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7 Cards in this Set
- Front
- Back
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CCA |
-Holding gain (identifies & isolates HG from Oi) -operating capacity (maintaining) -Replace (assets-there must be funds for this) -realistic & meaningful to users -subjective (replacement cost=estimates, can be manipulated) -estimates -replacement=similar (cost) |
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Ccp |
Purchasing power (closing cap same PP as to) Real value of money Objective (trans based like HCA) D. It can prevent payment of a dividend out of real capital R. Doesnt acc for additional replacement of stock A. Creates an 'alien' unit. We have a HCA £ and CCP , but they are different. One is the bona fide pound, other is a synthetic unit I. The rate used to adjust for inflation may not represent inflation rates that effect economy generally D. Doesnt acc for additional depn due to escalating replacement cost to assets |
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Hca |
Transaction (when it occured) Objective Cash value (maintained SH investment) -Simple -Hmrc (is insisted by hmrc for tax purposes e.g no estimates of depn, no manipulation) -Readily available (the info that is required) -inflation - it doesnt account for, or increases in values of assets -making decisions - can be suboptimal when info used is out of date -profit (can be stated higher than alternative methods, only realised profits is calculated) |
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Defined benefit plan |
-predetermined amount paid in by employee (normally % of salary) -underwrites the actuarial & investment risks (employer) -variable AP by employer -employer bears risks that liabs are under-estimated or assets are insufficient to meet obligations -expense for period is then not merely the amount of the contribution for the period |
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Defined contribution plan |
-fixed contributions -liabs of contributor are defined by terms of pension scheme -accumulated funds determines AP to participant -variable (level of pension) -employee bears risk, as only they know whether funds paid in & returns on investment are sufficient on retirement |
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Explain the purpose // need of an impairement review Associated risks |
OR, FH, RP, CF -ensures that fixed assets are not overstated or carried at a figure in excess of their recoverable amount -I is a key element in IASB's strategy of moving... -FR from historical cost to FV basis -moving grom pruden d to realism (faithful representation) as reflected in the removal of prudence concept from CF
Risks:see -subjective nature due to potential reliance on CF forecasts/other valuations methods -increased risk of errors -increases scope for earnings management (smoothing & big bath acc) |
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Circumstances in which an impairment review is required7 |
Do rep -damage -obsolense -reorganisation of business operations -loss of key employees -economic performance of an asset is/or will be worse than expected
Clime -carrying amount of entity > market caputalisation likely to arise where an asset or part of the company is loss-making -a key employer in the locality where a company carries on business closes down -increase in market interest rates -decrease in the assets market value -adverse change in company's competitive environment, e.g a new business opens up as a competitor GW must he reviewed for impairment annually whilst other intangible assets must he reviewed for impairment if not amortised annually |
