Financial Accounting

Financial Accounting helps in keeping systematic records to ascertain the financial position and financial position of an entity. This is the most popular type of accounting.

  • financial instruments

    IFRS 9 Financial Instruments

    Overview of IFRS 9 IFRS 9 is effective for annual periods beginning on or after 1 January 2018 with early application permitted. IFRS 9 specifies how an entity should classify and measure financial assets, financial liabilities, and some contracts to buy or sell non-financial items. According to IFRS 9, an organisation must recognise a financial asset or liability in its statement of financial position when it becomes a party to the instrument’s contractual conditions. At the time of initial recognition, an entity values a financial asset or a financial liability at its fair value plus or minus, in the case of a financial asset or a financial liability that is not measured at fair value through profit or loss, transaction costs directly attributable to the financial asset’s or liability’s acquisition or issuance. Financial assets When an entity first recognises a financial asset, it classifies it based on the entity‚Äôs business…

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  • operating segments

    IFRS 8 – Operating Segments

    Scope IFRS 8 applies to the separate or individual financial statements of an entity (and to the consolidated financial statements of a group with a parent): whose debt or equity instruments are traded in a public market orthat files, or is in the process of filing, its (consolidated) financial statements with a securities commission or other regulatory organisation for the purpose of issuing any class of instruments in a public market [IFRS 8.2] However, when both separate and consolidated financial statements for the parent are presented in a single financial report, segment information need be shown only on the basis of the consolidated financial statements [IFRS 8.4] Operating segments IFRS 8 defines an operating segment as follows. An operating segment is a component of an entity: [IFRS 8.2] that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with…

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  • Financial instruments disclosures

    IFRS 7 – Financial Instruments: Disclosures

    Overview IFRS 7 Financial Instruments: Disclosures require a business to disclose information on the financial instruments’ relevance to the entity and the type and extent of the risks associated with those financial instruments, both qualitatively and quantitatively. Certain disclosures are necessary in connection with the transfer of financial assets and various other things. Disclosure requirements of IFRS 7 Certain disclosures are required to be reported by instrument type per IAS 39 measurement categories. Additional disclosures are necessarily based on the kind of financial instrument. For those disclosures, a company must classify its financial instruments according to the type of information disclosed. The two primary kinds of disclosures mandated by IFRS 7 are as follows: Information about the financial instruments’ importance. information on the type and intensity of financial instrument-related hazards Transfers of financial assets An entity shall publish information that enables users of its financial statements to make the following…

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  • treatment of goodwill ifrs vs gaap

    Treatment of Goodwill: IFRS v. GAAP

    What is Goodwill? Goodwill is an intangible asset representing the future economic benefit arising from assets that cannot be recognised separately. It constitutes an essential part of assets, especially for companies operating in high technology industries. Goodwill is a simple concept to explain but a complex one to define. It is the benefit and advantage of a business’s excellent name, reputation, and connections. It is the enticing power that attracts new clients. It is one of the characteristics that separates an established firm from a start-up. Goodwill is comprised of several components. It varies in composition across trades and between enterprises within the same trade. From a legal standpoint, goodwill is defined as “the benefit that a firm obtains in excess of the worth of its capital, stock, and cash legitimately invested therein, as a result of the broad public favour and encouragement gained from regular or habitual consumers.” Thus, goodwill…

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  • zero based budgeting

    What is zero-based budgeting?

    Zero-based budgeting Zero-based budgeting (ZBB) is an accounting method in which every budget element is calculated from an initial zero point. This can seem a little odd at first glance. The first thing that people usually do is to think of ZBB as negative budgeting. It is often seen as something negative. However, ZBB is actually the most appropriate method of budgeting for the modern workplace. It is the budgeting method that is most aligned with the workplace that we know today. It is a method that is not only flexible but also one that is easily understood. The first point to understand is that ZBB has nothing to do with negativity. The method is simply about starting with a zero budget and then working through every budget line and budget element and working out where the costs should come from. It can also be a method of working that…

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  • exploration and evaluation of natural resources

    IFRS 6 – Exploration for and Evaluation of Mineral Resources

    Overview IFRS 6 Exploration for and Evaluation of Mineral Resources allows organisations adopting the standard for the first time to continue to apply pre-IFRS accounting rules for exploration and evaluation assets. Additionally, it alters the impairment testing of exploration and evaluation assets by providing new impairment indicators and allows for aggregate assessment of the carrying amount (not more significant than a segment). Definitions Exploration and evaluation of mineral resources refer to the process of locating and evaluating mineral resources, such as minerals, oil, natural gas, and similar non-regenerative resources, after an entity has obtained legal rights to explore in a particular area, as well as determining the technical feasibility and commercial viability of extracting the mineral resource. Exploration and evaluation expenditure is spent in conjunction with the exploration and assessment of mineral resources prior to demonstrating the technical feasibility and economic viability of extracting the mineral resource. Accounting policies for…

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