Summary: International Financial Reporting Standards (Ifrs)

Read the summary and the most important questions on International Financial Reporting Standards (IFRS)

• 2 Week 2: Revenue from contracts (revenue recognition); Tangible assets (PPE)

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• The first step is to identify the contract. In this step you have a things you need to look before identifying the contract:

  1. Is the contract approved by all the parties
  2. Can you identify rights
  3. Can you identify payment terms
  4. Is there commercial substance?
  5. Is the contract entitled to in exchange for the goods

• 3 Week 3: Intangible assets and impairment of assets

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• When should an entity conduct an impairment test?

  Annual because the entity must test if there are any indicators of impairment. If there are indicators entities should calculate the Recoverable Amount of the asstes.

• What are 4 external indicators of impairment?

  • Assets value : declined the value of the asset more than normally?
    
  • Entity environment/market : are there changes in the tech industry of economic market?
  • Interest rates : increases the interest rate?
  • Market capitalization : is the Carrying Amount greather than the market capitalization?

• What do you do in the cost method? How should you account the impairment?

  Recognize immediately in P/L. Write-down can be included in accumulated depreciation and impairment loss (CA - RA)

• When you do an impairment test and you have the account Goodwill, what should do first?

  The impairment loss first allocated to Goodwill. Because the carrying amount of Goodwill is nihil after the impairment

• 4 Week 4: Business combination and Consolidations (Group accounting)

• What is meant by a business combination?

  Transaction or events in which an acquirer obtains control of one or more businesses.
  Only in a business combination can Goodwill be present.

• What is a contingent consideration and how it is accounted for?

  An obligation of the acquirer to transfer additional assets or equity interests to the owners of an acquiree as part of the exchange. The consideration includes transfer assets or liabilities with an contingent arrangement and is measured at Fair Value at acquisition date.

• Explain the key components of core Goodwill:

  • Going Concern Goodwill : acquiree's net assets together are more worth than the net assets separately. Synergy created;
    
  • Combination Goodwill : extra benefits accruing because of the synergy created by acquirer and the acquiree combining together. 

• How do you calculate the exchange rate of shares?

  Fair value per share Badings / (gedeeld door) Fair value per share Bosmans

• How do you calculate the Merger Premium?

  Fair value of the net assets of Badings - (min) increase in capital Bosmans