FA4 Refresher
FA4 — Module summaries
Module 1 summary
This module summarizes and explains the foundation of international financial reporting standards
(IFRS). It also examines the nature of financial instruments and how the method of accounting for them varies based on their nature.
Describe the development of international financial reporting standards
(IFRS), and discuss the reasons and processes followed by the AcSB for the adoption of international accounting standards in Canada.
The global acceptance of IFRS continues to grow; more than 100 countries are represented by the IASB.
The adoption of IFRS provides Canadian companies with better access to global capital markets.
Moreover, the adoption of international accounting standards is more cost-effective than maintaining separate sets of accounting standards.
Define the term financial instrument, then evaluate, classify, and categorize types of financial instruments.
A financial instrument is a particular type of contract to which the entity is a party. The contract gives rise to a financial asset for one party and a financial liability or equity instrument for another party.
Financial instruments must be classified as financial assets or financial liabilities and should be categorized as loans and receivables, held to maturity, held for trading, or available for sale.
Describe and apply the standards for comprehensive income and equity.
Comprehensive income is a combination of net income plus or minus all items contained in other comprehensive income for a reporting period. It includes all changes to equity resulting from transactions and other events and circumstances in a reporting period except for investments by and distribution to owners. IAS 1 describes the standards for the presentation of equity and changes in equity during a reporting period.
Explain how IFRS recommendations for categorizing financial instruments are applied.
Financial assets held for trading (HFT) are initially measured
Module 1 summary
This module summarizes and explains the foundation of international financial reporting standards
(IFRS). It also examines the nature of financial instruments and how the method of accounting for them varies based on their nature.
Describe the development of international financial reporting standards
(IFRS), and discuss the reasons and processes followed by the AcSB for the adoption of international accounting standards in Canada.
The global acceptance of IFRS continues to grow; more than 100 countries are represented by the IASB.
The adoption of IFRS provides Canadian companies with better access to global capital markets.
Moreover, the adoption of international accounting standards is more cost-effective than maintaining separate sets of accounting standards.
Define the term financial instrument, then evaluate, classify, and categorize types of financial instruments.
A financial instrument is a particular type of contract to which the entity is a party. The contract gives rise to a financial asset for one party and a financial liability or equity instrument for another party.
Financial instruments must be classified as financial assets or financial liabilities and should be categorized as loans and receivables, held to maturity, held for trading, or available for sale.
Describe and apply the standards for comprehensive income and equity.
Comprehensive income is a combination of net income plus or minus all items contained in other comprehensive income for a reporting period. It includes all changes to equity resulting from transactions and other events and circumstances in a reporting period except for investments by and distribution to owners. IAS 1 describes the standards for the presentation of equity and changes in equity during a reporting period.
Explain how IFRS recommendations for categorizing financial instruments are applied.
Financial assets held for trading (HFT) are initially measured