acca fr revision class

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ACCA FR Revision Class Prepared by: YU HUI FCCA, CA (Singapore)

FR Examination

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✓Paper F7 Financial Reporting is the requirement to understand and apply accounting standards (IFRSs) and conceptual framework that underpin IFRSs. ✓Candidates will be expected to understand the main principles and objectives of accounting standards, and to be able to apply these when required to produce financial statements. ✓Candidates will be expected to calculate various accounting ratios from financial statements and analyze/interpret of what particular ratios are intended to measure

What need to be learned in F7

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Qualitative characteristics of financial information

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Specialised, not-for-profit and public sector entities Examples: • Government departments and agencies • Public-funded bodies providing health/social services • Education institutions • Charities Aims: • Quality of service provision is often more important than profit • Efficiency of use of resources is key • Focus is often on small profits or breakeven • Need to satisfy a wide group of stakeholders Relevance of IFRS accounting •IFRSs are designed 'to help participants in the various capital markets of the world and other users of the information to make economic decisions'. •The world's capital markets tend to focus on profit and fair value (buy; hold; sell decisions) which are concepts that are not so relevant to not-for-profit and public sector entities. •However, accountability问责制 is still very important for these entities as they often handle public funds. Approach to performance measurement •Profit is clearly not the key objective of a 'not-for-profit' organisation. •However, such organisations produce budgets, which their performance can be assessed against and many of the performance indicators relating to efficiency (e.g. inventory management) will be relevant to a not-for-profit organisation. 9

Key Performance Indicators Examples of Key Performance Indicators (KPIs) relevant to not-for-profit organisations: Public sector (hospital): •Length of waiting lists •Percentage of patients treated successfully

Private sector (charity): •Proportion of donations spent on administration •Humanitarian aid provided

Three Es The 'Three Es' (or Value for Money) are often a useful way of assessing performance for not-for-profit and public sector entities: ECONOMY The business is conducted with the least expenditure of money, manpower or other resources. EFFICIENCY Resources are used in the most advantageous way. EFFECTIVENESS Policy objectives or other intended effects are achieved.

Specialised, not-for-profit and public sector entities

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Presentation of published financial statements

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The components of other comprehensive income include

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IAS 16 PPE

✓PPE升值进OCI,减值进P&l ✓先减值后升值，先冲previous loss,再进OCI ✓先升值后减值,先冲previous OCI,再进P&L

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IAS 40 Investment Property

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Fair value model VS Revaluation model


FV model (IAS40)

Revaluation model (IAS16)

Frequency Each year If no material difference, no need revalue each year

scope All investment property Entire class

Subsequent depn No depn (revalued amount-RV)/remaining useful life

Gain on revaluation Cr Income-Gain on IP (SOPL) Cr Revaluation reserve (OCI)

Gain on disposal Recognised income or expense in SOPL 1. Recognised income or expense in SOPL 2. Transfer the remaining balance in RR to RE (as realised)

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Transfer转换

YH：转换⽇是⽼资产的最后⼀天

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IAS 38 Intangible Assets

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IAS 36 Impairment of assets

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Note: impairment loss recognised for goodwill cannot be reversed

IAS 36 Impairment of assets

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IAS 23 Borrowing Cost

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The capitalisation rate is the weighted average of the borrowing costs applicable to the entity's borrowings that are outstanding during the period, excluding borrowings made specifically to obtain a qualifying asset。 YH：⼀般借款：⽤多少资本化多少，⽤多久资本化多久。


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Commence (all) •Expenditure incurred •Borrowing cost incurred •Activities start

Cease: Complete

Borrowing cost X -Interest income (X) Capitalised as asset X

•Interest expense: Finance cost (SOPL) •Interest income earned: Interest income (SOPL)


•Interest expense: Finance cost (SOPL) •Interest income earned: Interest income (SOPL)

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IAS 20 Government Grants

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Disposal of Government Grant Example：On 1 January 20x6, Gardenbugs Co received a $30,000 government grant relating to equipment wich cost $90,000 and had a useful life of six years. The grant was netted off against the cost of the equipment. On 1 January 20x7, when the quipment had a carrying amount of $50,000, its use was changed so that it was no longer being used in accordance with the grant. This meant that the grant needed to be repaid in full but by 31 December 20x7, this had not yet been done. Which journal entry is required to reflect the correct accounting treatment of the government grant and the quipment in the financial statements of Gardenbugs Co for the year ended 31 December 20x7?


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IFRS 5 NCA held for sale

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IFRS 5 NCA held for sale and discontinued operation

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IFRS 5 NCA held for sale and discontinued operation

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IFRS 15 Revenue from contracts with customers

1.五步法基本理解Step 1 Identify the contract with the customer. Step 2 Identify the separate performance obligations. [注意区分产品/服务: FR常考点：Product是在销售的时点确认收⼊，⽽service是按照提供该服务归属的会计年度确认收⼊。收⼊实现的⽅式和时间不同，因此要单独确认。] Step 3 Determine the transaction price. [Transaction price的⾦额，需要考虑如下因素: 1)Probability [EV=∑Probability*Amount], 2)Contingent amount (Reasonable estimates), 3)如果time value of money不可忽视，那么需要以PV of future cash inflow确认transaction price]

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IFRS 15 Revenue from contracts with customersStep 4 Allocate the transaction price to the performance obligations.

[根据现⾦流性质/提供服务或产品性质，按照不同performance obligation的市场价值/stand-alone selling price,计算出来不同的performance obligation应该分摊合约价款的⾦额]

Step 5 Recognise revenue when (or as) a performance obligation is satisfied.

[随着产品/服务的提供，可计算履约程度及应确认的收⼊，之后确认当期revenue][*In some circumstances, such as in the early stages of a contract, it may not be possible to reasonably measure the outcome of a performance obligation, but the entity expects to recover the costs incurred. In these circumstances, revenue is recognised only to the extent of costs incurred.]

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Old

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New


Statement of Financial Position

b)Receivables (Unpaid invoices) [已开票但未付]

c)Contract liability (present separately under current liabilities)

[⾄今为⽌可在未来收回的⾦额⼩于已开票部分 Amount due to customer]

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IAS 8 Accounting policies, changes in accounting estimates and errors

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IAS 2 Inventory

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IAS 2 Inventory

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IAS 41 Agriculture

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IAS 41 Agriculture

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绵⽺的⼀⽣：

IAS 32 & IFRS 9 Financial instruments

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Debt/


1. Financial asset – Classification & initial measurement

FV Debt instrument Financial asset Amortised cost

Equity instrument: only FV 46

（难）


Short term: expense I/S transaction cost Long term: Capitalise (+/-) the transaction cost

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总结：

注意：FA和FL将transaction cost计⼊初始价值的⽅向不同

IAS 32 & IFRS 9 Financial instruments ✓Coupon rate: 票⾯利息，公司每年给付利息的现⾦⾦额（决定付现⾦的流动安排） interest paid/received=Par value X coupon rate

✓Effective interest rate: 有效利率，市场利率，资⾦成本⽤来计算利息收⼊/费⽤，收益率

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（Payment in arrear）

（Payment in advance）

IAS 32 & IFRS 9 Financial instruments 考试中⼤题working的格式 Financial Asset： @2003/1/1 1,086 Interest income(1,086X10%)-SOPL 109 Coupon received(1,250X4.72%) (59) @2003/12/31-SOFP 1,136

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Dr. FVTOCI (Transaction cost +purchase price) Cr. Cash

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Factoring of debt

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•If the significant risks and rewards of these receivables are not transferred from the entity, and the receivables do not therefore qualify for derecognition, the entity's business objective is to hold the assets to collect contractual cash flows. • [经济实质：作为借款融资处理→以应收账款为抵押，⽤于融资借款，确认⻓期负债，并计算finance cost]

Factoring of debt -Substance is loan

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Compound instruments:-- Convertible bond

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Summary: Accounting in two stage: •Initial recognition: ✓ Liability @ FV: the PV of future cash flows (principle + interest)

discounted using the market rate of interest for the non-convertible debt instrument.

✓ Equity: the residual interest (balancing figure) •Subsequent: ✓ Liability: Amortised cost ✓ Equity: unchanged

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2. Recognition ✓ At the commencement date: Dr. right- of-use

Cr. Lease liability ✓ Recognition exemption: Dr. Lease expense Cr. Cash

– Short term leases (lease term less than 1 year) – Low value leases

IFRS 16 Leases1. Identify a lease: Right of control to use an identified asset: ① There is identified asset ② Lessee have right to obtain substantially all of the economic benefits from use of the identified asset ③ Lessee has the right to direct the use of the asset, either:

• has the right to direct how and for what purpose the asset is used during the whole of its period of use, or • The relevant decisions about use are pre-determined and the customer can operate the asset without the supplier having the

right to change those operating instructions ④ The lessor cannot substitute the underlying asset

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IFRS 16 Leases3. Lessee accounting • Right of use asset- Initial measurement @ cost including: a) initial measurement of the lease liability, discussed later; b) any lease payments made at or before the commencement date c) less any lease incentives received, e.g. rent free period or cash back incentive; d) any initial direct costs incurred by the lessee; and e) The cost lessee will incurred for dismantling, removing and restoring (Provision)

Double entry: Dr. Right-of-use asset Cr. Lease obligation (a) Cr. Cash (b,c &d) Cr. Provision (e)

•Right of use asset- subsequent measurement Cost model or revaluation model =cost – acc depn- acc impairment

Deprecated over: ✓Transfer ownership or purchase option expected to exercise—useful life of the underlying asset ✓No transfer of ownership—from commencement date to shorter of useful life lease term

Dr. Depn expense Cr. Right of use asset- Acc Depn

Dr. impairment loss Cr. Right of use asset- Acc impairment loss

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IFRS 16 Leases3. Lessee accounting • Lease obligation - initial measurement @ the present value of the lease payments that are not paid at that date. a) Fixed payment b) Amount expected to be payable under residual value guarantees (残值担保⾦） c) Option to purchase the asset that are reasonably certain to be exercised d) Termination penalties ( if available)

The lease payments shall be discounted using the interest rate implicit in the lease or the lessee’s incremental borrowing rate.

• Lease obligation - Subsequent measurement Lease liability table ✓年底确认 Finance cost (First year) Dr. Finance cost [Amortised cost @transaction * effective interest rate * Time proportion] Cr. Finance lease obligation ✓Lease obligation计算（列示分别为：NCL和CL. ⼝诀：下⼀期付完钱后剩下的，就是本期负债的⻓期部分)

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IFRS 16 Leases

4. Influence on financial statements • Statement of financial position (a) right of use asset (carrying amount) (under NCA separate line) (b) Lease obligation (separate NCL&CL) • Statement of comprehensive income (a) finance cost (b) depreciation of right of use asset • Statement of cash flow (a) cash payments for the principal portion of the lease liability within financing activities; (b) cash payments for the interest portion of the lease liability in IAS 7 Statement of Cash Flows for interest paid (Operating & financing activities)

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IFRS 16 Leases

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IFRS 16 Leases

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Transfer is not a lease: a secured loan

Seller/lessee: 1. Continued to recognised the transferred asset

2. Recognise a financial liability = transfer proceeds

IFRS 16 Leases

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IAS 12 Income tax

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IAS 12 Income tax

Current tax: 1. Recognition & measurement

a) Current year estimated tax: Dr. Tax expense X Cr. Tax payable X

a) Previous year under/over provision: • Under provision: Dr. Tax expenses X • Over provision: Cr. Tax expenses X

2. Presentation:

SOPL PBT X Tax expenses: • Current year estimated tax X • Under/over provision in previous year X/(X)

(X)

SOFP CURRENT LIABILITY

Tax payable (current year estimated tax) X

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IAS 12 Income tax

Deferred tax: Accounting measure to “match” the tax effect with the accounting impact

1. Summary

Temporary Difference Judgments DTA/DTL In respect of

Taxable differenceAsset: CV > Tax base Deferred tax liability

意味着企业未来期间增加应纳税所得额和应交所得税

1. Interest revenue 2. Accelerated depn 3. Revalued assets *

Liability: CV < Tax base

Deductible difference

Asset: CV < Tax base Deferred tax asset 意味着企业未来期间减少应纳税所得额和应交所得税

1.The deductible temporary difference 2. The c/f of unused tax losses 3. The c/f of unused tax credit Note: it will probable that the entity will earn sufficient taxable profit in the future to benefit from a reduction in tax payment

Liability: CV > Tax base

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IAS 12 Income tax

2. Recognition & measurement ✓ Changes in tax rates: measured at the tax rate expected to apply in the period when the asset is realised or liability settled. ✓ Discounting : DTA& DTL should not be discounted ✓ CV of DTA: should be reviewed at end of each reporting period and reduced where appropriate (insufficient future taxable profits).

Such reduction may be revised in the future years. ✓ Accounting entries: Steps:

① CV- tax base = temporary difference ② Deferred tax (YE figure in the SOFP)= Temporary difference * Tax rate ③ “Movement” on the deferred tax need to be account for:

✓ Increase in deferred tax liability: Dr. income tax expense(SOPL)/ OCI X Cr. deferred tax (SOFP) X ✓ Decrease in deferred tax liability: Dr. deferred tax (SOFP) X

Cr. income tax expense(SOPL)/ OCI X

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IAS 12 Income tax

SOPL&OCI PBT X Tax expenses: • Current year estimated tax X • Under/(over) provision in previous year X/(X) • Changes in deferred tax X/(X)

(X) PAT X

OCI: Changes in deferred tax X/(X)

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IAS 21 Foreign currency transaction

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IAS 21 Foreign currency transaction

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IAS 10 Events after the reporting period

Authorized/approved date

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IAS 10 Events after the reporting period

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Examples:

IAS 37 Provision and Contingencies

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Provision 1. Reconition : if and only if •Legal obligation or constructive obligation due to the past event •Probable future economic benefit outflow •Can be measured reliably

2. Measurement

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3. Re- measurement • each financial year end reviewed • if not probable, reverse the provision • if material difference, change of accounting estimate (IAS8，未来适⽤法） • 专项专⽤

4. Reimbursements • Recognised when virtual certain will receive the reimbursement • SOPL: may net with the provision • SOFP: separate asset, the amount should not be greater than the provision made.

5. Disclose • Detail of the change in the carrying value i.e. from b/d to c/d • Background & uncertainty affecting its outcome

6. Specific example ① Clean up cost , decommissioning or abandonments ② Warranties ③ Guarantee ④ Future operating losses ⑤ Onerous contract ⑥ Future repair ⑦ Restructuring ⑧ Expected disposal of FA ⑨ Self insurance

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1) Clean up cost , decommissioning or abandonments • Recognition: when there is legal or constructive obligation • Measurement:

✓ Full cost when obligation arises ✓ Time value of money, PV ✓ Unwinding of the discount– Finance cost

2) Warranties • Recognition: time of sale • Measurement: Expected value, reviewed at each FYE

3) Guarantee • Recognition: when probable, if not probable, may need disclose as contingent liability

4) Future operating losses • Cannot be made provision

5) Onerous contract • Recognition: when cost > benefit • Measurement: least net cost: lower of cost of fulfilling the contract and cost of terminating & penalty.

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6) Future repair • No obligation, no provision • Capitalized when incurred (IAS16)

7) Restructuring • Definition A program that is planed and controlled by the management and material change either:

a) The scope of the biz undertaken by an entity, or (企业经营范围） b) the manner in which that biz is conducted. ( 做⽣意的⽅式）

• Recognition only if both met: a) An entity must have a detailed and approved formal plan existed for the restructuring. b) It must have raised a valid expectation in those affected that it will carry out the restructuring by starting to implement that plan or announcing its main features to those affected by it [标志：包括重组涉及的业务，主要地点，需要补偿的职⼯⼈数及其岗位，性质，预计重组⽀出，计划实施时间等，或重组计划已对外公告]

• Measurement only include:

a) Direct necessary expenditure entailed by the restructuring; and [企业重组必须承担的] b) Not associated with the ongoing activities of the entity. [与未来经营活动⽆关的]

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The following costs should specifically not be included within a restructuring provision. a) Retraining or relocating continuing staff [留⽤职⼯的岗前培训] b) Marketing [市场推⼴费⽤] c) Investment in new systems and distribution networks [新系统和营销⽹络投⼊]

*因为这些⽀出与未来的经营活动相关，在资产负债表⽇不是重组义务。 *企业在计量预计负债时不应当考虑预期处置相关资产的利得或损失

8) Expected disposal of FA • No provision

9) Self insurance • No provision as no obligation

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Contingent asset, contingent liabilities

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IAS 33 Earning per share

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Diluted EPS:


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Diluted EPS:


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Statement of cash flow Operating activity的调整顺序 • Non-cash item • Non-operating item • Working capital adjustment • Finance cost 加回费⽤减掉⽀出 • Interest paid & income tax paid

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Statement of cash flow

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1. 拿到题，先搭建报表结构，再往⾥⾯填充科⽬和数字。科⽬不确定的先空着4-5⾏，⼤类标好就⾏。

2. 回头来看trial balance，把TB上的数值放到报表相应的位置上。

3. 边看trial balance,边对应着看notes,建议先花⼀点时间把所有的notes快速看⼀遍，准确判断考了哪些准则，什么考点。防⽌处理完

第⼀个notes还要综合考虑其他的notes.

4. 对trial balance & notes 都有⼀个基本的判断和了解之后开始，打working，每个working的布局不要太满，空 3，4⾏，防⽌前后

notes具有关联性。编制报表主要的计算步骤和得分点都集中在working部分，所以这部分要好好写，写的清楚⼀点，尤其是⽐较难的

notes,会有过程分。每处理⼀个notes得出来的最终数据，要⽴刻写到报表去，先Dr.再Cr.防⽌漏放。

a) ⽐如PPE的账⾯全部计算完之后，就要⽴刻写到报表上去，基本不会再需要修改了，机考要善⽤linking，后⾯如果需要更改working

报表的数值也会⾃动更改了。

b) 但⽐如说finance cost 会有好⼏个部分组成，⽐如同时考察⾦融负债&租赁&unwinding of provision产⽣的利息，那么你就要在解题

过程中⽤highlight提醒⾃⼰了，最终数据是加总数据。

单体报表

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5. 等到所有的notes都处理完了，该有的数据都出来了，就可以往报表上填写了，这个过程要⾮常快速，因为你所有的数据都已经出来了。

没有时间的话就不⽤加总了，加总部分是不计分的，分数重在working部分。

6. 报表最终平不平⽆所谓，并不会影响你过不过，working都处理对了，绝⼤部分的分数都可以拿到了

7. Trial balance⾥⾯⼀般不要调整的科⽬，⽐如distribution cost，要注意要抄上去，不要把数字看岔⾏，科⽬和数字对上，防⽌看错。

单体报表

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Investment Criteria Required treatment in group accounts

Subsidiary Control Full consolidation(IFRS3)

Associate Significant influence Equity accounting(IAS 28)

Investment which is none of the above Asset held for accretion of wealth

As for single company accounts per

IFRS 9

Consolidated financial statements

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IFRS 10 provides a definition of control and identifies three separate elements of control: An investor controls an investee if and only if it has all of the following.

•Power over the investee

•Exposure to, or rights to, variable returns from its involvement with the investee

•The ability to use its power over the investee to affect the amount of the investor's returns

Power can be obtained directly from ownership of the majority of voting rights or can be derived from other rights, such as:

• Rights to appoint, reassign or remove key management personnel who can direct the relevant activities

• Rights to appoint or remove another entity that directs the relevant activities

• Rights to direct the investee to enter into, or veto changes to, transactions for the benefit of the investor

• Other rights, such as those specified in a management contract

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Consolidated financial statements Exemption from consolidation:

•Intermediate entity

•Its securities are neither publicly traded nor in the process of issuing

•Exclusively for disposal-IFRS 5

Exclusion of subsidiary from consolidation:

把⼀些⼦公司不纳⼊合并报表的范围（ 2014年12⽉Q10）

因为通过操纵合并报表的范围可以来操纵合并的利润，所以The rule on exclusion are necessarily strict.

IAS27 did originally allow a subsidiary to be excluded from consolidation where control is intended to be temporary. This exclusion was then removed by IFRS5.

Subsudiary held for sale are accounted for in accordance with IFRS5 Non-current assets held for sale and discounted operations. ( 如果对⼦公司的持有是暂时性的也可以不纳⼊合并报表，但是根据IFRS5，要单独有⼀项列⽰，也相当于纳⼊合并报表的范围。P2再学）

以前可以exclude from consol,但是现在都不允许。⽐如：

•Dissimilar activities

•Subsidiary operate under severe long-term restrictions 受到长期的严格限制，⽐如外汇管制

总结：暂时性投资，不同的经营活动，或者长期严格的控制都不能成为不纳⼊合并报表的理由。只有真正失去控制才能不纳⼊合并。 Control must be actually be lost for exclusion to occur.

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Different reporting dates :

• Subsidiary may prepare additional financial statements to the reporting date of the rest of group

• Exemption if gap between reporting date is less than 3 months (细微调整后再继续合并） adjustments should be made for the effect of significant transactions or other events that occur between that date and the parent’s reporting date.

Uniform accounting policies:

• uniform accounting policies should be used

• Adjustments must be made for inconsistency (this achieved by: 1) adjust the asset or liability balance of subsidiary, 2) adjust “net asset of subsidiary” to reflect the impact of the different policy on the sub’s net assets.

Date of inclusion/exclusion :纳⼊报表⽇期（常考点：合并利润表P+S *n/12）

• The date of acquisition-obtain control

• The date of disposal-lose control

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Accounting for subsidiaries and associates in the parent’s separate financial statements

Should be either:

•Account for cost or FV with IFRS9

•Investment in subsidiary：Business combination(理解!)

•合并要把母公司单体报表Investment in subsidiary科⽬替换掉，替换成母公司可以控制的资源。

•收购的是⼦公司的股权，也就是净资产, net asset =Asset –liability, 把⼦公司所有的资产和负债的⾦额，line by line加总到⼀起，⽽

equity列⽰的是母公司的所有者权益。

•有时候虽然不是100%收购，也不乘以持股⽐例，直接P+100%S，因为关注的点是能否控制，母公司能控制⼦公司的资源是100%

的，即使不是100%拥有的。所以合幵报表⾥⾯会有⼀部分不平，才会列⽰NCI，因此合并报表体现的是⼀个全貌

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Consolidated financial statements 1.Cost of investment (cost method)

@ Date of acquisition

Dr.investment in subsidiary [parent's SOFP]

Cr.cash

Cr. share capital/share premium [P’s no. Of share issued X FV at acquisition date] [Add extra share capital and share premium in group] Cr.loan note [在收购⽇当⽇发⽣的，属于consideration;收购⽇之后发⽣的，属于内部交易 intra- group transaction]

Cr. deferred consideration [FV at acquisition date] Cr. contingent consideration

•Discounted at PV of future cash flow

•Including in NCL/CL

•Interest on deferred consideration deducted from group reserve

@ Financial year end - Share of profit

No accounting treatment

@ Year end - Receipt of dividend

Dr. Cash Cr. Other income

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2. Investment in associate (Equity method)

@Date of investment

Dr. Investment in associate [parent's SOFP]

Cr. Cash .etc (same as subsidiary calculation)

@ Year end - share of current year profit

Dr. Investment in associate [购买后联营公司的所有应分配利润* % 持股⽐例]

Cr. Other income [gain on investment in associate]

@ Year end - Receipt of dividend

Dr. Cash [Total dividend issued * % 持股⽐例]

Cr. Investment in associate 98


1. Group structure

a. Direct interest 直接控制 P

S1 S2 S3 S4

b. Indirect holdings 间接控制 P

S1

SS

51%

51%

控制具有传导性，P只能分得SS的51%X51% =26% 但合并的时候要P+S1+SS

虽在FR考纲内，但考官明确说不考，所以SBR再学。

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• Partial goodwill-NCI是永远没有商誉，因此商誉如果减值是母公司全额承担。

• Full goodwill-如果商誉减值的话，⼦公司利润减少，NCI分的利润⾃然减少，承担了部分商誉减值。

• NCI的价值按照⼦公司净资产的公允价值的⽐例进⾏列⽰

Negative goodwill - directly credit to P&L

2. Goodwill

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3. Fair value adjustments:

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4. Intra-group trading

a. Group is a single entity,内部交易要全部抵消，合并报表不承认母⼦内部的所有交易，挤掉报表⽔分。抵消的⾦额是全部的收⼊和成本，

不管存货期末在不在库。

Dr. sales （selling price）销售⽅多确认了⼀笔交易，需要减去

Cr. COS （selling price）购买⽅多确认了⼀笔成本，需要减去

b. 但是如果期末存货没有卖出去，就会存在未实现利润URP

Sale by P to S: Adjust in P's books DR Cost of sales/Retained earnings of P-URP CR Consolidated inventories 母公司有未实现利润，只会影响group R.E

Sale by S to P: Adjust in S's books DR Cost of sales/Retained earnings of S-URP CR Consolidated inventories ⼦公司有未实现利润，⼦公司的利润会减少，那么 NCI&parent 分的利润都会受到影响。

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c. Reconciliation of intra-group balances

Cash in transit (在途资⾦导致的应收应付不平，补收款)

DR Cash

CR Receivables

Goods in transit (在途存货导致的应收应付不平，补存货)

DR Inventories

CR Payables

d. Eliminate intra-group receivables and payables

DR Intra-group payable

CR Intra-group receivable 关联⽅需要对

账，母⼦公司

应收应付平了

之后，才能正

常抵消应收应

付

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e. Transfer of property, plant and equipment

(1) Calculate the unrealised profit:

Unrealised profit on transfer X （Sales proceeds - CV of PPE）

Less: proportion depreciated by year end (X) （调回已经实现的URP，通过excess depre’n实现的）

X

(2) Adjust in the books of the company making the sale:

Dr. Retained earnings （Profit价值增加了URP，需要调减）

Cr. Property, plant and equipment （PPE价值增加了URP，需要调减）

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f. Intra-group loans and interest

• Cancel the loans in the consolidated statement of financial position

DR Loan payable

CR Loan receivable • Cancel interest payable by one party to the other in the consolidated statement of profit or loss and other comprehensive income: 站在集团公司⻆度，实际上并没有发⽣利息⽀出（finance cost）和利息收⼊（finance income）

DR Group finance income 借出⽅，实质上，并没有发⽣利息收⼊（扣减finance income）

CR Group finance costs 借⼊⽅，实质上，并没有发⽣利息⽀出（扣减finance cost）

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Consolidated financial statements Consolidated statement of profit or loss and other comprehensive income

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Group disposal

1. Parent's separate financial statements [单体报表]

Fair value of consideration received X Less carrying amount of investment disposed of (X) [单体报表中，⼦公司的处理⽅式是成本法，所以CV就是初始投资⽀付的兑价] Profit/(loss) on disposal X/(X)

2. Group profit or loss on disposal [在合并利润表中列示的处置收益/损失] $ $ Fair value of consideration received [卖出部分的对价Sales proceeds] X Add：FV of NCI at date of disposal X Less: S’s carrying amount at date of disposal net assets X goodwill X (X) Profit/(loss) on disposal to group X/(X)

必做题： Specimen Q8

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IAS 28 Investment in associates

This type of investment is something less than a subsidiary, but more than a simple investment. The key criterion here is significant influence. This is defined as the 'power to participate', but not to control

IAS 28 states that if an investor holds 20% or more of the voting power of the investee, it can be presumed that the investor has significant influence over the investee, unless it can be clearly shown that this is not the case. Significant influence can be presumed not to exist if the investor holds less than 20% of the voting power of the investee, unless it can be demonstrated otherwise. The existence of significant influence is evidenced in one or more of the following ways. a) Representation on the board of directors (or equivalent) of the investee b) Participation in the policy making process c) Material transactions between investor and investee d) Interchange of management personnel e) Provision of essential technical information

IAS 28 requires the use of the equity method of accounting for investments in associates.

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IAS 28 Investment in associates

➢Investment做投资 Dr. investment in associate Cr. cash Cr. Share capital/share premium Cr. payable

➢P&L sharing (time-apportionment)分利润 Dr. investment in associate Cr. P&L

➢Dividend 收股利 Dr. cash/dividend receivable Cr. investment in association

➢Impairment loss of associate减值 Dr. impairment loss Cr. investment in associate

⼀般情况下，dividend是计⼊到investment income⾥⾯的 DR.cash/receivable Cr.investment income ⽽在涉及到associates时，dividend会导致investment in associate科⽬账⾯价值的变动

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IAS 28 Investment in associates关联⽅交易-parent & associate transaction(理解！) Ø因为联营公司的处理⽤的是equity method,所以不存在抵消内部交易。

Ø浮夸的利润URP不⽤全部抵消。因为Associate赚的钱，parent按⽐例分享利润，⺟公司会以其持股⽐例影响报表，所以要按⽐

例来抵消URP

Sale by the associate（A to P）-Upstream transactions Dr. Share of associate's profit/Group RE (P's column) (SOFP) URP × A% Cr. Investment in associate URP × A%

Associate 的PAT被⾼估，所提导致以上两项都会被⾼估，因此要调减。

Sale by parent(P to A)- Downstream transactions Dr. Cost of sales of P (P/L) /Group RE(P's column) (SOFP). URP × A% Cr. Investment in associate URP × A%

Associate ⾼估了存货，但是不会直接影响合并报表。但是associate的cost of sale被低估进⽽PAT被⾼估所以，share of profit和Investment in associate都要调减。

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Ratio analysis1. Profitability 2. Liquidity

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Ratio analysis

3. Gearing

4. Investor's ratios

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Ratio analysis

5. Group aspects

a) Acquisition 去除掉合并影响的⾦额，计算出来的ratio，和去年合并前的ratio进⾏对⽐，增加可⽐性 a) Disposal PBIT：调整 Group gain or loss on disposal

Capital employed：调整net asset of subsidiary disposed

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Ratio analysis6. Limitations of financial statements and ratio analysis: Historical cost accounts Ratios are a tool to assist analysis. •They help to focus attention systematically on important areas and summarize information in an understandable form •They assist in identifying trends and relationships.

However ratios are not predictive if they are based on historical information. •They ignore future action by management. •They can be manipulated by window dressing or creative accounting. •They may be distorted by differences in accounting polices. Window dressing is a method of carrying out transactions in order to distort the position shown by the financial statements and generally improve the position shown by them.

7. Limitations of interpretation techniques •Inflation when comparing to previous years •Different accounting policies/classifications when comparing to different companies e.g. ROCE higher if use cost models for assets •Lack of information/ breakdown of information •Year end figures not representative •Related party transactions make the ratios incomparable with other companies •Different ratio definitions used by different companies •Different companies in the same business may have different risk profiles or specific factors affecting them, making industry comparisons less meaningful •Where financial statements are manipulated, this is often done to improve key ratios •A new company will have no comparatives to compare with.

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Ratio analysis-2014/06/Q3 ✓Introduction The assessment of the performance of the company will focus on the areas of profitability, liquidity and gearing.

✓Profitability ROCE is considered by many analysts to be the most important profitability ratio. A ROCE of 12·0% in 2014, compared to 10·5% in 2013, represents a creditable 14·3% (12·0 – 10·5)/10·5) improvement in profitability. The cause of the improvement in ROCE is revealed by consideration of the secondary profitability ratios: asset turnover and profit margins.

✓Liquidity The company’s liquidity position, as measured by the current ratio, has fallen considerably in 2014 and is a cause for concern. At 1·67:1 in 2013, it was within the acceptable range (normally between 1·5:1 and 2·0:1); however, the 2014 ratio of 1·08:1 is very low, indeed it is more like what would be expected for the quick ratio (acid test). Without needing to calculate the component ratios of the current ratio (for inventory, receivables and payables), it can be seen from the statements of financial position that the main causes of the deterioration in the liquidity position are the reduction in the cash (bank) position and the dramatic increase in trade payables. The bank balance has fallen by $4·5 million (5,000 – 500) and the trade payables have increased by $8 million.

✓Gearing The company has gone from a position of very modest gearing at 5·3% in 2013 to 36·7% in 2014. (分析趋势) This has largely been caused by the issue of the additional 10% loan notes to finance the purchase of Shaw. （找原因） Arguably, it might have been better if some of the finance had been raised from a share issue, but the level of gearing is still acceptable and the financing cost of 10% should be more than covered by the prospect of future high returns from Shaw, thus benefiting shareholders overall

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Ratio analysis-2014/06/Q3 ✓Conclusion The overall operating performance of Woodbank has improved during the period (although the gross profit margin on sales other than those made by Shaw has fallen) and this should be even more marked next year when a full year’s results from Shaw will be reported (assuming that Shaw can maintain its current performance). The changes in the financial position, particularly liquidity, are less favorable and call into question the current dividend policy. Gearing has increased substantially, due to the financing of the purchase of Shaw; however, it is still acceptable and has benefited shareholders. It is interesting to note that of the $50 million purchase price, $30 million of this is represented by goodwill. Although this may seem high, Shaw is certainly delivering in terms of generating revenue with good profit margins.

8. Tips a) 先分析ratio的趋势

b) 找原因，ratio变化的原因，给出⾃⼰的分析

c) ⼀定要紧紧结合案例，从案例找原因，结合case!

d) 注意ratio的可⽐性，两年的ratio是否具有可⽐性，或者和⾏业平均⽔

平相⽐是否具有可⽐性,找出导致ratio不具有可⽐性的原因，并着重

分析!

e) 2016年9⽉考纲着重强调合并层⾯的ratio analysis,建议参考并研究

2016年9⽉样卷的那道财报分析

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