ACCO 20103:

INTERMEDIATE ACCOUNTING 3
MIDTERM REVIEW

Lady Diana P. Noleal, CPA MBA(cand.)

CONCEPT RECAP:

NON-FINANCIAL LIABILITIES
P ro vi sio ns (IA S 37 )
• Pre s e n t le g a l or cons t ruc tiv e obl ig a t ion
• Prob a b le
• R e lia b le e s tim ate

IF R S 15: R e ve n u e f ro m C o nt r act s w it h C u s t ome rs

* A s s oc iatin g c a us e a n d e f f ec t
C O N C E P T R E C A P :

NON-FINANCIAL LIABILITIES

PAYABLES
Probable
Measurable
Invoiced

ACCRUALS
Probable
Measurable
Not invoiced or formally agreed upon

PROVISIONS
Probable, >50% chance
Can be estimated reliably
Highly subjective

CONTINGENCY
Possible, 50% or < but >10% chance, existing condition
Cannot be estimated reliably
Disclose in the Notes

REMOTE POSS.
Possibility is <10%
Cannot be measured reliably
No disclosure
C O N C E P T R E C A P :

NON-FINANCIAL LIABILITIES

WARRANTIES
TYPES:

• Assurance-type warranty
No separate performance obligation
PAS 37: Provisions, Contingent Liabilities and Contingent Assets

• Service-type warranty
With separate performance obligation
PFRS 15: Revenue from Contracts with Customers
Unearned Warranty Revenue
C O N C E P T R E C A P :

NON-FINANCIAL LIABILITIES

WARRANTIES
TWO WAYS OF DERECOGNIZING WARRANTY LIABILITY:
• Discrete (based on actual repairs)
• Evenly throughout the period
Year 1 Year 2 Year 3 Year 4

Year 1 Sales

Year 2 Sales
C O N C E P T R E C A P :

NON-FINANCIAL LIABILITIES

WARRANTIES
TWO WAYS OF DERECOGNIZING WARRANTY LIABILITY:
• Discrete (based on actual repairs)
• Evenly throughout the period
Year 1 Year 2 Year 3 Year 4 Total
Year 1 – 5%
25K 50K
Year 2 – 10%
Year 1 Sales 150K
P1M
25K 50K

50K 100K

Year 2 Sales 200K

P2M
50K 100K

TOTAL 25K 125K 200K P100K

C O N C E P T R E C A P :

NON-FINANCIAL LIABILITIES

WARRANTIES
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C O N C E P T R E C A P :

NON-FINANCIAL LIABILITIES

PRESENT VALUE FACTORS

ANNUITY DUE ORDINARY ANNUITY

01/01/2021 12/31/2021
C O N C E P T R E C A P :

NON-FINANCIAL LIABILITIES

PRESENT VALUE FACTORS

ANNUITY DUE ORDINARY ANNUITY
C O N C E P T R E C A P :

NON-FINANCIAL LIABILITIES

PRESENT VALUE FACTORS

ANNUITY DUE ORDINARY ANNUITY
CONCEPT RECAP:

PFRS 16: LEASES

LE S S E E
• Relative Stand-alone price, may use practical expedient if inputs are unobservable
• Recognition: PV of Lease Payments + Initial Direct Costs
• Other considerations to measurement: FV GBP
• Subsequent Measurement of ROU Asset: Cost Model
• Subsequent Measurement of Lease Liab.: +Interest, -Payments, Remeasurements

LE S S OR
Finance Lease or Operating Lease?
OL: Recognize on straight-line basis or another systematic basis
FL: Dealer/manufacturer’s lease or Direct Financing Lease?
CONCEPT RECAP:

PFRS 16: LEASES

LE S S E E – LE A S E LIA B ILITY

FV GBP
• F ix e d p a ym e n ts – le a s e in c en tiv es
• V a ri a b le p a y m e n ts – ind e x/ rate d ur in g c om m e n ce men t d a te
• Gua ra n te ed R e s id ua l V a lue
• B a rg ain Pu rch a se Op t ion
• P e n a ltie s f or e ar ly te rm in ation
CONCEPT RECAP:

PFRS 16: LEASES

LE S S E E - R E MEA S URE ME NT S

TBR2
• T e rm ( re v is e d is coun t r a te )
• B a rg ain p u rc ha se op ti on (r ev is e d is c ount ra t e )
• R e s id ua l V a l ue
• R a t e or in d e x cha n g e s
CONCEPT RECAP:

PFRS 16: LEASES

LE S S E E – E LE C T IO N T O T R E A T A S E XP ./ S L B A S IS

TV
• T e rm is l e s s t ha n 1 2 m on t h s a nd n o B PO
• V a lue is low w h e n n e w
CONCEPT RECAP:

PFRS 16: LEASES

LE S S OR – F IN A N C E L E A S E C R IT E R IA

BLack OPS
• B a rg ain p u rc ha se op ti on
• L e a s e t er m = m a j or pa rt of ec on omi c lif e of a s se t
• O w n e rs hip t ra ns fe r a t e n d of le a s e t e rm
• P re s e n t va l ue of M L P = F V , s ub s ta ntia lly
• S p e c ia liz ed n a tu re – le s s ee c an only us e it w / out m od .
CONCEPT RECAP:

PFRS 16: LEASES

LE S S OR – N E T IN V E S TME N T

FV GBP
• F ix e d p a ym e n ts – le a s e in c en tiv es
• V a ri a b le p a y m e n ts – ind e x/ rate d ur in g c om m e n ce men t d a te
• Gua ra n te ed R e s id ua l V a lue
• B a rg ain Pu rch a se Op t ion
• P e n a ltie s f or e ar ly te rm in ation
CONCEPT RECAP:

PFRS 16: LEASES

LE S S OR – D ire ct F in an cin g Le as e

FMV-COST=INTEREST REV.
CONCEPT RECAP:

PFRS 16: LEASES

LE S S OR – Man u f act ur er /D eale r ’s Le as e

REVENUE = FMV or PV
COS = CV – PV of URV
CONCEPT RECAP:

PFRS 16: LEASES

LE S S OR – Man u f act ur er /D eal er ’s Le as e
No IDC
Receivable/GI includes all RV
COS includes GRV only
Cash (dr)
Finance Lease Receivable (dr) = Pmts. + BPO + RV
Sales (cr) = FV or PV of FLR + BPO+ *GRV
Unearned Interest Revenue (cr)
CONCEPT RECAP:

PFRS 16: LEASES

S A L ES A N D LE A S EB A CK T R A N SACT ION S
S e ll e r- les se e re t a ins pa r t of R OU a s s e t

Consideration
vs.
FV of Asset

and

PV of contractual payments
Vs.
PV of lease payments based on market rate
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REVIEW MATERIALS
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CLARIFICATIONS
*Explanation for letter D:
A lessee can be a lessor and a lessee at
the same time under a sublease contract.

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THANK YOU! 