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Sub/Asso + Biz combi + Consol + Equity accounting

Control: It is exposed or has rights to variable returns from its involvement with the investee, has the
ability to affect those returns through its power
Power: Able to control relevant activities. Voting rights, Right to appoint, reassign or remove key
management, Rights to appoint or remove entity which directs relevant activities, Right to direct
investee or veto changes to transactions for benefit of investor. Substantive (practical ability to exercise)
considered, Protective ignored.
Principal/Agent: Substantive right to kick out decision maker? Scope of decision-making authority,
Rights held by other parties, Remuneration of decision maker, Decision makers exposure to variability
of returns
De facto power: 1.Size of investors holding relative to size and dispersion of other holders, Potential
voting rights held by others, Rights from other contractual arrangement, then 2. Voting patterns at
previous vote holders meetings. Inconclusive -> No De facto power
Exemption from consolidation: 1. Parent is a wholly-owned subsidiary 2. Parents debt or equity not
traded in public market 3. Parent did not file for listing of debt or equity instruments, and 4. Ultimate or
any intermediate parent produces consolidated financial statements for public use
Consideration: Measured at FV at acquisition date. Acquisition-related cost not part of consideration,
debt -> amortise over repayment period, equity -> deduct against share capital, other costs -> expense
Contingent consideration: Acquisition date fair value of contingent consideration is to be included as
part of the consideration transferred
Recognition of INA in biz combi: Fair value at acquisition date. An asset is recognized when it is
probable that the future economic benefits will flow in and the asset can be measured reliably.
Intangible asset: Separable and arise from contractual or other legal rights. Marketing, Customer,
Artistic-related, Contract, Technology-based
Contingent liabilities: 1. Possible obligation that arise from past events and whose existence will be
confirmed only by occurrence of uncertain future events, or 2. Not probable that an outflow of resources
will be required to settle obligation or amount cannot be measured reliably
Recognition of NCI: Fair value or proportionate share of FV of INA
Gain from bargain purchase: Charge immediately to conso I/S as a gain attributable to acquirer
Intragroup transfer at loss: If impaired, impairment loss must be recognized at the conso level. If
arbitrary set lower, unrealized loss must be eliminated from inventory and profits
Associate: Significant influence is the power to participate in financial and operating policy decision but
is not control or joint control
Exemption from equity accounting: 1. Investment is classified as held for sale 2. Investor is a venture
capital organization, mutal fund, unit trust including investment-linked insurance funds, or 3. Investor is
exempted from preparing conso FS
Equity method: The investment is initially recognized at cost and adjusted for post-acquisition change in
investors share of investees net asset, The investors profit or loss includes its share of the investees
net assets, The investors OCI includes its share of the investees OCI
Financial Instruments, Derivative and Hedging
FVTPL: It is classified as held for trading: 1. Acquired for the purpose of selling it in the near term
with the objective of generating a profit from short-term fluctuations in price 2. Part of a portfolio of
identified financial instruments that are managed together and for which there is evidence of a recent
pattern of short-term profit taking, or 3. A derivative (except that is designated and effective hedging
instrument. Upon initial recognition it is designated by the entity as at FVTPL: 1. It significantly
reduce a measurement or recognition inconsistency, or 2. A group of financial assets or liabilities is
managed and its performance is evaluated on a fair value basis.
HTM: Non-derivative financial assets with 1. Fixed or determinable payments 2. Fixed maturity 3. That
an entity has the positive intention, and 4. Ability to hold to maturity.
HTM->AFS: Unless 1. Close to maturity that changes in market interest rate would not have significant
effect on its fair value 2. Occur after the entity has collected substantially original principal, or 3. Are

attributable to an isolated non-recurring event that could not have been reasonably anticipated by the
entity.
No positive intention: 1. Hold it for undefined period 2. Stands ready to sell in response to changes in
market interest rates or risks 3. Issuer has a right to settle the financial asset at amount significantly
below its amortized costs 4. No financial resources to finance it until maturity, or 5. Subject to existing
legal or other constrain that could frustrate its intention to hold to maturity.
L&R: Non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market, other than 1. Intend to sell immediately or in the near term 2. Upon initial recognition it is
designated as FVTPL, or 3. Holder may not recover substantially all of its initial investment, other than
because credit deterioration
Amortized cost: 1. Amount measured at initial recognition 2. Minus principal repayments 3. +Cumulative amortization using effective interest method between initial amount and maturity amount 4.
Minus any reduction for impairment or uncollectibility
Forward contract: An agreement to buy or sell on agreed quantity of a particular asset on a specific
future date at a pre-agreed price
Futures contract: Exchange-traded forward contract. Standard amount of a specific commodity or
financial instrument on a fixed future date at a pre-agreed price.
Option: Gives the holder the right, but not the obligation to buy or sell a specific item at a specific price
on or before the particular date.
Swaps: Agreement providing for the exchange between two parties of streams of cash flow calculated
by set criterion on predetermined dates.
Conditions for hedge accounting: 1.Formal designation and documentation of hedging relationship and
entitys risk management objective and strategy for undertaking the hedge. 2. Expected to be highly
effective in achieving offsetting changes in fair value or cash flows of the hedged risk 3. Effectiveness
of the hedge can be reliably measured 4. Hedge is assessed on an ongoing basis 5. For cash flow hedge,
forecast transaction that is subject of the hedge must be highly probable
Hedged item: Recognized asset or liability, Unrecognized firm commitment, Highly probable forecast
transaction, Net investment in a foreign operation
Hedge effectiveness: 1.At the inception of the hedge and in subsequent periods, the hedge is expected to
be highly effective, and 2. The actual results of the hedge are within a range of 80-125%
Effect hedge purchase commodity forward: 1. Forward purchase same quantity of same commodity at
the same time and location as the hedged forecast purchase 2. Fair value of forward at inception is zero,
and 3.Change in discount or premium on forward is excluded from the assessment of effectiveness and
recognized in P&P, or change in expected cash flows is based on the forward price for the commodity
Fair value hedge: Exposure to changes in fair value of 1. A recognized asset 2. A liability 3. An
unrecognized firm commitment. Gain/loss from remeasuring the hedge instrument at fair value
recognize in profit or loss. Gain/loss on hedged item recognized in profit or loss.
Cash flow hedge: Exposure to variability in cash flows that is attributable to a particular risk associated
with 1. A recognized asset 2. A liability 3. A highly probable forecast transaction, and could affect profit
or loss. Portion of gain/loss on hedging instrument determined to be effective hedge recognized directly
in equity through statement of change in equity, and ineffective portion of gain or loss recognized in
profit or loss.
If a hedge of a forecast transaction subsequently results in recognition of a financial asset or liability, the
associated gain/loss recognized in equity shall be reclassified into profit or loss in the same period the
asset/liability assumed affects profit or loss.
f a hedge of a forecast transaction subsequently results in recognition of a non-financial asset or liability,
same as above, or it removes the associated gain/loss and includes them in initial cost or other carrying
amount of asset/liability
Foreign exchange transactions and translation
Exchange difference: 1. Accounting for transactions and balances in foreign currencies in FS on
individual entities 2. Translating results and financial position of foreign operations that are included in

the financial statements of the entity by consolidation, or 3. Translating an entitys results and financial
position into a presentation currency
Primary factors determining functional currency: 1. Influence sales price for goods and services, and 2.
Country whose competitive forces and regulations mainly determine the sales prices of its goods and
services. Secondary factors determining functional currency: 1. Currency in which funds from financing
activities are generates, and 2. Currency which receipts from operating activities are usually retained.
When indicators are mixed, management uses its judgement to determine functional currency, giving
priority to primary indicators.
Initial recognition: Apply spot exchange rate between functional currency and foreign currency. For
practical reason, average rate might be used.
End of year reporting: Monetary items (units of currency held and assets and liabilities to be received or
paid in a fixed or determinable number of units of currency) translated at closing rate. Non-monetary
items translated at historical costs. Non-monetary items measured at fair value translated using
exchange rates at the date where fair value was determined.
Presentation currency other than functional: Assets and liabilities presented at closing rate. Income and
expenses translated at the dates of transactions. Exchange differences recognized in OCI and to
exchange fluctuation reserve.
Functional currency of foreign operation: Without Significant degree of autonomy, Extensive
intercompany transactions, Cash flows of the foreign operations have a direct impact on the reporting
entitys cash flows and are readily available to the reporting entity, Whether reporting entity provides
financing to the foreign operations to service existing debts obligation.

Share cap/pre-acquisition RE
Post-acquisition RE
Monetary
Non-monetary (hist cost)
Non-monetary FV
Translation gains/losses

Closing rate method


(Translating to different presentation curre
operation translated for consolidation)
Historical
Accum from previous years
Closing
Closing
Closing
OCI -> EFR

Translation exposure

Beginning net assets translated last period


translated at this periods closing + Movem
during the period translated at actual/avera
at closing rate

Inflow/outflow monetary items


COGS
Depre/amoriza/non-monetary
Dividends/one-off transactions

Date of transaction/average
Date of transaction/average
Average
Actual

Share based payments


Service/performance condition: Account for services during the expected vesting period based on the
best available estimate of number of equity instruments expected to vest, revising that estimate up to
besting date.
Market condition: Estimate of the length of the expected vesting period shall be consistent with the
assumption used in estimating fair value of options granted, shall not be subsequently revised.
Recognized goods or service received from counterparty who satisfy all other vesting conditions
irrespective of whether that market condition is satisfied

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