MASTER OF

ACCOUNTANC
Here is where your presentation begins

Y
Regulatory Framework
IFRS Foundation
- Appointing members of the IASB, advisory council and IFRS IC.
- Ensuring the three bodies have adequate funding.

International Accounting Standards Board (IASB)

International Financial Reporting Standards (IFRS’s)

- Issuing accounting standards

IFRS Advisory Council

- Advising and providing the IASB information
 Conceptual framework (8 parts)
- Part1: The objective of general purpose financial reporting
- Part2: Qualitative characteristics of useful financial information
- Part3: Financial Statements and the Reporting Entity
- Part4: The elements of financial statements
- Part5: Recognition and derecognition
- Part6: Measurement
- Part7: Presentation and disclosure
- Part8: Concepts of capital and capital maintenance
Objective: To provide useful information to users of Financial Statements.
Useful: Qualitative characteristics

Information:

01 Financial position Assets, Liabilities, Equity

02 Financial performance Income, Expense

03 Cash flow

Users:
- Shareholders and investors
- Lenders
- Employees
- Government
- Customers/Suppliers
 Financial statements and the reporting
entity

Going concern assumption Accruals

It assumes they prepare their financial Transactions are reported in the period to
statements in the foreseeable future, which they relate, regardless of when cash
normally one year (going concern). is received or paid,
 Sole trader Partnership Limited liability
company
Owned by… One person Two or more people Shareholders

Liable for… Any business Their own contributions Limited

debts
Example Small local shops, Accountancy practice,
Hairdressers… Legal practice firms…
 The Accounting Equation
Assets – Liabilities = Capital + Profit - Drawings

• Net asset = Asset – Liabilities

• Closing capital – Opening capital = Increase in net asset = Profit – Drawing + Capital
• Gross = Revenue – COGS
• Revenue = Sales – Return in
• Starting inventory + Purchases + Return out − Ending inventory = Cost of goods sold.

Ledger account
Debit: Credit:
An increase to an asset A decrease to an asset
A decrease to a liability An increase to a liability
A decrease to capital An increase to capital
A decrease to an income item An increase to an income item
An increase to an expense item A decrease to an expense item
 Accounting for Sole Traders
Cash Transactions Double Entry Credit Transactions Double Entry

Cash/Bank account Receivables

Debit: Credit: Debit: Credit:
• Money in • Money out • Sale (+) • Received (-)
• Returns (-)

Capital
Payables
Cash/Bank account Debit: Credit:
Debit: Credit: • Payment (-) Purchase (+)
• Drawing • Contribution • Returns (-)
REVISION OF FINANCIAL STATEMENTS
PREPARATION (6 steps)
Step1: Transaction and source/business document
Step2: Books of prime entry
Step3: Ledger & balance off the account
Step4: Trial balance
Step5: Year-end adjustment journal
Step6: Financial Statements
 Step1: Transaction and source/business
document
Step1: The seller provides a Price Quotation to the customer.
Step2: The customer provides a Purchase Order Form to the seller. The
seller will then need to confirm this by having a sales order document.
Step3: The seller provides Delivery Note/Goods Dispatch Note and
delivers goods as well as sales Invoice to the customer.
Step4: Customer provides Cheque to pay for the goods. A Remittance
Advice will also need to be sent along with the cheque to indicate the
supplier that the invoice has been paid.
Step5: If there are any returned goods, the seller needs to provide Credit
Note to the customer.
 Step2: Books of prime entry
Sales Day Book (SDB) Records credit sales to customers (Sales Invoices)
Sales Returns Day Book (SRDB) Records the return of credit sales (Credit Notes)

Purchases Day Book (PDB) Records credit purchases from suppliers (Purchases Invoices)
Purchases Returns Day Book (PRDB) Records the return of credit purchases (Debit Notes)

Cash Payments Book (CPB) Records all payments made at the bank
Cash Receipts Book (CRB) Records all receipts made at the bank

Petty Cash Book Records all receipts and payments of cash in hand
Imprest System for Petty Cash control the case easier and therefore reduce the possibility of error and fraud

Journal Other transactions (Depreciation etc.)

 Step3: Ledger & balance off the account
The ledger in accounting records journal entries from separate accounts
in a chronological manner. It is maintained in a T format. For closing
balance, It shows a debit or credit balance—at the end accounting period.
All ledger balances are transferred to the trial balance. Ledgers contain
important data— income statements and balance sheets are formulated based
on that information.

Title of Account
Debit Credit
Date Details Folio Total Date Details Folio Total
$ $
 Step4: Trial balance
A trial balance is a report that lists the balances of all general ledger accounts of a company at a
certain point in time.
Example:
 Capital structures
Equity: Share Capital
This is the nominal (par) value of shares issued to shareholders. Shares can be issued at a price equal to or greater than the
nominal (par) value. Any amounts of issued shares over and above the par value is held in the share premium
account. There are mainly two types of shares:

Type 1: Ordinary Shares Type 2: Preference Shares

Standard shares with no special Preferred shares usually carry no voting rights. A fixed dividend is paid
rights or restrictions. (% of share par value) in priority to ordinary shares.
Double entry: 1. Issue shares:
DR Cash Types Redeemable preference shares Irredeemable preference shares.
CR Equity (Share
capital/Premium)
2. Dividend: Meaning Preference shares that can be bought back by the Preference shares that cannot be bought back
DR Retained earnings issuing company within its predetermined maturity by the issuing company till the company is a
CR Cash period. going concern and in existence.
Double 1. Shares issued: 1. Shares issued:
entry DR Cash DR Cash
CR Redeemable preference share (Liability) CR Irredeemable preference share (Equity)
2. Dividends paid: 2. Dividends paid:
DR Finance Cost = % x value (par value only!) x number of
CR Redeemable Preference share dividend shares
payable DR Retained earnings
CR Cash
 Bonus Issues of Ordinary Share Capital
A bonus issue is an offer of free additional shares to existing shareholders (no cash is received). A bonus issue can
be used by a company to restructure its equity and reserves.
Example:
Suppose a company equity account in balance sheet looks like this before bonus issue:
Ordinary Shares 1,000,000 at $1 each = $1,000,000
Share Premium Account = $500,000
Retained Profit = $1,500,000
#1: The company decided to give a 1:5 bonus, meaning shareholders will receive 1 share out of 5. So, in total new bonus shares issues will be 1,000,000/5
= 200,000. Total new share capital = 200,000*1 = $200,000. This $200,000 would be deducted from the Share Premium Account. So new equity account
after the bonus issue will look like below:
Ordinary Shares 1,200,000 at $1 each = $1,200,000 ($1,000,000 + $200,000)
Share Premium Account = $300,000 ($500,000 - $200,000)
Retained Profit = $1,500,000
#2: The company decided to give a 1:1 bonus, which means shareholders will receive one share out of each share held. So, in total new bonus issues will be
1,000,000. Total new share capital = 1,000,000*1 = $1,000,000. This $1,000,000 would be deducted from the Share Premium account and retained earnings.
So new equity account after the bonus issue will look like below:
Ordinary Shares 2,000,000 at $1 each = $2,000,000 ($1,000,000 + $1,000,000
Share Premium Account = $0 ($500,000 - $500,000)
Retained Profit = $1,000,000 ($1,500,000 - $500,000)
Double Entry Example:
 Right issue of Ordinary Share Capital
A right share issue is an invitation that a company gives to its existing shareholders to purchase new
shares of the company based on the number of their existing shares held.
Accounting Entry
Example: ABC Co. has 100,000 issued shares with a nominal value of $10 per share and a market value of $15 per share. The
company invites its shareholders to a rights issues of 1 share for every 5 shares for $10 per share.
This means the company is offering a total of 20,000 (100,000 x 1/5) shares at a discount of $5 ($15 – $10) to its shareholders.
Assuming all the issues are accepted by the shareholders, the accounting entry will be as follows:
Dr Bank (20,000 x $10) 200,000
Cr Share Capital (20,000 x $10) 200,000
For the same example, if the right share issue price is $12 instead of $10, the accounting entry will be as follows:
Dr Bank (20,000 x $12) 240,000
Cr Share Capital (20,000 x $10) 200,000
Cr Share Premium (20,000 x ($12 – $10)) 40,000
 Loan Notes
Loan notes are a financial instrument that detail when a loan must be repaid by the borrower and what
interest is payable to the lender.
Interest will be payable to the loan note holder on the nominal value.
In the exam, you may be asked to calculate the interest expense for the year to be shown as finance costs in
the P/L.
Example:
KG Ltd issues 30,000 $150 10% loan notes on 1 July 2015. Interest is paid annually in arrears on the 30 June each year.
Required:
Assuming KG Ltd has a year end of 31 December 2015 what is the double entry required to account for the loan notes fully.

Answer:
DR Bank ($150 x 30.000) $4.500.000
Cr Loan note (non-current liability) $4.500.000
At 31 Dec 2015:
DR Finance cost (6m/12m x $4.500.000 x 10%) $225.000
CR Accruals (liability) $225.000
 Sales Tax
Sales:
Suppose we sell clothes, sales=$60, sales tax=$10, then:
DR Cash $70 (VAT inclusive)
CR Sales revenue $60 (VAT exclusive)
CR Output VAT $10
Purchases
Because we are VAT registered company and then we purchase raw materials at a price of $30, and Input VAT=$5:
DR Purchase $30 (VAT exclusive)
DR Input VAT liability $5
CR Payable $35 (VAT inclusive)
Total Liability and Payments
So Total VAT Liability
= output VAT- input VAT
= $10 - $5 =$5
Payments to tax authorities:
DR Sales tax control A/C (VAT liability)
CR Bank
 Taxation
Companies have to pay tax on taxable profits. The tax charge is normally ESTIMATED at the
end of the financial year and charged to the statement of profit or loss, and paid in the
following year.
The double entry for taxation would be:
DR Taxation expense (Statement of profit or loss)
CR Taxation liability (Statement of financial position)

The double entry for when the tax is paid a few months later:
DR Taxation liability (Statement of financial position)
CR Bank (Statement of financial position)
 IRRECOVERABLE DEBTS AND
ALLOWANCES

1 2 3
Account for irrecoverable Recover the irrecoverable Account for allowance for
debts debts receivables

4 5 6
Calculate the allowance
Recover a doubtful debt Disclosure
for receivables
 Account for Irrecoverable Debts Recover the Irrecoverable Debts
(Removing the debt from the accounts) (If a debt previously written off is subsequently recovered)
DR Cash/Bank (Statement of financial position)
DR Irrecoverable debts expense (Statement of profit or loss)
CR Irrecoverable debts expense (Statement of profit or
CR Trade receivables (Statement of financial position)
loss)

The closing journal entry for The closing journal entry for
Irrecoverable Debts Irrecoverable Debts Recovered
DR Statement of profit or loss (Administrative expense)
DR Irrecoverable debts expense (Statement of profit or loss)
CR Irrecoverable debts expense (Statement of profit or
CR Statement of profit or loss (Administrative expense)
loss)

If we have written off the receivable balance and there is no

outstanding receivable balance here and when we recover it,
we can:

DR Cash/Bank (Statement of financial position)

CR Statement of profit or loss (Administrative expense)
 Account for Allowance for Receivables Recover a Doubtful Debt
Step1: Remove receivable balance
Increase in allowance: Decrease in allowance: DR Bank
DR Irrecoverable debts expense DR Allowance for receivables CR Trade receivables
(Statement of profit or loss) (Statement of financial position) Step2: Remove the allowance
CR Allowance for receivables CR Irrecoverable debts expense DR Allowance for doubtful debts
(Statement of financial position) (Statement of profit or loss)
CR Irrecoverable debt expense

Calculate Allowance for Receivables

Specific allowance: refers to specific receivables that you know are facing financial problems, and so may be unable to pay off the debt.
General allowance: refers to a general percentage of debts that may need to be written off based on your business's past experience.

General allowance + Specific allowances = Ending Balance of Receivables

General Allowance = All Receivables - Irrecoverable Debts Expense - Specific Allowances

 Accruals and Prepayments

Accrued Expense Accrued Income Prepaid expense Deferred Income

Expenses recognized but not yet Income recognized but not yet Expenses paid in advance and Income received in advance but
paid. received. hence recognized as an asset. not yet earned.

Step 1: Incur accrued expense Step 1: Incur accrued income Step 1: Incur prepaid expense Step 1: Incur deferred income
DR Accrued Expense (P/L) DR Accrued Income DR Prepayments DR Cash/Bank
CR Accrued Liability CR Income (P/L) CR Cash/Bank CR Deferred Income
Step 2: Payments Step 2: Payments Step 2: Adjustments Step 2: Adjustments
DR Accrued Liability DR Cash/Bank DR Expense (P/L) DR Deferred Income
CR Cash/Bank CR Accrued Income CR Prepayments CR Income (P/L)
 IFRS
- Session 1: IAS 1 Presentation of Financial Statements
- Session 2: IAS 2 Inventories
- Session 3: IAS10 Events after the Reporting Period
- Session 4: IAS 16 Property, Plant & Equipment
- Session 5: IAS 18 and IFRS15 Revenue Recognition
- Session 6: IAS 37 Provisions, Contingent Liabilities and Contingent Assets
- Session 7: IAS 38 Intangible Assets
 Session 1: IAS 1 Presentation of Financial Statements

Contents of FS
• Statement of financial position
• Statement of profit or loss and other comprehensive income
• Statement of changes in equity
• Statement of cash flow
• Accounting policies note and other explanatory notes
 Session 2: IAS 2 Inventories
IAS 2 defines inventories as assets which are:
• held for sale in the ordinary course of business,
• in the process of production for such sale, or
• in the form of materials or supplies to be consumed in the production or rendering of services.
Example:
• Merchandise
• Production supplies
• Materials
• Work in progress
• Finished goods

 Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of
completion and the estimated costs necessary to make the sale.
 Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date.
 Measurement of inventories
Inventories shall be measured at the lower of cost and net realisable value.

The cost of inventories comprises:

• Costs of purchase: the total cost for the item(s) or service purchased (including taxes, shipping costs, other fees,
and contingencies) subtracts trade discounts, rebates and other similar items.
• Costs of conversion: relating to production (variable and fixed overheads absorbed into the product), e.g., labour
costs in factory; (but labour costs relating to marketing department is not) machinery depreciation.
• Other costs: happened necessarily to bring the inventory to its intended location and condition.

The cost of inventories of items that are not ordinarily interchangeable and goods or services produced and
segregated for specific projects shall be assigned by using specific identification (specific costs are
attributed to identified items of inventory) of their individual costs.
If not, the cost of inventories shall be assigned by using the first-in, first-out (FIFO) or weighted average
cost formula.
 FiFO The FIFO formula assumes that the items of inventory that were purchased or produced
first are sold first, and consequently the items remaining in inventory at the end of the

methods period are those most recently purchased or produced.

Quantity Unit Cost/Unit Total Cost FIFO methods:

Opening Balance 01/12/15 300 units $2.00 $600 • Revenue = $10/unit x 550units = $5,500

Receipts 07/12/15 200 units $2.20 $440 • Cost for 550 units:
300units x $2/unit = $600
Receipts 08/12/15 100 units $2.30 $230 200units x $2.2/unit = $440
50units x $2.3/unit = $115
Issues 09/12/15 550 units Selling price: $10
Þ Total cost of good sold = $1,155
Receipts 10/12/15 5 units $2.5 $12.5 Gross profit = $5,500 - $1,155 = $4,345
Closing inventory = 50units x $2.3/unit + 5units x $2.5$/unit =
$127.5
Required: Calculate the issue cost for inventory and the closing inventory
Therefore, year-end adjustment:
value for Jason using FIFO methods.
Dr Closing inventory $127.5
Cr Cost of sales $127.5
 Weighted average Under the weighted average cost formula, the cost of each item is determined
from the weighted average of the cost of similar items at the beginning of a

methods period and the cost of similar items purchased or produced during the period.

Quantity Unit Cost/Unit Total Cost

Opening Balance 01/12/15 300 units $2.00 $600 Required: Calculate the issue cost for
Receipts 07/12/15 200 units $2.20 $440 inventory and the closing inventory value for
Jason using Weighted Average method:
Receipts 08/12/15 100 units $2.30 $230
• Continuous method
Issues 09/12/15 550 units Selling price: $10 • Periodic method
Receipts 10/12/15 5 units $2.5 $12.5

Weighted Average method: Continuous method
• Revenue = $10/unit x 550units = $5,500
• Weighted Average at 09/12/15: = $2.12/unit
Total cost of good sold = 550units x 2.12/unit = $1,166
Gross profit = $5,500 - $1,166 = $4,334
Closing inventory = 55units x $2.12/unit = $116.6
Weighted Average method: Periodic method
• Revenue = $10/unit x 550units = $5,500
• Weighted Average at the year-end: = $2.12/unit
Total cost of good sold = 550units x 2.12/unit = $1,166
Gross profit = $5,500 - $1,166 = $4,334
Closing inventory = 55units x $2.12/unit = $116.6

Therefore, year-end adjustment: Therefore, year-end adjustment:

Dr Closing inventory $116.6 Dr Closing inventory $116.6
Cr Cost of sales $116.6 Cr Cost of sales $116.6
 Net realisable value
(NRV) NRV = estimated selling price – estimated cost to sell

Example:
As at the year-end, inventory A cost is $300. The expected selling price for inventory A is $800. Agency costs
in order to sell the inventory are $50. In order to complete the sale of inventory A, we need to incur further
repairment costs of $30.
Required: According to IAS 2 Inventory, what is the value of inventory A as at the financial statements year
end?
Answer:
Cost of inventory: $300
Net realizable value: $800-$50-$30=$720
Inventory A should be valued at the lower of costs and NRV: $300.
Session 3: IAS10 Events after the Reporting Period
When should you consider events after the reporting period?

By definition (IAS 10. 3), events after the reporting period are those events, both favorable and unfavorable,
that occur between:
• The end of the reporting period, and
• The date when the financial statements are authorized for issue

Example:
So imagine that the end of your reporting period is 31 December 20X1, your accountants finish the closing works on 31
January 20X2, the board of directors authorizes them for issue on 15 February 20X2 and the shareholders approve
them on 28 February 20X2.
By definition, you need to consider everything that happens between 31 December 20X1 and 15 February 20X2 as an
event after the reporting period.
What should you report on events after the reporting period?
Adjusting events
These are events that provide evidence of conditions that
existed at the end of the reporting period.
• Court case
• Bankruptcy
• Sale of inventories (at below-cost price suggesting that
the inventories’ NRV was lower that their cost)
• Profit-sharing or bonus payments
• Errors or fraud
Non-adjusting events
These are events that are indicative of conditions that arose
after the reporting period.
• Decline in fair value of investments
• Natural disasters, wars, pandemics, etc.
 Dividends declared after the reporting period are NOT
reported as a liability at the end of the reporting period.
 Example: Let’s say that in January 20X2 DEF declared dividend in
total amount of CU 10 000 from profit of 20X1.
 The dividend liability is recognized when the shareholder’s right to
receive them has been established – that is supposedly in January
20X2, but NOT in 20X1.
 Session 4: IAS 16 Property, Plant & Equipment
• Property, plant and equipment are tangible items that:
(a) are held for use in the production or supply of goods or services, for rental to others, or for
administrative purposes; and
(b) are expected to be used during more than one period.
• Depreciation is the systematic allocation of the depreciable amount (the cost of an asset) of an asset over its useful life.
• Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date.
• Carrying amount is the amount at which an asset is recognised after deducting any accumulated depreciation and
accumulated impairment losses.
• Recoverable amount is the higher of an asset’s fair value less costs of disposal and its value in use.
• An impairment loss is the amount by which the carrying amount of an asset exceeds its recoverable amount.
• The residual value of an asset is the estimated amount that an entity would currently obtain from disposal of the asset,
after deducting the estimated costs of disposal, if the asset were already of the age and in the condition expected at the end
of its useful life.
• Useful life is: (a) the period over which an asset is expected to be available for use by an entity; or (b) the number of
production or similar units expected to be obtained from the asset by an entity.
 Recognition
The cost of an item of property, plant and equipment shall be recognised as an asset if, and only if:
a) it is probable that future economic benefits associated with the item will flow to the entity; and
b) the cost of the item can be measured reliably.

Initial Measurement
An item of property, plant and equipment that qualifies for recognition as an asset shall be measured at its cost.

Elements of cost
The cost of an item of property, plant and equipment comprises:
Purchase price including import duties and non-refundable purchase taxes,
after deducting trade discounts and rebates
Any costs directly attributable to bringing the asset to the (a) costs of employee benefits
location and condition necessary for it to be operational. (b) costs of site preparation;
(c) initial delivery and handling costs;
(d) installation and assembly costs;
(e) costs of testing whether the asset is functioning properly;
(f) professional fees.
An estimated value of the costs of dismantling and removing
the asset and restoring the site on which it is located.
The cost of an item of property, plant and equipment is the cash price equivalent at the recognition date.
If payment is deferred beyond normal credit terms, the difference between the cash price equivalent and the total payment is
recognized as interest over the period of credit (unless such interest is capitalized in accordance with IAS 23).
If an asset is acquired in exchange for another non-monetary asset, the cost will be measured at the fair value unless:
• the exchange transaction lacks commercial substance or
• the fair value of neither the asset received nor the asset given up is reliably measurable.
If the acquired item is not measured at fair value, its cost is measured at the carrying amount of the asset given up.

CapEx OpEx
Capital expenditures are typically one-time large purchases Operating expense (Revenue expenditures) are the ongoing
of fixed assets that will be used for revenue generation over operating expenses, which are short-term expenses used to
a longer period. run the daily business operations.

 Initial cost (purchase price)  Repairs expenses

 Import duty is not refundable  Insurance expenses
(if the asset is bought from another country)
 Maintenance expense
 Installation costs
 Training Costs
 Intended use relating costs
(lawyer, surveyor costs)  Advertising Expense

 Delivery costs
 Finance cost
 Subsequent Measurement
An entity shall choose either the Cost Model or the Revaluation Model as its accounting policy and shall apply that
policy to an entire class of property, plant and equipment.

Cost Model:
 Cost – Accumulated Depreciation – Accumulated Impairment Losses

Revaluation Model:
 Fair Value – Subsequent Accumulated Depreciation - Subsequent Accumulated Impairment Losses
 Revaluation
If the revaluation model is adopted, An entity shall carry an asset at a revalued amount (Fair Value – Subsequent Accumulated
Depreciation - Subsequent Accumulated Impairment Losses)
The initial revaluation
Determine if there is a gain or loss on the revaluation by comparing.
• Carrying amount of non-current asset at revaluation date
• Valuation at fair value of non-current asset
 Difference = gain or loss on revaluation
 Revaluation gains:
Dr Non-current asset cost (PPE) [difference between valuation and original cost/valuation]
Dr Accumulated depreciation [eliminate any accumulated depreciation]
Cr Revaluation surplus [gain on revaluation recognised in other comprehensive income]
 Revaluation losses:
Dr Revaluation surplus [to maximum of original gain/balance in revaluation surplus if lower]
Dr Impairment Losses [any additional loss]
Cr Non-current asset cost (PPE) [difference between valuation and original cost/valuation]
 Reserves transfer
Transfer an amount equal to the excess depreciation from the revaluation surplus to retained earnings
Dr Revaluation surplus
Cr Retained earnings
 EXAMPLE of Revaluation
 Revaluation gains: A company purchased a building on 1 April 20X1 for $100,000. The asset had a useful life at that date of 40
years. On 1 April 20X3 the company revalued the building to its fair value of $120,000.
 Gain on revaluation:
Carrying value of non-current asset at revaluation date
(100,000 – (100,000/40 years x 2 years)) 95,000
Valuation 120,000
Gain on revaluation 25,000
 Double entry:
Dr Building cost (120,000 – 100,000) 20,000
Dr Accumulated depreciation (100,000/40 years x 2 years) 5,000
Cr Revaluation reserve 25,000

 Revaluation losses: The carrying amount of Zen Co’s property at the end of the year amounted to $108,000 (cost/value
$125,000 and accumulated depreciation $17,000). On this date the property was revalued and was deemed to have a fair value
of $95,000. The balance on the revaluation surplus relating to a previous revaluation gain for this property was $10,000.
 Loss on revaluation:
Carrying value of non-current asset at revaluation date 108,000
Valuation 95,000
Loss on revaluation 13,000
 Double entry:
Dr Revaluation reserve (to maximum of original gain) 10,000
Dr Income statement 3,000
Cr Non-current asset 13,000
 Depreciation Entry:
DR Depreciation expense
CR Accumulated depreciation

Straight-Line Depreciation Declining Balance Depreciation

Depreciation: Depreciation:
• (cost of asset - salvage value)/useful life • current book value x depreciation rate
 Disposal
An asset should be removed from the statement of financial position on disposal or when it is withdrawn from use and no future economic
benefits are expected from its disposal.
Calculation: Profit/(loss) on disposal = Cash sale/part exchange – CV of asset at disposal date (X)

Journal Example:

1. Cost Removal • Tommy sold the motor vehicle for $8,000 on 1 July 20x6 when its carrying value is $3,000 (Cost is $6,000 and
accumulated depreciation $3,000).
DR Disposals
CR Non-current asset Cost  Answer:

2. Accumulated Depreciation Removal Profit = $8,000 - $3,000 = $5,000

DR Accumulated Depreciation DR Disposals $3,000
CR Disposals DR Accumulated Depreciation $3,000
CR Non-current asset Cost $6,000
3. Proceeds to be dealt with In Cash or
Part Exchange DR Bank $8,000
CR Disposals $8,000
• In Cash:
DR Bank • Tommy bought a van costing $15,000 several years ago. On 1 March 2010, the van was exchanged for the
CR Disposals latest model. At the date of exchange, the old van’s carrying value was $3,400 and the dealership gave a part-
• Part Exchange: exchange allowance of $1,500. The new van has a list price of $18,000.
 Answer:
DR Asset Cost
CR Bank DR Disposals $3,400
CR disposals DR Accumulated Depreciation $11,600
CR Non-current asset Cost $15,000
DR Asset Cost $18,000
CR Bank $16,500 ($18,000 - $1,500)
CR disposals $1,500
 Session 5: IAS 18 and IFRS15 Revenue Recognition
IAS 18 specifies revenue recognition criteria for 3 basic revenue generating scenarios:
• Sale of goods
• Rendering of services
• Interest, Royalties and Dividends
Revenue is the gross inflow of economic benefits during the period arising in the
course of the ordinary activities of an entity when those inflows result in increases in equity,
other than increases relating to contributions from equity participants.
Five step model [COPAR]
 1. Contract Identification
 2. Obligation identified
 3. Price for transaction
 4. Allocation of transaction price to obligation
 5. Recognise Revenue
Example: Revenue recognition
 In this example, the five step model is applied to a simple sales transaction involving the sale of a single product. TDF is a
company that manufactures office furniture. A customer placed an order on 22 December 20X4 for an office desk at a price of
$300 plus sales tax at 20% of $60. The desk was delivered to the customer on 25 January 20X5, who accepted the goods as
satisfactory by signing a delivery note. TDF then invoiced the customer for the goods on 1 February 20X5. The customer paid
$360 to TDF on 1 March 20X5.
Required: How should TDF account for revenue?
 Solution
Applying the five step model:
(1) Identify the contract(s) with a customer: A customer placed an order for a desk. This represents a contract to supply the desk.
(2) Identify the performance obligations in the contract: There is one performance obligation, the delivery of a satisfactory desk.
(3) Determine the transaction price: This is the price agreed as per the order, ie $300.
Note: Sales tax is not included since transaction price as defined by IFRS 15 does not include amounts collected on behalf of third
parties.
(4) Allocate the transaction price to the performance obligations in the contract: There is one performance obligation,
therefore the full transaction price is allocated to the performance of the obligation of the delivery of the desk.
(5) Recognise revenue when (or as) the entity satisfies a performance obligation: Since the customer has signed a delivery
note to confirm acceptance of the goods as satisfactory, this is evidence that TDF has fulfilled its performance obligation and can
therefore recognise $300 in January 20X5.
Note: The timing of payment by the customer is irrelevant to when the revenue is recognized.
Session 6: IAS 37 Provisions, Contingent Liabilities and Assets
The standard IAS sets 3 criteria for
recognizing a provision:
1. Present obligation from past event;
2. The outflow of economic benefits
must be probable (more than 50% )
3. The amount of economic benefits
must be reliably estimated.

If just one of them is not met, then you

should either:
Double entry • Disclose a contingent liability, or
DR Relevant expense • Do nothing if the outflow of
CR Provision economic benefits is remote.
 Contingent liabilities Contingent assets

A contingent liability is either: A contingent asset is a possible

1. A possible obligation (not present) from asset arising from past events that will be
past event that will be confirmed by some confirmed by some future events not fully
future event; or under the entity’s control.
2. A present obligation from past event,
but either:
• The ouflow of economic benefits to
satisfy this obligation is not probable (less
than 50%), or
• The amount of obligation cannot be
reliably measured (this is very rare, in
fact).
Session 7: IAS 38 Intangible Assets
An intangible asset is an identifiable
non-monetary asset without physical
substance.
To sum up, each intangible asset has 3
main characteristics:
It is controlled by the entity
No physical substance
It is identifiable.
You can recognize an intangible asset
only when:
Future economic benefits from the
asset are probable;
Cost can be measured reliably.
 TABLE OF CONTENTS
01 03
TEACHING
OUR TEACHERS
METHOD
Describe here the topic Describe here the topic of
of the section the section

02 04
ENROLLMENT
ACADEMIC AREAS
Describe here the topic of PROCESS
Describe here the topic of
the section the section
OUR GOALS
VENUS
Venus is the second planet
from the Sun

JUPITER
It’s the biggest planet in the
Solar System

MARS
Despite being red, Mars is a
cold place
 01
TEACHING METHOD
You can describe the topic of the section here
AWESOM
E WORDS
A PICTURE
ALWAYS
REINFORCES
THE CONCEPT
EASILY
Images reveal large amounts of data, so
remember: use an image instead of a long
text
500,000
Big numbers catch your audience’s attention
 9h 55m 23s
Jupiter's rotation period

333,000.000
The Sun’s mass compared to Earth’s

386,000 km
Distance between Earth and the Moon
 STATS OF THE WEEK

MARS VENUS
Mars is a very 15% 30% Venus has a
cold place beautiful name

EART
SATURN
H 60% 90%
Earth harbors Saturn is a ringed
lots of life planet
 OUR LOCATIONS
1st
MERCURY
2nd Mercury is small

VENUS
3rd Venus is hot

JUPITER
Jupiter is big
 OUR SUCCESS

MERCURY SATURN MARS JUPITER

Mercury is a Saturn is a ringed Mars is full of Jupiter is a really
small planet planet iron oxide dust big planet
 OUR TEACHING METHOD
MARS 01 VENUS
Despite being red, Venus has a
Mars is a cold place beautiful name

04 02

JUPITER NEPTUNE
Jupiter is a really 03 Neptune is far away
big planet from us
 STATS OF THE MONTH

JUPITER 24%
Jupiter is a big planet

NEPTUNE
36%
Neptune is far away

MERCURY 40%
Mercury is small

Follow the link in the graph to modify its data and then paste the new one
here. For more info, click here
ACADEMIC AREAS
You can describe the topic of the section here

02
OUR TEACHERS
Mercury is the closest planet to the Sun and the smallest
one in the Solar System—it’s only a bit larger than the
Moon
 STUDENT PROGRESS

1 2 3

JUPITER JUPITER JUPITER

Jupiter is the Venus is the Saturn is a gas
biggest planet of second planet giant and has
them all from the Sun several rings
 USE A GRAPH!
MARS
30% 20% Mars is a cold planet

VENUS
Venus is a hot planet

JUPITER
50% Jupiter is a big planet

Follow the link in the graph to modify its data and then paste the new one
here. For more info, click here
 SPECIAL REMINDERS
MARS MON TUE WED THU FRI SAT SUN
Despite being red,
Mars is a cold place 31 1 2 3 4 5 6

JUPITE
7 8 9 10 11 12 13
R
Jupiter is the biggest
planet of them all 14 15 16 17 18 19 20

SATUR 21 22 23 24 25 26 27
N
Saturn is a gas giant
28 29 30 31 1 2 3
and has several rings
EDUCATIVE REFERENCES
● You can list your reference websites here
● You can list your reference websites here
● You can list your reference websites here
● You can list your reference websites here
● You can list your reference websites here
● You can list your reference websites here
 DESKTOP
SOFTWARE
You can replace the image on the screen
with your own work. Right-click on it and
then choose "Replace image" (in Google
Slides) or "Change Picture" (in PPT) so
you can add yours
TABLET
APP
You can replace the image on the screen
with your own work. Right-click on it and
then choose "Replace image" (in Google
Slides) or "Change Picture" (in PPT) so
you can add yours
 MOBILE APP
You can replace the image on the screen
with your own work. Right-click on it and
then choose "Replace image" (in Google
Slides) or "Change Picture" (in PPT) so
you can add yours
 OUR TEACHERS

MARTHA ROE JOHN SCOTT

You can tell more You can tell more
about this person about this person

JAMES SMITH MELISA ROSE

You can tell more You can tell more
about this person about this person
 THREE CONCEPTS

VENUS JUPITER MARS

Venus is the It’s the biggest Despite being
second planet planet in the red, Mars is a
from the Sun Solar System cold place
THANKS!
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youremail@freepik.com
+91 620 421 838 yourwebsite.com

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