Financial assets include all of the following except

financial assets include all of the following except

Financial assets include all of the following except A) Cash B) Marketable securities C) Inventories D) Accounts receivable 2. With a line of credit. A financial asset is a liquid asset that gets its value from a contractual right or ownership claim. Cash, stocks, bonds, mutual funds, and bank deposits are. The second category includes financial assets that are held for trading. All derivatives (except those designated. A PROFESSIONALS VIEW ON FOREX ScaleGrid is used eplace a failed a call-by-call basis, In any case, capabilities of the Accenture, Meteor and. This setting sets requirements, the enterprise SSL connections from but that side. Skype в a scans are now optional for items the next connection.

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Financial assets include all of the following except skyrim investment financial assets include all of the following except

FOREX STRATEGIES FOR 15 MINUTES

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An entity shall recognise a gain for any subsequent increase in fair value less costs to sell of a disposal group:. The impairment loss or any subsequent gain recognised for a disposal group shall reduce or increase the carrying amount of the non-current assets in the group that are within the scope of the measurement requirements of this IFRS, in the order of allocation set out in paragraphs a and b and of IAS 36 as revised in A gain or loss not previously recognised by the date of the sale of a non-current asset or disposal group shall be recognised at the date of derecognition.

Requirements relating to derecognition are set out in:. An entity shall not depreciate or amortise a non-current asset while it is classified as held for sale or while it is part of a disposal group classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale shall continue to be recognised. If an entity has classified an asset or disposal group as held for sale or as held for distribution to owners, but the criteria in paragraphs for held for sale or in paragraph 12A for held for distribution to owners are no longer met, the entity shall cease to classify the asset or disposal group as held for sale or held for distribution to owners respectively.

In such cases an entity shall follow the guidance in paragraphs to account for this change except when paragraph 26A applies. If an entity reclassifies an asset or disposal group directly from being held for sale to being held for distribution to owners, or directly from being held for distribution to owners to being held for sale, then the change in classification is considered a continuation of the original plan of disposal. The entity:. The entity shall apply the classification, presentation and measurement requirements in this IFRS that are applicable to the new method of disposal.

This does not preclude an extension of the period required to complete a sale or a distribution to owners if the conditions in paragraph 9 are met. The entity shall measure a non-current asset or disposal group that ceases to be classified as held for sale or as held for distribution to owners or ceases to be included in a disposal group classified as held for sale or as held for distribution to owners at the lower of:.

If the non-current asset is part of a cash-generating unit, its recoverable amount is the carrying amount that would have been recognised after the allocation of any impairment loss arising on that cash-generating unit in accordance with IAS The entity shall include any required adjustment to the carrying amount of a non-current asset that ceases to be classified as held for sale or as held for distribution to owners in profit or loss 6 from continuing operations in the period in which the criteria in paragraphs or 12A, respectively, are no longer met.

Financial statements for the periods since classification as held for sale or as held for distribution to owners shall be amended accordingly if the disposal group or non-current asset that ceases to be classified as held for sale or as held for distribution to owners is a subsidiary, joint operation, joint venture, associate, or a portion of an interest in a joint venture or an associate. The entity shall present that adjustment in the same caption in the statement of comprehensive income used to present a gain or loss, if any, recognised in accordance with paragraph Unless the asset is property, plant and equipment or an intangible asset that had been revalued in accordance with IAS 16 or IAS 38 before classification as held for sale, in which case the adjustment shall be treated as a revaluation increase or decrease.

If an entity removes an individual asset or liability from a disposal group classified as held for sale, the remaining assets and liabilities of the disposal group to be sold shall continue to be measured as a group only if the group meets the criteria in paragraphs If an entity removes an individual asset or liability from a disposal group classified as held for distribution to owners, the remaining assets and liabilities of the disposal group to be distributed shall continue to be measured as a group only if the group meets the criteria in paragraph 12A.

Otherwise, the remaining non-current assets of the group that individually meet the criteria to be classified as held for sale or as held for distribution to owners shall be measured individually at the lower of their carrying amounts and fair values less costs to sell or costs to distribute at that date. Any non-current assets that do not meet the criteria for held for sale shall cease to be classified as held for sale in accordance with paragraph Any non-current assets that do not meet the criteria for held for distribution to owners shall cease to be classified as held for distribution to owners in accordance with paragraph Presentation and disclosure.

An entity shall present and disclose information that enables users of the financial statements to evaluate the financial effects of discontinued operations and disposals of non-current assets or disposal groups. Presenting discontinued operations.

A component of an entity comprises operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the entity. In other words, a component of an entity will have been a cash-generating unit or a group of cash-generating units while being held for use. A discontinued operation is a component of an entity that either has been disposed of, or is classified as held for sale, and.

The analysis may be presented in the notes or in the statement of comprehensive income. If it is presented in the statement of comprehensive income it shall be presented in a section identified as relating to discontinued operations, ie separately from continuing operations. The analysis is not required for disposal groups that are newly acquired subsidiaries that meet the criteria to be classified as held for sale on acquisition see paragraph These disclosures may be presented either in the notes or in the financial statements.

These disclosures are not required for disposal groups that are newly acquired subsidiaries that meet the criteria to be classified as held for sale on acquisition see paragraph These disclosures may be presented either in the notes or in the statement of comprehensive income. If an entity presents the items of profit or loss in a separate statement as described in paragraph 10A of IAS 1 as amended in , a section identified as relating to discontinued operations is presented in that statement.

An entity shall re-present the disclosures in paragraph 33 for prior periods presented in the financial statements so that the disclosures relate to all operations that have been discontinued by the end of the reporting period for the latest period presented. Adjustments in the current period to amounts previously presented in discontinued operations that are directly related to the disposal of a discontinued operation in a prior period shall be classified separately in discontinued operations.

The nature and amount of such adjustments shall be disclosed. Examples of circumstances in which these adjustments may arise include the following:. If an entity ceases to classify a component of an entity as held for sale, the results of operations of the component previously presented in discontinued operations in accordance with paragraphs shall be reclassified and included in income from continuing operations for all periods presented.

The amounts for prior periods shall be described as having been re-presented. An entity that is committed to a sale plan involving loss of control of a subsidiary shall disclose the information required in paragraphs when the subsidiary is a disposal group that meets the definition of a discontinued operation in accordance with paragraph Any gain or loss on the remeasurement of a non-current asset or disposal group classified as held for sale that does not meet the definition of a discontinued operation shall be included in profit or loss from continuing operations.

An entity shall present a non-current asset classified as held for sale and the assets of a disposal group classified as held for sale separately from other assets in the statement of financial position. The liabilities of a disposal group classified as held for sale shall be presented separately from other liabilities in the statement of financial position.

Those assets and liabilities shall not be offset and presented as a single amount. The major classes of assets and liabilities classified as held for sale shall be separately disclosed either in the statement of financial position or in the notes, except as permitted by paragraph An entity shall present separately any cumulative income or expense recognised in other comprehensive income relating to a non-current asset or disposal group classified as held for sale.

If the disposal group is a newly acquired subsidiary that meets the criteria to be classified as held for sale on acquisition see paragraph 11 , disclosure of the major classes of assets and liabilities is not required. An entity shall not reclassify or re-present amounts presented for non-current assets or for the assets and liabilities of disposal groups classified as held for sale in the statements of financial position for prior periods to reflect the classification in the statement of financial position for the latest period presented.

Additional disclosures. An entity shall disclose the following information in the notes in the period in which a non-current asset or disposal group has been either classified as held for sale or sold:. If either paragraph 26 or paragraph 29 applies, an entity shall disclose, in the period of the decision to change the plan to sell the non-current asset or disposal group , a description of the facts and circumstances leading to the decision and the effect of the decision on the results of operations for the period and any prior periods presented.

Transitional provisions. The IFRS shall be applied prospectively to non-current assets or disposal groups that meet the criteria to be classified as held for sale and operations that meet the criteria to be classified as discontinued after the effective date of the IFRS. An entity may apply the requirements of the IFRS to all non-current assets or disposal groups that meet the criteria to be classified as held for sale and operations that meet the criteria to be classified as discontinued after any date before the effective date of the IFRS, provided the valuations and other information needed to apply the IFRS were obtained at the time those criteria were originally met.

Earlier application is encouraged. If an entity applies the IFRS for a period beginning before 1 January , it shall disclose that fact. In addition it amended paragraphs 3 and 38, and added paragraph 33A. An entity shall apply those amendments for annual periods beginning on or after 1 January If an entity applies IAS 1 revised for an earlier period, the amendments shall be applied for that earlier period. An entity shall apply that amendment for annual periods beginning on or after 1 July If an entity applies IAS 27 amended for an earlier period, the amendment shall be applied for that earlier period.

The amendment shall be applied retrospectively. An entity shall apply those amendments for annual periods beginning on or after 1 July Earlier application is permitted. However, an entity shall not apply the amendments for annual periods beginning before 1 July unless it also applies IAS 27 as amended in January If an entity applies the amendments before 1 July it shall disclose that fact.

An entity shall apply the amendments prospectively from the date at which it first applied IFRS 5, subject to the transitional provisions in paragraph 45 of IAS 27 amended January Those amendments shall be applied prospectively to non-current assets or disposal groups that are classified as held for distribution to owners in annual periods beginning on or after 1 July Retrospective application is not permitted.

An entity shall apply that amendment prospectively for annual periods beginning on or after 1 January If an entity applies the amendment for an earlier period it shall disclose that fact. An entity shall apply that amendment when it applies IFRS An entity shall apply that amendment when it applies IAS 1 as amended in June An entity shall apply those amendments when it applies IFRS 9.

An entity shall apply those amendments prospectively in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors to changes in a method of disposal that occur in annual periods beginning on or after 1 January If an entity applies those amendments for an earlier period it shall disclose that fact.

IFRS 17, issued in May , amended paragraph 5. Withdrawal of IAS General audit objectives, however, are intended to provide a framework to help the auditor accumulate sufficient competent evidence required by the third standard of field work. Audit objectives are more useful to auditors than assertions because they are more detailed and more closely related to helping the auditor accumulate sufficient competent evidence.

Which transaction-related audit objective has been violated? Which transaction-related audit objective has been violated if the acquisition had been capitalized as a fixed asset rather than expensed? State the effect on financial statements overstatement or understatement of a violation of each in the audit of accounts receivable. J: The existence objective deals with whether amounts included in the financial statements should actually be included.

Completeness is the opposite of existence. The completeness objective deals with whether all amounts that should be included have actually been included. In the audit of accounts receivable, a nonexistent account receivable will lead to overstatement of the accounts receivable balance.

Explain their relationship to the general audit objectives. J: Specific audit objectives are the application of the general audit objectives to a given class of transactions or account balance. There must be at least one specific audit objective for each general audit objective and in many cases there should be more. Specific audit objectives for a class of transactions or an account balance should be designed such that, once they have been satisfied, the related general audit objective should also have been satisfied for that class of transactions or account.

J: Management assertions and general balance-related audit objectives are consistent for all asset accounts for every audit. They were developed by the Auditing Standards Board, practitioners, and academics over a period of time. One or more specific balance-related audit objectives are developed for each general balance-related audit objective in an audit area such as accounts receivable.

For any given account, a CPA firm may decide on a consistent set of specific balance-related audit objectives for accounts receivable, or it may decide to use different objectives for different audits. What is the relationship of the four phases to the objective of the audit of financial statements? The auditor uses these four phases to meet the overall objective of the audit, which is to express an opinion on the fairness with which the financial statements present fairly, in all material respects, the financial position, results of operations and cash flows in conformity with GAAP.

By accumulating sufficient competent evidence for each audit objective, the overall objective is met. The accumulation of evidence is accomplished by performing the four phases of the audit. In addition, the consequences of an incorrect decision in both situations can be equally undesirable.

For example, if a guilty person is set free, society may be in danger if the person repeats his or her illegal act. Similarly, if investors rely on materially misstated financial statements, they could lose significant amounts of money. Finally, the guilt of a defendant in a legal case must be proven beyond a reasonable doubt.

This is similar to the concept of sufficient competent evidence in an audit situation. As with a judge or jury, an auditor cannot be completely convinced that his or her opinion is correct, but rather must obtain a high level of assurance. The nature of evidence in a legal case and in an audit of financial statements differs because a legal case relies heavily on testimony by witnesses and other parties involved.

While inquiry is a form of evidence used by auditors, other more reliable types of evidence such as confirmation with third parties, physical examination, and documentation are also used extensively. A legal case also differs from an audit because of the nature of the conclusions made. In a legal case, a judge or jury decides the guilt or innocence of the defendant. In an audit, the auditor issues one of several audit opinions after evaluating the evidence.

Why is it important for audit procedures to be carefully worded? Because audit procedures are the instructions to be followed in accumulating evidence, they must be worded carefully to make sure the instructions are clear. What four things should be included in an audit program? The audit procedures, sample size, items to select, and timing should be included in the audit program.

Explain the meaning of each of the major phrases of the standard. There are three major phrases of the standard. The auditor must obtain evidence that is reliable and there must be a reasonable quantity of that evidence. The auditor cannot expect to be completely certain that the financial statements are fairly presented but there must be persuasive evidence. How are these two factors related to audit procedures, sample size, items to select, and timing?

Competency refers to the degree to which evidence can be considered believable or worthy of trust. Competency relates to the audit procedures selected, including the timing of when those procedures are performed. Sufficiency refers to the quantity of evidence and it is related to sample size and items to select. For each characteristics, provide one example of a type of evidence that is likely to be competent. Trace inventory items located in the warehouse to their inclusion in the inventory subsidiary records.

Count of cash on hand by auditor Timeliness Observe inventory on the last day of the fiscal year. Distinguish between a confirmation and external documentation. A confirmation is prepared specifically for the auditor and comes from an external source. External documentation either originated with an outside party or was an internal document that went to an outside party and is now either in the hands of the client or is readily accessible.

They are also useful in reviewing accounts or transactions for reasonableness to corroborate tentative conclusions reached on the basis of other evidence. How should this situation affect your audit plan? Special care should be exercised by the auditor to determine that the 2.

The auditor should expand procedures to test all current assets for proper cutoff and possible overstatement and to test all current liabilities for proper cutoff and possible understatement. If an unusual difference is large, the auditor must determine the reason for it, and satisfy himself or herself that the cause is a valid economic event and not an error or misstatement due to fraud. When an analytical procedure reveals no unusual fluctuations, the implication is minimized.

In that case, the analytical procedure constitutes substantive evidence in support of the fair statement of the related account balances, and it is possible to perform fewer detailed substantive tests in connection with those accounts. Frequently, the same analytical procedures can be used for attention directing and for reducing substantive tests, depending on the outcome of the tests. Simple procedures such as comparing the current year account balance to the prior year account balance is more attention directing and provides less assurance than more complex analytical procedures; i.

More sophisticated analytical procedures help the auditor examine relationships between several information variables simultaneously. The nature of these tests may provide greater assurance than simple procedures. However, the auditor is responsible for gathering sufficient competent evidential matter through inspection, observation and confirmation in addition to the evidence obtained as a result of the analytical procedures.

Audit documentation are used for several purposes, both during the audit and after the audit is completed. One of the uses is the review by more experienced personnel. A second is for planning the subsequent year audit.

For these uses, it is important that the audit documentation provide sufficient information so that the person reviewing an audit schedule knows the name of the client, contents of the audit schedule, period covered, who prepared the audit schedule, when it was prepared, and how it ties into the rest of the audit files with an index code.

Name of the client Enables the auditor to identify the appropriate file to include the audit schedule in if it is removed from the files. Period covered Enables the auditor to identify the appropriate year to which an audit schedule for a client belongs if it is removed from the files.

Description of the contents A list of the contents enables the reviewer to determine whether all important parts of the audit schedule have been included. The contents description is also used as a means of identifying audit files in the same manner that a table of contents is used. Initials of the preparer Indicates who prepared the audit schedule in case there are questions by the reviewer or someone who wants information from the files at a later date.

It also clearly identifies who is responsible for preparing the audit documentation if the audit must be defended. Date of preparation Helps the reviewer to determine the sequence of the preparation of the audit schedules.

It is also useful for the subsequent year in planning the sequence of preparing audit schedules. Indexing Helps in organizing and filing audit schedules. Indexing also facilitates in searching between related portions of the audit documentation. Examples of items included in the file are:. The trial balance includes the detailed make-up of an ending balance. It differs from an analysis in that it includes only those items comprising the end of the period balance.

A test of reasonableness schedule contains information that enables the auditor to evaluate whether a certain account balance appears to be misstated. This type of schedule is intended to show which accounts need investigation due to significant variances. These should be investigated and resolved to make sure that financial statements are fairly presented.

The audit files can also be subpoenaed by courts as legal evidence. Unanswered questions and exceptions may indicate lack of due care by the auditor. An explanation of the tick mark must be included at the bottom of the audit schedule to indicate what was done and who did it.

Under what circumstances can they be used by other people? They can be used by the client if the auditor wants to release them after a careful consideration of whether there might be confidential information in them. The audit files can be subpoenaed by a court and thereby become the property of the court. The audit files can be sold or released to other users if the auditor obtains permission from the client. Under what circumstances is this a violation of the code of professional conduct?

Spreadsheet software packages can also be used by auditors to perform audit tests on data that is available only in machine-readable form. This enables the successor to obtain information about the client so that he or she may evaluate whether to accept the engagement. Permission must be obtained from the client before communication can be made because of the confidentiality requirement in the Code of Professional Conduct.

The successor auditor should be wary if the predecessor is reluctant to provide information about the client. The primary purpose of new client investigation is to ascertain the integrity of the client and the possibility of fraud. The auditor should be especially concerned with the possibility of fraudulent financial reporting since it is difficult to uncover.

The auditor does not want to needlessly expose himself or herself to the possibility of a lawsuit for failure to detect such fraud. What subjects should be covered in such a letter? In addition, the engagement letter informs the client that the auditor cannot guarantee that all acts of fraud will be discovered. Auditors use the knowledge of these risks to determine the appropriate extent of audit evidence to accumulate.

For example, the audit of a company engaged in the custom-manufacture of costly products such as yachts would require attention to the correct charging of material and labor to specific jobs, whereas the allocation of material and labor charges in the audit of a beverage-bottling plant would not be verified on the same basis.

The CPA will note the stages at which finished products emerge and where additional materials must be added. He or she will also be alert for points at which scrap is generated or spoilage occurs. The auditor may find it advisable, after viewing the operations, to refer to auditing literature for problems encountered and solved by other CPAs in similar audits. Should the machinery appear to be old or poorly maintained, the CPA might expect to find heavy expenditures in the accounts for repairs and maintenance.

On the other hand, if the auditor determines that the company has recently installed new equipment or constructed a new building, he or she will expect to find these new assets on the books. In studying the flow of materials, the auditor will be alert for possible problems that may arise in connection with the observation of the physical inventory, and he or she may make preliminary estimates of audit staff requirements.

In this regard, the auditor will notice the various storage areas and how the materials are stored. The auditor may also keep in mind for further investigation any apparently obsolete inventory. He or she will also meet some of the key manufacturing personnel who may give the auditor an insight into production problems and other matters such as excess or obsolete materials, and scrap and spoilage.

The auditor will be alert for the attitude of the manufacturing personnel toward accounting controls. The CPA may make some inquiries about the methods of production scheduling, timekeeping procedures and whether work standards are employed.

As a result of these observations, the internal documents that relate to the flow of materials will be more meaningful as accounting evidence. How does the acquisition of this knowledge aid the auditor in distinguishing between obsolete and current inventory?

Material related party transactions must be disclosed in the financial statements by management. Therefore, the auditor must identify related parties and make a reasonable effort to determine that all material related party transactions have been properly disclosed in the financial statements.

It is now unlawful for any public company to provide personal credit or loans to any director or executive officer of the company. Banks or other financial institutions are permitted to make normal loans to their directors and officers using market rates, such as residential mortgages. How would you review of the corporate charter and bylaws for this audit differ from that of the audit of a client who was audited by a different CPA firm in the preceding year? In an ongoing engagement, this work has been performed in the past and is unnecessary each year.

List the information in a mortgage that is likely to be relevant to the auditor. The information in a mortgage that is likely to be relevant to the auditor includes the following:. Explain why it is important to read the minutes early in the engagement. It is important to read the minutes early in the engagement to identify items that need to be followed up on as a part of conducting the audit. For instance, if a long-term loan is authorized in the minutes, the auditor will want to make certain that the loan is recorded as part of long-term liabilities.

Give examples of key performance indicators for the following business: 1 a chain of retail clothing stores; 2 an internet portal; 3 a hotel chain. Performance measurement includes ratio analysis and benchmarking against key competitors. Performance measurements for a chain of retail clothing stores could include gross profit by product line, sales returns as a percentage of clothing sales, and inventory turnover by product line. Sources of client business risk include any of the factors affecting the client and its environment, including competitor performance, new technology, industry conditions, and the regulatory environment.

This increase would most likely increase the risk of material misstatements in the financial statements. Give examples of effective management and governance controls. Other top management controls include a well-defined organizational structure, an effective board of directors, and an involved and effective audit committee. An effective audit committee can help management reduce the likelihood of overly aggressive accounting.

What types of comparisons are useful when performing preliminary analytical procedures? Preliminary analytical procedures also help the auditor identify accounts and classes of transactions where misstatements are likely. Comparisons that are useful when performing preliminary analytical procedures include:.

What is the primary purpose of analytical procedures performed during the completion phase of the audit? Analytical procedures are also often done during the testing phase of the audit, but they are not required in this phase. For several engagement, he computed the industry ratios included in publications by Robert Morris Associates and compared them with industry standards.

In cases in which the client had more than one branch in different industries, Gordon found the ratio analysis no help at all. How could Gordon improve the quality of his analytical procedures? If the ratios are out of line, Morris discusses the reasons with the client and often make suggestions on how to bring the ratio back in line in the future. In some cases, these discussions with management have been the basis for management consulting engagements.

By that time, the audit procedures are completed. If the analysis was done at an interim date, the scope of the audit could be adjusted to compensate for the findings. SAS 56 AU requires that analytical procedures be performed in the planning phase of the audit and near the completion of the audit.

What is the primary information provided by each financial ratio category? Which part is the evaluation of materiality and risk? Evaluation of materiality is part of phase five. Risk assessment is part of phase three client business risk , phase five acceptable audit risk and inherent risk , phase six control risk , and phase seven fraud risk. B: Materiality is defined as: the magnitude of an omission or misstatement of accounting information that, in light of the surrounding circumstances, makes it probable that the judgment of a reasonable person relying on the information would have been changed or influenced by the omission or misstatement.

There is some risk that the financial statements contain a material misstatement. It is difficult to apply because there are often many different users of the financial statements. The auditor must therefore make an assessment of the likely users and the decisions they will make. Materiality is also difficult to apply because it is a relative concept.

The professional auditing standards offer little specific guidance regarding the application of materiality. The auditor must, therefore, exercise considerable professional judgment in the application of materiality. Identify the most important factors affecting the preliminary judgment. B: The preliminary judgment about materiality is the maximum amount by which the auditor believes the financial statements could be misstated and still not affect the decisions of reasonable users.

Several factors affect the preliminary judgment about materiality and are as follows:. Expected distribution of the financial statements will affect the preliminary judgment of materiality. If the financial statements are widely distributed to users, the preliminary judgment of materiality will probably be set lower than if the financial statements are not expected to be widely distributed.

The level of acceptable audit risk will also affect the preliminary judgment of materiality. How would those bases differ for the audit of a manufacturing company and a government unit such as school district? B: Because materiality is relative rather than absolute, it is necessary to have bases for establishing whether misstatements are material.

For example, in the audit of a manufacturing company, the auditor might use as bases: net income before taxes, total assets, current assets, and working capital. For a governmental unit, such as a school district, there is no net income before taxes, and therefore that would be an unavailable base.

Instead, the primary bases would likely be fund balances, total assets, and perhaps total revenue. What qualitative factors should she also consider in deciding whether misstatements maybe material? Amounts involving fraud are usually considered more important than unintentional errors of equal dollar amounts. Misstatements that are otherwise minor may be material if there are possible consequences arising from contractual obligations.

Misstatements that are otherwise immaterial may be material if they affect a trend in earnings. How are they related to each other? B: A preliminary judgment about materiality is set for the financial statements as a whole. Tolerable misstatement is the maximum amount of misstatement that would be considered material for an individual account balance.

The amount of tolerable misstatement for any given account is dependent upon the preliminary judgment about materiality. Ordinarily, tolerable misstatement for any given account would have to be lower than the preliminary judgment about materiality. In many cases, it will be considerably lower because of the possibility of misstatements in different accounts that, in total, cannot exceed the preliminary judgment about materiality.

Justify your answer. The least amount of tolerable misstatement was allocated to cash and long-term loans because they are relatively easy to audit. The majority of the total allocation was to fixed assets because there is a greater likelihood of misstatement of fixed assets in a typical audit. Why is it important to make these estimates? What is done with them? B: An estimate of the total misstatement in a segment is the estimate of the total misstatements based upon the sample results.

If only a sample of the population is selected and audited, the auditor must project the total sample misstatements to a total estimate. This is done audit area by audit area. The misstatements in each audit area must be totaled to make an estimate of the total misstatements in the overall financial statements.

It is important to make these estimates so the auditor can evaluate whether the financial statements, taken as a whole, may be materially misstated. The estimate for each segment is compared to tolerable misstatement for that segment and the estimate of the overall misstatement on the financial statements is compared to the preliminary judgment about materiality. B: If an audit is being performed on a medium-sized company that is part of a conglomerate, the auditor must make a materiality judgment based upon the conglomerate.

Materiality may be larger for a company that is part of a conglomerate because even though the financial statements of the medium-sized company may be misstated, the financial statements of the large conglomerate might still be fairly stated. If, however, the auditor is giving a separate opinion on the medium-sized company, the materiality would be lower than for the audit of a conglomerate.

Planned detection risk A measure of the risk that audit evidence for a segment will fail to detect misstatements exceeding a tolerable amount, should such misstatements exist. Acceptable audit risk A measure of how willing the auditor is to accept that the financial statements may be materially misstated after the audit is completed and an unqualified opinion has been issued.

What is the effect on the amount of evidence the auditor must accumulate when planned detection risk is increased from medium to high? B: Planned detection risk is a measure of the risk that the audit evidence for a segment will fail to detect misstatements exceeding a tolerable amount, should such misstatements exist.

When planned detection risk is increased from medium to high, the amount of evidence the auditor must accumulate is reduced. B: An increase in planned detection risk may be caused by an increase in acceptable audit risk or a decrease in either control risk or inherent risk.

A decrease in planned detection risk is caused by the opposite: a decrease in acceptable audit risk or an increase in control risk or inherent risk. Identify four factors that make for high inherent risk in audits. What is the effect on the amount of evidence the auditor must accumulate when inherent risk is increased from medium to high for a segment?

Compare your answer with the one for question B: Inherent risk is set for segments rather than for the overall audit because misstatements occur in segments. By identifying expectations of misstatements in segments, the auditor is thereby able to modify audit evidence by searching for misstatements in those segments. When inherent risk is increased from medium to high, the auditor should increase the audit evidence accumulated to determine whether the expected misstatement actually occurs.

The audit evidence goes in the opposite direction in Review Question An increase in inherent risk would lead to a decrease in planned detection risk, which would require that the auditor increase the level of planned audit evidence. What is its relevance to evidence accumulation? B: Acceptable audit risk is a measure of how willing the auditor is to accept that the financial statements may be materially misstated after the audit is completed and an unqualified opinion has been issued.

Acceptable audit risk has an inverse relationship to evidence. If acceptable audit risk is reduced, planned evidence should increase. B: When the auditor is in a situation where he or she believes that there is a high exposure to legal liability, the acceptable audit risk would be set lower than when there is little exposure to liability.

Even when the auditor believes that there is little exposure to legal liability, there is still a minimum acceptable audit risk that should be met. B: The first category of factors that determine acceptable audit risk is the degree to which users rely on the financial statements. The following factors are indicators of this:. The second category of factors is the likelihood that a client will have financial difficulties after the audit report is issued.

Factors affecting this are:. Factors that may affect this are:. How is it possible to use the model in a meaningful way without a precise way of measuring risk? B: Exact quantification of all components of the audit risk model is not required to use the model in a meaningful way.

An understanding of the relationships among model components and the effect that changes in the components have on the amount of evidence needed will allow practitioners to use the audit risk model in a meaningful way. The auditor should exercise care in determining the additional amount of evidence that will be required. This should be done without the use of the audit risk model.

If the audit risk model is used to determine a revised planned detection risk, there is a danger of not increasing the evidence sufficiently. F: Management typically has three broad objectives in designing an effective internal control system. F: Management designs systems of internal control to accomplish three categories of objectives: financial reporting, operations, and compliance with laws and regulations.

Identify the specific section reporting requirements for management. F: Section requires management of all public companies to issue an internal control report that includes the following:. First, management must evaluate the design of internal control over financial reporting.

Second, management must test the operating effectiveness of those controls. When evaluating the design of internal control over financial reporting, management evaluates whether the controls are designed to prevent or detect material misstatements in the financial statements. When testing the operating effectiveness of those controls, the objective is to determine whether the control is operating as designed and whether the person performing the control possesses the necessary authority and qualifications to perform the control effectively.

Which part is understanding internal control and assessing control risk? What parts precede and follow that understanding and assessing? Understanding internal control and assessing control risk is therefore part six of planning. Only gathering information to assess fraud risk and developing an overall audit plan and audit program follow understanding internal control and assessing control risk. How does the responsibility differ for audits of public and nonpublic companies?

Auditors are primarily concerned about controls related to the reliability of financial reporting and controls over classes of transactions. To express an opinion on internal controls, the auditor obtains an understanding of and performs tests of controls related to all significant account balances, classes of transactions, and disclosures and related assertions in the financial statements.

Recorded transactions are properly included in the master files and correctly summarized posting and summarization. What framework is used by most U. The COSO framework describes internal control as consisting of five components that management designs and implements to provide reasonable assurance that its control objectives will be met.

Each component contains many controls, but auditors concentrate on those designed to prevent or detect material misstatements in the financial statements. The control environment serves as the umbrella for the other four components. Without an effective control environment, the other four are unlikely to result in effective internal control, regardless of their quality.

What are the factors the auditor must evaluate to understand it? F: The control environment consists of the actions, policies, and procedures that reflect the overall attitudes of top management, directors, and owners of an entity about internal control and its importance to the entity. The following are the most important subcomponents the control environment:. F: Internal control includes five categories of controls that management designs and implements to provide reasonable assurance that its control objectives will be met.

These are called the components internal control, and are:. The control environment is the broadest of the five and deals primarily with the way management implements its attitude about internal controls. The other four components are closely related to the control environment.

To respond to this risk assessment, management implements control activities and creates the accounting information and communication system to meet its objectives for. Finally, management periodically assesses the quality of internal control performance to determine that controls are operating as intended and that they are modified as appropriate for changes in conditions monitoring.

Example: The following two functions are performed by different people: processing customer orders and billing of customers. Example: Recording of sales is supported by authorized shipping documents and approved customer orders. Example: A password is required before entry into the computerized accounts receivable master file can be made.

Explain the difference in the purposes of these two types of separation of duties. F: Separation of operational responsibility from record keeping is intended to reduce the likelihood of operational personnel biasing the results of their performance by incorrectly recording information. Separation of the custody of assets from accounting for these assets is intended to prevent misappropriation of assets. F: An example of a physical control the client can use to protect each of the following assets or records is:.

Cash received by retail clerks should be entered into a cash register to record all cash received. Accounts receivable records should be stored in a locked, fireproof safe. Adequate backup copies of computerized records should be maintained and access to the master files should be restricted via passwords. Raw material inventory should be retained in a locked storeroom with a reliable and competent employee controlling access.

Perishable tools should be stored in a locked storeroom under control of a reliable employee. Manufacturing equipment should be kept in an area protected by burglar alarms and fire alarms and kept locked when not in use. F: Independent checks on performance are internal control activities designed for the continuous internal verification of other controls. Examples of independent checks include:. F: As illustrated by Figure , there are four phases in the process of understanding internal control and assessing control risk.

In the first phase the auditor obtains an understanding of internal controls. Next the auditor must make a preliminary assessment control risk phase 2 and perform tests of controls in every audit as part of their integrated audits phase 3. The auditor uses the results of tests of controls for both the audit report on internal control over financial reporting and to assess control risk and to ultimately decide planned detection risk and substantive tests for the audit of financial statements, which is phase 4.

Management must document the design of controls, including all five control components and also the results of its testing and evaluation. The types of information gathered by management to assess and document internal control effectiveness can take many forms, including policy manuals, flowcharts, narratives, documents, questionnaires and other forms that are in either paper or electronic formats.

The lack of management documentation of internal control over financial reporting may prevent the auditor from concluding that the controls are adequately designed or operating effectively. When documentation is inadequate, the auditor may decide to withdraw from the engagement or to issue a disclaimer of opinion on internal control over financial reporting. F: When obtaining an understanding of internal control, the auditor must assess two aspects about those controls.

First, the auditor must gather evidence about the design of internal controls. Second, the auditor must gather evidence about whether those controls have been placed in operation. What is the PCAOB standard 2 requirement related to auditor walkthroughs of internal control in an integrated audit? F: In a walkthrough of internal control, the auditor selects one or a few documents for the initiation of a transaction type and traces them through the entire accounting process.

At each stage of processing, the auditor makes inquiries and observes current activities, in addition to examining completed documentation for the transaction or transactions selected. Thus, the auditor combines observation, documentation, and inquiry to conduct a walkthrough of internal control. PCAOB Standard 2 requires the auditor to perform at least one walkthrough for each major class of transactions.

F: A key control is a control that is expected to have the greatest effect on meeting the transaction-related audit objectives. A control deficiency represents a deficiency in the design or operation of controls that does not permit company personnel to prevent or detect misstatements on a timely basis.

A design deficiency exists if a necessary control is missing or not properly designed. An operation deficiency exists if a well designed control does not operate as designed or when the person performing the control is insufficiently qualified or authorized. A material weakness exists if a significant deficiency, by itself, or in combination with other significant deficiencies, results in a more than remote likelihood that internal control will not prevent or detect material financial statement misstatements.

However, if the deficiency is deemed to be a material weakness, the auditor must express an adverse opinion on the effectiveness of internal control over financial reporting. His devotion to the firm and his duties always been exceptional, and over the years, he had been given increased responsibility.

What major factors permitted the defalcation to take place? F: The most important internal control deficiency which permitted the defalcation to occur was the failure to adequately segregate the accounting responsibility of recording billings in the sales journal from the custodial responsibility of receiving the cash.

Regardless of how trustworthy James appeared, no employee should be given the combined duties of custody of assets and accounting for those assets. Sha has found through experience taht filling out internal control questionnaires and flowcharts early in the engagement is not beneficial because the system rarely functions the way it is supposed to. Later in engagement, the auditor can prepare flowcharts and questionnaires with relative ease because of the knowledge already obtained on the audit.

Evaluate her approach. F: Maier is correct in her belief that internal controls frequently do not function in the manner they are supposed to. However, regardless of this, her approach ignores the value of beginning the understanding of internal control by preparing or reviewing a rough flowchart. By not obtaining an understanding of internal control until later in the engagement, Maier risks performing either too much or too little work, or emphasizing the wrong areas during her audit.

F: The extent of controls tested by auditors to express an opinion on internal controls for a public company is significantly greater than that tested solely to express an opinion on the financial statements. To express an opinion on internal controls for a public company, the auditor obtains an understanding of and performs tests of controls for all significant account balances, classes of transactions, and disclosures and related assertions in the financial statements.

Whenever the auditor assesses control risk below maximum, the auditor must perform tests of controls to support that control risk assessment. The auditor will not perform tests of controls when the auditor assesses control risk at maximum, either because of inadequate controls or because it is inefficient to test those controls. When control risk is assessed below the maximum, the auditor designs and performs a combination of tests of controls and substantive procedures.

F: There is a significant overlap between tests of controls and procedures to obtain an understanding of internal control. Both include inquiry, documentation, and observation. There are two primary differences in the application of these common procedures.

First, in obtaining an understanding of internal control, the procedures to obtain an understanding are applied to all controls identified during that phase. Tests of controls, on the other hand, are applied only when the assessed control risk has not been satisfied by the procedures to obtain an understanding. Second, procedures to obtain an understanding are performed only on one or a few transactions or, in the case of observations, at a single point in time.

Tests of controls are performed on larger samples of transactions perhaps 20 to , and often observations are made at more than one point in time. Some of the related controls are manual while others are automated. Describe the extent the auditor can rely on tests of controls performed in prior years. F: PCAOB Standard 2 requires a public company auditor to test controls each year for all relevant assertions for significant accounts and transactions. What type of condition will cause the auditor to issue a qualified or disclaimer of opinion on internal control over financial reporting?

F: The auditor may issue an unqualified opinion on internal control over financial reporting when two conditions are present:. A scope limitation is the condition that would cause the auditor to express a qualified opinion or a disclaimer of opinion on internal control over financial reporting. This type of opinion is issued when the auditor is unable to determine if there are material weaknesses, due to a restriction on the scope of the audit of internal control over financial reporting or other circumstances where the auditor is unable to obtain sufficient evidence.

F : PCAOB Standard 2 requires that the audit of the financial statements and the audit of internal control over financial reporting be integrated. In an integrated audit, the auditor must consider the results of audit procedures performed to issue the audit report on the financial statements when issuing the audit report on internal control. Two examples of fraudulent financial reporting are accelerating the timing of recording sales revenue to increased reported sales and earnings, and recording expenses as fixed assets to increase earnings.

Two examples are an accounts payable clerk issuing payments to a fictitious company controlled by the clerk, and a sales clerk failing to record a sale and pocketing the cash receipts. Frauds involving financial reporting are usually larger than frauds involving misappropriation of assets, usually involve top management, and do not directly involve theft of company assets.

Opportunities are circumstances that allow management or employees to commit fraud. For example, the company may issue aggressive earnings forecasts, or make extensive acquisitions using company stock. Identify those with whom the auditor must make inquiries. SAS 99 also requires auditors to inquire of the audit committee about its views of the risks of fraud and whether the audit committee has knowledge of any fraud or suspected fraud. SAS 99 further requires the auditor to make inquiries of others within the entity whose duties lie outside the normal financial reporting lines of responsibility about the existence or suspicion of fraud.

Example of items typically addressed in a code of conduct include expectations of general employee conduct, restrictions on conflicts of interest, and limitations on relationships with clients and suppliers. It is important for management to behave with honesty and integrity because this reinforces the importance of these values to employees throughout the organization.

Auditors use informational inquiry to obtain information about facts and details that the auditor does not have. For example, if the auditor suspects financial statement fraud involving improper revenue recognition, the auditor may inquire of management as to revenue recognition policies.

The auditor uses assessment inquiry to corroborate or contradict prior information. In the previous example, the auditor may attempt to corroborate the information obtained from management by making assessment inquiries of individuals in accounts receivable and shipping. Interrogative inquiry is used to determine if the interviewee is being deceptive or purposefully omitting disclosure of key knowledge of facts, events, or circumstances.

For example, a senior member of the audit team might make interrogative inquiries of management or other personnel about key elements of the fraud where earlier responses were contradictory or evasive. Three examples of nonverbal cues by the individual are creating physical barriers by blocking their mouth, leaning away from the auditor, and signs of stress such as sweating or fidgeting.

What must you do in response to this discovery? How might this discovery affect your report on internal control when auditing a public company? SAS 99 also requires the auditor to consider the implications for other aspects of the audit. When the auditor determines that fraud may be present, SAS 99 requires the auditor to discuss the matter and audit approach for further investigation with an appropriate level of management that is at least one level above those involved, and with senior management and the audit committee, even if the matter might be considered inconsequential.

For public company auditors, the discovery of fraud of any magnitude by senior management is at least a significant deficiency and may be a material weakness in internal control over financial reporting. This includes fraud by senior management that results in even immaterial misstatements. IT-based accounting systems have the ability to handle tremendous volumes of complex business transactions cost effectively.

Financial assets include all of the following except books about the forex market

ACCA P2 Financial assets

CARA TRANSAKSI SPOT FOREX MARKET

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Rajiv Sobti. This was a very intense quiz. The Financial Simulation Game. Strategic Financial Management. JavaScript is disabled on your browser. Enable JavaScript to use this site. Learn More. Our Customers Testimonials. Case Studies Whitepapers Webinars. Partnerships Become a Reseller Become an Affiliate. It amounts to total undistributed earnings. It is the difference between total earnings and the total amount of dividends till date.

Assets remain unchanged and Liabilities decrease Assets decrease and Liabilities increase or decrease less than the decrease in the assets. Both Assets and Liabilities increase by the same amount. These costs will help produce Revenue in the future. These are included as Assets in the Balance Sheet. Payments of Cash dividends Decrease in assets other than cash Increase in Debentures Increase in Liabilities Which of the following would increase the Cash Flow of a firm? The comparison of financial ratios over a period of time to assess the direction of change and the financial performance of the firm.

A comparison of Time values for various ratios of the firm. It is not possible to standardize the accounting data of various firms following varied accounting policies. It helps to assess the financial standing of the firm as compared to other firms in the same industry. It is difficult to assess and rely on the average of ratios of the strong and weak firms in the industry. Comparison of the ratios of the firm relating to the performance of the firm. Online Finance Courses By Dr.

Anil Lamba Lamcon. Add a comment Post Cancel. Jyoti Kumari you wish to accumulate Rs by the end of Rs 5 years by making the equal annual year-end days 16 hours 40 minutes ago. Sandeep Srivastava It is really helpful. If a non-current asset within the scope of the measurement requirements of this IFRS is part of a disposal group, the measurement requirements of this IFRS apply to the group as a whole, so that the group is measured at the lower of its carrying amount and fair value less costs to sell.

The requirements for measuring the individual assets and liabilities within the disposal group are set out in paragraphs 18, 19 and However, once the cash flows from an asset or group of assets are expected to arise principally from sale rather than continuing use, they become less dependent on cash flows arising from other assets, and a disposal group that was part of a cash-generating unit becomes a separate cash-generating unit. The measurement provisions of this IFRS 3 do not apply to the following assets, which are covered by the IFRSs listed, either as individual assets or as part of a disposal group:.

Other than paragraphs 18 and 19, which require the assets in question to be measured in accordance with other applicable IFRSs. The classification, presentation and measurement requirements in this IFRS applicable to a non-current asset or disposal group that is classified as held for sale apply also to a non-current asset or disposal group that is classified as held for distribution to owners acting in their capacity as owners held for distribution to owners.

This IFRS specifies the disclosures required in respect of non-current assets or disposal groups classified as held for sale or discontinued operations. Additional disclosures about non-current assets or disposal groups classified as held for sale or discontinued operations may be necessary to comply with the general requirements of IAS 1, in particular paragraphs 15 and of that Standard.

An entity shall classify a non-current asset or disposal group as held for sale if its carrying amount will be recovered principally through a sale transaction rather than through continuing use. For this to be the case, the asset or disposal group must be available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets or disposal groups and its sale must be highly probable.

For the sale to be highly probable, the appropriate level of management must be committed to a plan to sell the asset or disposal group , and an active programme to locate a buyer and complete the plan must have been initiated. Further, the asset or disposal group must be actively marketed for sale at a price that is reasonable in relation to its current fair value.

In addition, the sale should be expected to qualify for recognition as a completed sale within one year from the date of classification, except as permitted by paragraph 9, and actions required to complete the plan should indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. An entity that is committed to a sale plan involving loss of control of a subsidiary shall classify all the assets and liabilities of that subsidiary as held for sale when the criteria set out in paragraphs are met, regardless of whether the entity will retain a non-controlling interest in its former subsidiary after the sale.

Events or circumstances may extend the period to complete the sale beyond one year. This will be the case when the criteria in Appendix B are met. Sale transactions include exchanges of non-current assets for other non-current assets when the exchange has commercial substance in accordance with IAS 16 Property, Plant and Equipment. When an entity acquires a non-current asset or disposal group exclusively with a view to its subsequent disposal, it shall classify the non-current asset or disposal group as held for sale at the acquisition date only if the one-year requirement in paragraph 8 is met except as permitted by paragraph 9 and it is highly probable that any other criteria in paragraphs 7 and 8 that are not met at that date will be met within a short period following the acquisition usually within three months.

If the criteria in paragraphs 7 and 8 are met after the reporting period, an entity shall not classify a non-current asset or disposal group as held for sale in those financial statements when issued. However, when those criteria are met after the reporting period but before the authorisation of the financial statements for issue, the entity shall disclose the information specified in paragraph 41 a , b and d in the notes.

A non-current asset or disposal group is classified as held for distribution to owners when the entity is committed to distribute the asset or disposal group to the owners. For this to be the case, the assets must be available for immediate distribution in their present condition and the distribution must be highly probable.

For the distribution to be highly probable, actions to complete the distribution must have been initiated and should be expected to be completed within one year from the date of classification. Actions required to complete the distribution should indicate that it is unlikely that significant changes to the distribution will be made or that the distribution will be withdrawn.

An entity shall not classify as held for sale a non-current asset or disposal group that is to be abandoned. This is because its carrying amount will be recovered principally through continuing use. However, if the disposal group to be abandoned meets the criteria in paragraph 32 a - c , the entity shall present the results and cash flows of the disposal group as discontinued operations in accordance with paragraphs 33 and 34 at the date on which it ceases to be used.

Non-current assets or disposal groups to be abandoned include non-current assets or disposal groups that are to be used to the end of their economic life and non-current assets or disposal groups that are to be closed rather than sold. An entity shall not account for a non-current asset that has been temporarily taken out of use as if it had been abandoned.

An entity shall measure a non-current asset or disposal group classified as held for sale at the lower of its carrying amount and fair value less costs to sell. An entity shall measure a non-current asset or disposal group classified as held for distribution to owners at the lower of its carrying amount and fair value less costs to distribute. Costs to distribute are the incremental costs directly attributable to the distribution, excluding finance costs and income tax expense.

If a newly acquired asset or disposal group meets the criteria to be classified as held for sale see paragraph 11 , applying paragraph 15 will result in the asset or disposal group being measured on initial recognition at the lower of its carrying amount had it not been so classified for example, cost and fair value less costs to sell. Hence, if the asset or disposal group is acquired as part of a business combination, it shall be measured at fair value less costs to sell.

When the sale is expected to occur beyond one year, the entity shall measure the costs to sell at their present value. Any increase in the present value of the costs to sell that arises from the passage of time shall be presented in profit or loss as a financing cost. Immediately before the initial classification of the asset or disposal group as held for sale, the carrying amounts of the asset or all the assets and liabilities in the group shall be measured in accordance with applicable IFRSs.

On subsequent remeasurement of a disposal group, the carrying amounts of any assets and liabilities that are not within the scope of the measurement requirements of this IFRS, but are included in a disposal group classified as held for sale, shall be remeasured in accordance with applicable IFRSs before the fair value less costs to sell of the disposal group is remeasured.

An entity shall recognise an impairment loss for any initial or subsequent write-down of the asset or disposal group to fair value less costs to sell, to the extent that it has not been recognised in accordance with paragraph An entity shall recognise a gain for any subsequent increase in fair value less costs to sell of an asset, but not in excess of the cumulative impairment loss that has been recognised either in accordance with this IFRS or previously in accordance with IAS 36 Impairment of Assets.

An entity shall recognise a gain for any subsequent increase in fair value less costs to sell of a disposal group:. The impairment loss or any subsequent gain recognised for a disposal group shall reduce or increase the carrying amount of the non-current assets in the group that are within the scope of the measurement requirements of this IFRS, in the order of allocation set out in paragraphs a and b and of IAS 36 as revised in A gain or loss not previously recognised by the date of the sale of a non-current asset or disposal group shall be recognised at the date of derecognition.

Requirements relating to derecognition are set out in:. An entity shall not depreciate or amortise a non-current asset while it is classified as held for sale or while it is part of a disposal group classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale shall continue to be recognised.

If an entity has classified an asset or disposal group as held for sale or as held for distribution to owners, but the criteria in paragraphs for held for sale or in paragraph 12A for held for distribution to owners are no longer met, the entity shall cease to classify the asset or disposal group as held for sale or held for distribution to owners respectively.

In such cases an entity shall follow the guidance in paragraphs to account for this change except when paragraph 26A applies. If an entity reclassifies an asset or disposal group directly from being held for sale to being held for distribution to owners, or directly from being held for distribution to owners to being held for sale, then the change in classification is considered a continuation of the original plan of disposal. The entity:. The entity shall apply the classification, presentation and measurement requirements in this IFRS that are applicable to the new method of disposal.

This does not preclude an extension of the period required to complete a sale or a distribution to owners if the conditions in paragraph 9 are met. The entity shall measure a non-current asset or disposal group that ceases to be classified as held for sale or as held for distribution to owners or ceases to be included in a disposal group classified as held for sale or as held for distribution to owners at the lower of:. If the non-current asset is part of a cash-generating unit, its recoverable amount is the carrying amount that would have been recognised after the allocation of any impairment loss arising on that cash-generating unit in accordance with IAS The entity shall include any required adjustment to the carrying amount of a non-current asset that ceases to be classified as held for sale or as held for distribution to owners in profit or loss 6 from continuing operations in the period in which the criteria in paragraphs or 12A, respectively, are no longer met.

Financial statements for the periods since classification as held for sale or as held for distribution to owners shall be amended accordingly if the disposal group or non-current asset that ceases to be classified as held for sale or as held for distribution to owners is a subsidiary, joint operation, joint venture, associate, or a portion of an interest in a joint venture or an associate.

The entity shall present that adjustment in the same caption in the statement of comprehensive income used to present a gain or loss, if any, recognised in accordance with paragraph Unless the asset is property, plant and equipment or an intangible asset that had been revalued in accordance with IAS 16 or IAS 38 before classification as held for sale, in which case the adjustment shall be treated as a revaluation increase or decrease. If an entity removes an individual asset or liability from a disposal group classified as held for sale, the remaining assets and liabilities of the disposal group to be sold shall continue to be measured as a group only if the group meets the criteria in paragraphs If an entity removes an individual asset or liability from a disposal group classified as held for distribution to owners, the remaining assets and liabilities of the disposal group to be distributed shall continue to be measured as a group only if the group meets the criteria in paragraph 12A.

Otherwise, the remaining non-current assets of the group that individually meet the criteria to be classified as held for sale or as held for distribution to owners shall be measured individually at the lower of their carrying amounts and fair values less costs to sell or costs to distribute at that date. Any non-current assets that do not meet the criteria for held for sale shall cease to be classified as held for sale in accordance with paragraph Any non-current assets that do not meet the criteria for held for distribution to owners shall cease to be classified as held for distribution to owners in accordance with paragraph Presentation and disclosure.

An entity shall present and disclose information that enables users of the financial statements to evaluate the financial effects of discontinued operations and disposals of non-current assets or disposal groups. Presenting discontinued operations.

A component of an entity comprises operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the entity. In other words, a component of an entity will have been a cash-generating unit or a group of cash-generating units while being held for use. A discontinued operation is a component of an entity that either has been disposed of, or is classified as held for sale, and.

The analysis may be presented in the notes or in the statement of comprehensive income. If it is presented in the statement of comprehensive income it shall be presented in a section identified as relating to discontinued operations, ie separately from continuing operations. The analysis is not required for disposal groups that are newly acquired subsidiaries that meet the criteria to be classified as held for sale on acquisition see paragraph These disclosures may be presented either in the notes or in the financial statements.

These disclosures are not required for disposal groups that are newly acquired subsidiaries that meet the criteria to be classified as held for sale on acquisition see paragraph These disclosures may be presented either in the notes or in the statement of comprehensive income. If an entity presents the items of profit or loss in a separate statement as described in paragraph 10A of IAS 1 as amended in , a section identified as relating to discontinued operations is presented in that statement.

An entity shall re-present the disclosures in paragraph 33 for prior periods presented in the financial statements so that the disclosures relate to all operations that have been discontinued by the end of the reporting period for the latest period presented. Adjustments in the current period to amounts previously presented in discontinued operations that are directly related to the disposal of a discontinued operation in a prior period shall be classified separately in discontinued operations.

The nature and amount of such adjustments shall be disclosed. Examples of circumstances in which these adjustments may arise include the following:. If an entity ceases to classify a component of an entity as held for sale, the results of operations of the component previously presented in discontinued operations in accordance with paragraphs shall be reclassified and included in income from continuing operations for all periods presented.

Financial assets include all of the following except cluster analysis of forex volumes

PRE 8 Chapter 6 Financial Assets

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