the asset discounted at a current market-determined pre-tax rate in determining f gain or loss arising on initial recognition of biological assets and from the change in fair value less estimated point-of-sa net profit or loss for the period in which it arises; a gain or loss arising on initial recognition of agricultural produce should be included in net profit or loss for the period ina [@ Secure | httos//lesmicpa.ph/courses/toke/financial-accounting-study-guide/texts/2310823-agncuiture “ e Agriculture «a gain or loss arising on initial recognition of biological assets and from the change in fair value less estimated point-of sal net profit or loss for the period in which it arises «a gain or loss arising on initial recognition of agricultural produce should be included in net profit or loss for the period in «the Standard does not establish any new principles for land related to agricultural activity. Instead, an enterprise follows k Investment Property, depending on which standard is appropriate in the circumstances. Biological assets that are physica at their fair value less estimated point-of-sale costs separately from the land; ‘an unconditional government grant related to a biological asset measured at its fair value less estimated point-of-sale cos government grant becomes receivable. If a government grant related to a biological asset measured at its fair value less including where a government grant requires an enterprise not to engage in specified agricultural activity, an enterprise s when the conditions attaching to the government grant are met; + if government grant relates to a biological asset measured at its cost less any accumulated depreciation and any accum Government Grants and Disclosure of Government Assistance, should be applied. Disclosure ‘The Standard includes the following new disclosure requirements for biological assets measured at cost less any accumulated deoreciation and a ‘* a separate reconciliation of changes in the carrying amount of those biological assets; ‘+ a description of those biological assets; ‘+ an explanation of why fair value cannot be measured reliably;icra x\E_ € > G [@ Secure | httos://leamicpa.ph/courses/take/fnancisl-accounting-study-guide/texts/2310523-agnculture ve se Agriculture Disclosure “The Standard includes the following new disclosure requirements for biological assets measured at cost less any accumulated deoreclation and 4 ‘© a separate reconciliation of changes in the carrying amount of those biological assets; ‘« a description of those biological assets; «an explanation of why fair value cannot be measured reliably; «= the range of estimates within which fair value is highly likely to lie if possible), ‘= the gain or loss recognized on disposal of the biological assets; ‘the depreciation method used: * the useful lives or the depreciation rates used; and ‘= the gross carrying amount and the accumulated depreciation at the beginning and end of the period. In addition: «Ifthe fair value of biological assets previously measured at cost less any accumulated depreciation and any accumulated | measurable, an enterprise should disclose a description of the biological assets, an explanation of why fair value has becc change; and ‘+ significant decreases expected in the level of government grants related to the agricultural activity covered by this Standaicra x\E_ [@ Secure | httos//leamicpa.ph/courses/toke/financial-accounting-study-guide/texts/2310834-investment-property € y a Investment Property Summary of PAS 40 Scope «14S 40 covers investment property held by all enterprises and is not limited to enterprises whose main activities are in thi «Investment property is property (land or a building - or part of a building - or both) held (by the owner or by the lessee un appreciation or both, ‘« Investment property does not include: ‘+ property held for use in the production or supply of goods or services or for administrative purposes (see PAS 16, Pr ‘+ property held for sale in the ordinary course of business (see PAS 2, Inventories); ‘+ property being constructed or developed for future use as the investment property - IAS 16 applies to such property at which time the property becomes investment property and IAS 40 applies. However, PAS 40 does apply to existing continued future use as investment property; * an interest held by a lessee under an operating lease, even if the interest was a long-term interest acquired in excha Leases). + forests and similar regenerative natural resources (see PAS 41: Agriculture); and © mineral hts, the exploration for and development of minerals, oil, natural gas and similar non-regenerative natur:a [@ Secure | httos//leamicpa.ph/courses/toke/financial-accounting-study-guide/texts/2310834-investment-property “ c Investment Property ‘= property being constructed or developed for future use as the investment property - IAS 16 applies to such property at which time the property becomes investment property and IAS 40 applies. However, PAS 40 does apply to existing continued future use as investment property; ‘+ an interest held by a lessee under an operating lease, even if the interest was a long-term interest acquired in excha Leases), * forests and similar regenerative natural resources (see PAS 41: Agriculture); and ‘= mineral rights, the exploration for and development of minerals, oil, natural gas and similar non-regenerative nature ‘Accounting Models Under IAS 40, an enterprise must choose either: «a fair value modet investment property should be measured at fair value and changes in fair value should be recognised ‘+ 8 cost model (the same as the benchmark treatment in IAS 16, Property, Plant and Equipment): investment property shou accumulated impairment losses). An enterprise that chooses the cost model should disclose the fair value of its investme {An enterprise should apply the model chosen to all its investment property. A change from one model to the other model should be made only if ‘The Standard states that this is highly unlikely to be the case for a change from the fair value model to the cost model. In exceptional cases, there is clear evidence when an enterprise that has chosen the fair value madel first acquires an investment property (or wi property following the completion of construction or development. or after a change in use) that the enterprise will nt be able to determine the continuing basis. In such cases. the enterprise measures that investment property using the benchmark treatment in IAS 16 until the disposal of Investment property should be assumed to be zero. The enterprise measures all its other investment property at fair value,(Be icra x \ € © G | @ Secure | nttos,/learnicpa.ph/courses/take/inancial-accounting-study-guide/. ae IFRS Box: Investment Proper aR pery k°, IAS 40 IB ices 4x € | @ Secure | httos://learn.iepa.ph/courss sccounting study ve ae IFRS Box: Investment Property a e IAS 40 Investment Property | => 4 January 2005 > To prescribe the accounting treatment and disclosures = property (land, building (or its part), or both) that is held: Y To earn rentals, or % Production or supply of good Y For capital appreciation, or 3% Administrative purposes Y Both 3 Sale in ordinary course of bu www.lFRSbox.com IAS 401& ica € | @ Secure | httos://leamnicpa.ph/cot sccounting study ve ae IFRS Box: Investment Property ee > IAS 40 Investment Property | => 4 January 2005 > To prescribe the accounting treatment and disclosures = property (land, building (or its part), or both) that is held: VY To earn rentals, or Production or supply of good Y For capital appreciation, or Adrninistrative purposes Sale in ordinary course of bu: IAS 40 www.lFRSbox.com: IAS 401x yoTube Converter & D> x € > G [A secure | https/leamicpa.ph/courses/take/tinancial-accounting-study-o IFRS Box: Investment Property a e IAS 40 Investment Property (__ Future economic benefits Cost reliably measurable ah + A “he wwwlFRSbox.com IAS 401Bice 403 WB YouTube Converter & Dc \ 7 IFRSbox—Making IFRS EX € | @ Secure | httos,//learn.iepa.ph/courss an IFRS Box: Investment Property ey e IAS 40 Investment Property Initial Measurement | cost |=3) Purchase price |{ P| Directly attributable Start-up costs Operating losses Abnormal Cash price equivalent Se E> tt payment is deferred > iS www.IFRSbox.com IAS 40 |x yoTube Converter & D> x € © G | @ Secure | nttos,/learnicpa.ph/courses/take/inancial-accounting-study-guide/ ae IFRS Box: Investment Proper aR pery a GY IAS 40 Investment Property FAIR VALUE cost 4 + revaluation model under IAS 16!!! Accumulated Depreciai oO Accumulated Impairment www.lIFRSbox.com IAS 401x yoTube Converter & D> x € © G | @ Secure | nttos,/learnicpa.ph/courses/take/inancial-accounting-study-guide/ ae IFRS Box: Investment Proper aR pery a we IAS 40 Investment Property Fair Value Model Investment property is re-raeasured to V Gain/loss From re-measurement => In profit or loss Debit Credit: P/L: Loss from FV change Investment proper No depreciation charged www.lFRSbox.com IAS 401x yoTube Converter & D> x € © G | @ Secure | nttos,/learnicpa.ph/courses/take/inancial-accounting-study-guide/ ae IFRS Box: Investment Proper aR pery a e IAS 40 Investment Property Fair Value Model If you're unable to measure fair value reliably Is investment property under construction? gar! yes No AT COST COST MODEL under IAS 16 www.lFRSbox.com IAS 401x yoTube Converter & D> x € © G | @ Secure | nttos,/learnicpa.ph/courses/take/inancial-accounting-study-guide/ ae IFRS Box: Investment Proper aR pery a Y IAS 40 Investment Property | Cost Model Kn IAS 16 Prope and E ty, Plant Vin accordance with rant IFRS 5 Non. Assets Held fo Discontinued | VY lRclassified as held for sale (or in a disposal group) => www.lFRSbox.com IAS 401IFRS Box: Investment Property a 4 v IAS 40 Investment Property iD nen Seng a Derecognition of investment property When permanently withdrawn from use GAIN or LOSS = Net Disposal Proceeds - Carrying Amount din profit or www.lFRSbox.com IAS 401/& icra x € > G [A secure | httos://leamicpa.ph/courses/take/fnancisl-accounting-study-guide/texts/2310678-intangible-assets y a Intangible Assets Summary of PAS 38 PAS 38 applies to all intangible assets that are not specifically dealt with in other Philippine Accounting Standards. It applies, among other things, * advertising, training, startup, and ‘= research and development (R&D) activities. PAS 38 supersedes PAS 9. Research and Development Costs. AS 38 does not apply to financial assets, insurance contracts, mineral rights and the on-regenerative resources, Investments in and awareness of the importance of. intangible assets have increased significant in the last two cle ‘The main features of PAS 38 are: ‘+ an intangible asset should be recognized initially, at cost, in the financial statements, if, and only if; * the asset meets the definition of an intangible asset. Particularly, there should be an identifiable asset that is control goodwill * itis probable that the future economic benefits that are attributable to the asset will flow to the enterprise; and © the cost of the asset can be measured reliably. This requirement applies whether an intangible asset is acquired externally or generated internally. PAS 38 also includes additional recognition « «if an intangible item does not meet both the definition and the criteria for the recognition, of an intangible asset, PAS 38 r recognized as an expense when itis incurred. An enterprise is not permitted to include this expenditure in the cost of anicra, X Be YouTube Converter & Dox \\ [@ Secure | httos//leamicpa.ph/courses/toke/financial-accounting-study-guide/texts/2310878-intangible-assets Intangible Assets This requirement applies whether an intangible asset is acquired externally or generated internally. PAS 38 also includes additional recognition « iFan intangible item does not meet both the definition and the criteria for the recognition, of an intangible asset, PAS 38 r recognized as an expense when it is incurred. An enterprise is not permitted to include this expenditure in the cost of an i + it follows from the recognition criteria that all expenditure on research should be recognized as an expense. The same tre advertising costs. PAS 38 also specifically prohibits the recognition as assets of internally generated goodwill, brands, mas similar in substance. However, some development expenditure may result in the recognition of an intangible asset (for e» software); «= in the case of a business combination that is an acquisition, PAS 38 builds on PAS 22: Business Combinations, to emphasi definition and the criteria for the recognition of an intangible asset, the expenditure for this item (included in the cost ofa attributed to goodwill at the date of acquisition. This means that, among other things, unlike current practices in certain c recognised as an expense immediately at the date of acquisition but it should be recognised as part of the good recog under PAS 22, unless it meets the criteria for separate recognition as an intangible asset; «after initial recognition in the financial statements, an intangible asset should be measured under one of the following tw: + benchmark treatment: historical cost less any amortization and impairment losses; or « allowed alternative treatment: revalued amount (based on fair value) less any subsequent amortization and impairn treatment for revaluations of property, plant, and equipment under PAS 16 is that revaluations for intangible assets by reference to an active market. Active markets are expected to be rare for Intangible asset «« intangible assets should be amortized over the best estimate of their useful life. PAS 38 does not permit an enterprise to includes a rebuttable presumption that the useful life of an intangible asset will not exceed 20 years from the date when t that, in rare cases, there may be persuasive evidence that the useful life of an intangible asset will exceed 20 years. In theX Be YouTube Converter & Dox \\ € > G [A secure | httos://leamicpa.ph/courses/take/fnancisl-accounting-study-guide/texts/2310678-intangible-assets y a ¥ c Intangible Assets UNUE! FAS 22, UNIESS ILIHEELS INE Ute ia TUF Separate FeLUgIIUUIT @S att Marge ASE, ‘= after initial recognition in the financial statements, an intangible asset should be measured under one of the following tw * benchmark treatment: historical cost less any amortization and impairment losses; or « allowed alternative treatment: revalued amount (based on fair value) less any subsequent amortization and impairn treatment for revaluations of property, plant, and equipment under PAS 16 is that revaluations for intangible assets by reference to an active market. Active markets are expected to be rare for intangible assets; ‘intangible assets should be amortized over the best estimate of their useful life. PAS 38 does not permit an enterprise to: includes a rebuttable presumption that the useful life of an intangible asset will not exceed 20 years from the date when t that, in rare cases, there may be persuasive evidence that the useful life of an intangible asset will exceed 20 years. In the intangible asset over the best estimate of its useful life and: ‘+ test the intangible asset for impairment at least annually in accordance with PAS 36; Impairment of Assets; and lisclose the reasons why the presumption that the useful life of an intangible asset will not exceed 20 years is rebut role in determining the useful life of the asset; ‘required disclosures on intangible assets will enable users to understand, among other things, the types of intangible ass and the movements in their carrying amount (book value) during the year. PAS 38 also requires disclosure of the amount recognized as an expense during the year; and ‘+ PAS 38 Is operative for annual accounting periods beginning on or after 1 July 199. PAS 38 includes transitional provision retrospectively and when it should be applied prospectively To avoid creating opportunities for accounting arbitrage in an acquisition by recognising an intangible asset that's similar in nature to goodwill ( Intangiole asset (or vice versa). the amortisation requirements for goodwill in PAS 22: Business Combinations are consistent with those of PAS 38cea B. YouTube Converter & Do Xx \\ 6 € > G@ [A secure | https: /leamicpa.ph/courses/take/financisl-accounting-study-guide/texts/2313757-provisions-contingent-assets-and-continge y a Provisions, Contingent Assets and Contingent Liabilities PAS 37 requires that: ‘* provisions should be recognised in the balance sheet when, and only when: an enterprise has a present obligation (legal probable (.e. more likely than not) that an outflow of resources embodying economic benefits will be required to seitle th of the amount of the obligation; «provisions should be measured on the balance sheet at the best estimate of the expenditure required to settle the preser words, the amount that an enterprise would rationally pay to settle the obligation, or to transfer It to a third party, at that risks and uncertainties into account. However, uncertainty does not justify the creation of excessive provisions or a delibe should discount a provision where the effect of the time value of money is material and should take future events, such a into account where there is sufficient objective evidence that they will occur; ‘the amount of a provision should not be reduced by gains from the expected disposal of assets (even if the expected disp provision) nor by expected reimbursements (for example, through insurance contracts, Indemnity clauses or suppliers w reimbursement will be received if the enterprise settles the obligation, the reimbursement should be recognized as a sep. * a provision should be used only for expenditures for which the provision was originally recognized and should be reverse PAS 37 sets out three specifi applications ofthese general requirements: ‘* a provision should not be recognized for future operating losses; ‘* a provision should be recognised for an onerous contract - a contract In which the unavoidable costs of meeting the oblig economic benefits; and *_a provision for restructuring costs should be recognized only when an enterprise has a detailed formal olan for the restruX Be YouTube Converter & Dox \\ € > G@ [A secure | https: /leamicpa.ph/courses/take/financisl-accounting-study-guide/texts/2313757-provisions-contingent-assets-and-continge y a e Provisions, Contingent Assets and Contingent Liabilities '= provisions snoula pe measured on the balance sneer at tne best estimate oF tne expenaicure required to seme the preser words, the amount that an enterprise would rationally pay to settle the obligation, or to transfer itto a third party, at that risks and uncertainties into account. However, uncertainty does not justify the creation of excessive provisions or a delibe should discount a provision where the effect of the time value of money is material and should take future events, such a into account where there s sufficient objective evidence that they will occur; «the amount of a provision should not be reduced by gains from the expected disposal of assets (even if the expected disp provision) nor by expected reimbursements (for example, through insurance contracts, indemnity clauses or suppliers’ w. reimbursement will be received if the enterprise settles the obligation, the reimbursement should be recognized as a sep. ‘+ 2 provision should be used only for expenditures for which the provision was originally recognized and should be reverse PAS 37 sets out three specific applications of these general requirements: ‘* a provision should not be recognized for future operating losses; «a provision should be recognised for an onerous contract - a contract in which the unavoidable costs of meeting the oblig economic benefits; and ‘a provision for restructuring costs should be recognized only when an enterprise has a detailed formal plan for the restru affected that it will carry out the restructuring by starting to implement that plan or announcing Its main features to those board decision is not enough. A restructuring provision should exclude costs - such as retraining or be relocating continui and distribution networks - that are not necessarily entailed by the restructuring or that are associated with the enterpris PAS 37 prohibits the recognition of contingent liabilities and contingent assets. An enterprise should disclose a contingent liability. unless the pos benefits is remote. and disclose a contingent asset if an inflow of economic benefits Is probable