International Accounting Standards (IAS) flashcards

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What is the core measurement principle of IAS 2 Inventories?

Inventories must be measured at the lower of cost and net realisable value (NRV).

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What is an 'adjusting event' under IAS 10?

An event after the reporting period that provides evidence of conditions that existed at the end of the reporting period. The financial statements must be adjusted for these events.

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Under IAS 37, when should a provision be recognised?

When there is a present obligation from a past event, an outflow of resources is probable, and the amount can be reliably estimated.

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What is the 'recoverable amount' of an asset according to IAS 36?

The higher of an asset's fair value less costs to sell and its value in use.

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What is the difference in accounting treatment between research and development costs under IAS 38?

Research costs must be expensed as incurred. Development costs may be capitalised as an intangible asset if they meet specific criteria.

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What are the five components of a complete set of financial statements according to IAS 1?

1. Statement of Financial Position, 2. Statement of Profit or Loss and Other Comprehensive Income, 3. Statement of Changes in Equity, 4. Statement of Cash Flows, 5. Notes to the financial statements.

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What are the three main categories of cash flows in a Statement of Cash Flows (IAS 7)?

1. Operating Activities, 2. Investing Activities, 3. Financing Activities.

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Under IAS 16, what are the two measurement models for Property, Plant, and Equipment after initial recognition?

The Cost Model (asset carried at cost less accumulated depreciation and impairment) and the Revaluation Model (asset carried at a revalued amount, being its fair value).

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IAS 1 (Presentation of Financial Statements)

Sets out the overall requirements for a company's accounts: their structure, their minimum content, and what a complete set comprises — a statement of financial position, of profit or loss and other comprehensive income, of changes in equity, of cash flows, and notes.

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IAS 2 (Inventories)

Stock is measured at the lower of cost and net realisable value (NRV). The standard also gives guidance on working out its cost and on when it becomes an expense.

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IAS 7 (Statement of Cash Flows)

Requires a statement that classifies the cash received and paid in a period into three categories: operating, investing and financing activities.

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IAS 8 (Accounting Policies, Estimates and Errors)

Guidance on choosing and changing the bases a company prepares its accounts on, on how to treat a revised estimate, and on correcting a mistake found in an earlier period's accounts.

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IAS 10 (Events After the Reporting Period)

Prescribes the treatment of anything that happens between the year end and the date the accounts are authorised for issue: adjust the accounts if it gives evidence of conditions that existed at the year end, otherwise disclose it.

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IAS 16 (Property, Plant and Equipment)

Covers tangible non-current assets: when to recognise them, their carrying amount and their depreciation. After recognition a company chooses between the cost model and the revaluation model.

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IAS 36 (Impairment of Assets)

An asset must not be carried above its recoverable amount, which is the higher of its fair value less costs to sell and its value in use.

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IAS 37 (Provisions, Contingent Liabilities and Assets)

A liability of uncertain timing or amount is recognised only when there is a present obligation from a past event, an outflow of resources is probable, and the amount can be estimated reliably.

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IAS 38 (Intangible Assets)

Covers identifiable non-monetary assets without physical substance, such as patents and trademarks. Research costs are expensed as incurred; development costs may be capitalised if specific criteria are met.