Financial Reporting (FR) - ACCA, Study notes of Financial Accounting

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Revenue

Revenue recognition (IFRS 15 )

Specific guidance

( 1 ) Identify contract with customer ( 2 ) Identify performance obligation(s) ( 3 ) Determine transaction price ( 4 ) Allocate transaction price to performance obligations ( 5 ) Recognise revenue when (or as) performance obligation satisfied agreement that creates enforceable rights and obligations distinct goods or services entity expects to be entitled PV Variable consideration stand-alone price point in time Over time present right to payment transfer legal title transfer physical possession transfer R&R Customer accept the asset simultaneous receives and consumes the benefits provided perf. creates/enhances asset that the customer controls Not create alternative use/has enforceable right to payment Incremental costs of obtaining a contract rec as assets if expected to recovered Costs to fulfil a contract: rec as assets if specifically identified generate/enhance resources expected to be recovered Sale with right of return Warranties Principal versus agent Non-refundable fees amount expect to be entitled Separate PO option to purchase separately additional services provided otherwise - IAS 37 principal - gross amount agent - commission lialibility until PO satisfied

Non-current assets 2

Fair value measurement (IFRS 13 ) Government grants (IAS 20 )

Borrowing costs (IAS 23 )

Defn The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date FV = SP - Transportation costs (before transaction costs) FV Hierarchy Level 1 = quoted prices (unadjusted) Level 2 = other than quoted (identical)

• quoted (similar) Level 3 = unobservable input Multiple markets Principal (highest volume of trading) In the absence of princ market
• the most advantageous (high net income) NFA Highest & best use financially, physically, legally Liab PV of estimated future CF Rec reasonable certain condition met Assets related grant Subtopic Deferred income Reduce CA Income related grant in p/l Defn Directly att to acqn, contruction or productn of QA QA - substantial period to get ready for use/sell Capitalise specific borrowings general borrowings - WA method Commencement exp being incurred BC being incurred Activities are in progress

Agriculture

Biological asset: living plant or animal Agricultural produce: harvested product (bearer plant = IAS 16 ) Recognition Control Prob econ ben FV or cost measured reliably Measurement FV-CTS