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
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Here) Total /25 Question 1 (25 marks) On the 1 July 20X6 Howard Ltd gained control of Carter Ltd by buying 70% of its shares for $70‚000. At this date‚ Carter had share capital $50‚000 and retained profits $30‚000. Additional information: Goodwill impairment is $500 in year ended 20X8 and $850 in 20X9. Dividends are paid out of current period profit. The dividends were paid before year-end. Inventory purchases by Howard from Carter during the current year amounted to $30‚000. Their cost to Carter
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On April 22‚ 2011‚ the FASB issued a Proposed Accounting Standards Update‚ IntangiblesGoodwill and Other (Topic 350): Testing Goodwill for Impairment. Under the proposed ASU‚ entities testing goodwill for impairment would have the option of performing a qualitative assessment before calculating the fair value of the reporting unit (i.e.‚ step 1 of the goodwill impairment test). If entities determine‚ on the basis of qualitative factors‚ that the fair value of the reporting unit is more likely than
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1 Intercorporate Acquisitions and Investments in Other Entities McGraw-Hill/Irwin Copyright © 2009 The McGraw-Hill Companies‚ Inc. All rights reserved. The Development of Complex Business Structures • Enterprise expansion as a means of survival and profitability – Size often allows economies of scale – New earning potential – Earnings stability through diversification – Management rewards for bigger company size – Prestige associated with company size 1-2 Organizational
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goodwill. implied offering price. takeover premium. 5. If the value implied by the purchase price of an acquired company exceeds the fair values of identifiable net assets‚ the excess should be allocated to reduce any previously recorded goodwill and classify any remainder as an ordinary gain. allocated to reduce current and long-lived assets. allocated to reduce long-lived assets. accounted for as goodwill.
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The company is unsure if any or all of its patent costs can be capitalized. The company is unsure if impairment testing should be done periodically on their patents. 2. ISSUES a) Should any costs related to purchasing patents be capitalized? What costs should be capitalized? What costs
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IAS 16‚ Property‚ plant and equipment By Graham Holt Studying this technical article and answering the related questions can count towards your verifiable CPD if you are following the unit route to CPD and the content is relevant to your learning and development needs. One hour of learning equates to one hour of CPD. We ’d suggest that you use this as a guide when allocating yourself CPD units. Property plant and equipment (PPE) are tangible assets that an entity holds for its own use or for
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Key differences Key changes PFRS 3 Goodwill PFRS provisions Goodwill required to be reviewed for impairment annually. If impaired‚ a charge to profit and loss for impairment loss is required Negative goodwill will have to be credited to profit and loss. Tax Provisions Impairment of goodwill •Not deductible •Deduction may be claimed upon disposal of related assets acquired Negative goodwill credited to P&L: Not taxable . . Negative goodwill PICPA: Tax Implications of New Accounting
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Goodwill for Impairment CLAUDIA Inc. has an internally generated goodwill and did not amortize or tested for impairment. They cannot amortize because measuring the components are complex and associating the costs incurred with future benefits are too difficult. Goodwill cannot generate cash flows independently and is made as a combination with other assets making up a business; it needs to be assigned to a reporting unit or cash-generating unit in order to test for impairment. Under ASPE‚ the impairment
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AOL ASSIGNMENT There were two accounting policies used by AOL that were considered aggressive‚ as well as controversial. The first was to amortize its software development costs and the second was to capitalize subscriber acquisition costs. The lifetime‚ for amortization purposes‚ which AOL assigned to software development costs was five years. This was considered by many to be an exceptionally long time considering the pace at which technology was progressing during that period of time.
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