IAS 32, IFRS 9, 7 - Financial Instruments
Cash
A co B co
shares & Debentures
Issue Investment
Purchase
shares Equity
-
Debentures liabilities
- Shares
Debentures
financial Assets
Shares Ordinary shares
Preference stases
Debentures
Reference shares
Redeemable Irredeemable
Preference share Preference shares
shares
legal Substance ( Dividend
Equity )
Debt SOCIE
shares ( obligation REC-)
to
sepaid ) Dividend
Finance cost
Substance form
over
<SOPL)
financial Instruments
Compound
convertible loan
Debt
Equity
Present value of Interest
Future cash flow
using effective rate Principal
Interest
legal Debt for 3 Teases
Transfer to
Equity
Substance Compound - Debt Present value of
future cashflow
Equity
Assets Present value of future cash Inflow
( value in use ) in 36
liabilities Present value of future cash outflow
loan Acc Cliability )
/ ( )
$ $
Interest
paid xx Bank xx
Bae xd finance cost csopl )
f: ¥
Finance cost Effective Qr finance cost
Opening
-
×
( soph ) Bal Rate or -
loan Acc
Interest Nominal Actual loan Acc
paid Ar
-
-
×
Value Rate or - Bank
loan ACC
$
Balance
Opening xx
finance cost CSOPL ) xx
Interest paid ( xx )
closing Balance xx
financial Instruments
shares Debt
Issue Purchase Issue Purchase
own shares Investment Investment
financial
financial financial
Equity
Assets
liability
Assets
Transaction costs
8ham Debt
Issue Purchase Issue Purchase
Sbasepaemiumx Fx Rec : x FX Paid a
Trans : cost )
FXTPL Trans cost * Tran: cod x
CI FIITOCI
-
SOPL
Fair value paid (
x
Expense)
(4)Trans : cost x
x
Debt Investment
A-mortise cost FXTOCI Reclassife
to P&L
* To collect cash flow *To collect cash flow
* Principal & Interest * Price pal & Interest
* Held to Maturity * Resell if
opportunity
arise
( Market Interest Rate )
Initial Measurement
value paid
Fair xx
④Transaction cost xx
xx
Debt ( Amortize Cost Method )
Purchase 5 Tss Redemption
Date Date
$
Nominal Cpas ) 5000 Received with
Discount C5@ Redemption Premium
Fair value Paid 4500
④ Transaction cost 200 Cash received
4700 $5500
Ar er
Financial Bank Nominal Premium
Assets $5000 $500
%
Actual Interest Rate 5
}
Discount Rec :
Amortize
[Link]
×
Effective Interest Rate 10
Interest Opening + Effective or -
financial Assets
Income Balance Rate or - soplcfinance Income)
Interest Nominal ×
Actual Ar - Bank AK
Received Value Rate Cs -
financial Assets
Debt Investment Acc Cassels )
) / /
$ Is
Bank xx Interest received xx
Income Bal ad
Maffei
*
xx
,
Xx xx
Debt Investment
$
Bal
Opening xx
Finance Income CSOPL ) xx
Interest received ( xx)
closing Bal xx
Share Investment
Measured at fair Value
FV TO CI FV TP L
* Not held for trading * Held for trading
* Held for long term * Short term profit taking
to receive dividend
* Irrevocable election
Not Reclassified to P&L
Reclassified to Ro
financial Instruments
① Convertible loan
② Amortize cost Debt
③ fair value through Pel CFXTPL )
④ fair value
through OCI Cfacto CI )
Factoring d- Trade Receivables
Genome sales Secured loan
( without Recourse ) Cloth Recourse )
Dr Cr ar er
Trade Bank loan
Receivables c- s
Bank finance $10000 Interest
$8000 cost
( sops Remove
$2000
Debt
Convertible Loan
.
Equite
.
2 Debt Investment Amorfise cost
(financial Assets) FITOCI
.
3 Debt Issue Amortise cost
cliability
> xTP
&
4 . Share Investment F XTOCI
5
. Factoring
Chapter (16)
Taxation
Current Tax
Tax Paid Tax
provision -Under provision
Dr 28
Trial -
Dr balance
Tax Paid Tax Over
provision -
provision
Dr 28
Trial - Is balance
Deferred tax
Accounting Profit Taxable Profit
IAS / IFRS Tax rules
Difference
Permanent Temporary
Difference Difference
Over / Under provision Deferred tax
les - fines . political contos:]
}
Profit
Accounting Profit Taxable
temporary
AK
Depot . Tax
Depp : Difference
carrying Tax base
Amount
SOFP
Deferred Tax Balance bed & Ud
liability
( carrying
Amount
Tax
base
> ✗ Tax Rates
.
SOPL
Deferred Tax AKDEPD :
)×¥Ñe%
Tax
Depp :
the
Expense year for the year
(Increase or
Decrease ) ( OR )
Deferred tax liability
bid & ed → Differed
Taxable
Carrying Tax
Amount Base Temporary
Difference
Tax
[Link]: Depp:
✗
Tax Rates
AK Profit Tax Profit
Deferred
Income tax Current Tax Tax liability
Expense Cld
.
Future Tax
Carrying Tax
Amount Base
Future Expense
Future Profit
Future tax
Taxable Temporary
Difference
SOP Income Tax Expense
current tax current liability
Over/Under provision
Deferred tax charge/credit
Accrued Expense
Dr -
Expense 2+)
Accounting Accrued
Expense or - Accrued Exp :
Cliabihtq ]
Tax Cash Basis
Alc
>
Tax
Expense Expense
Profit Hotel
Tax Current tax
Exp:
Future tax Deductible Temporary
Difference
Tax Future Profit Tax I ✗ Tax Raley
.
Expense assets
( Cash paid ) Deferred tax
Accrued Income
or - Receivable Ace
Accounting Accrued Income or - Income C+ >
Tax Cash Received Income
AK Income
> Tax Income
Profit t 30h7
Tax current tax
Exp :
Taxable Temporary
Future Tax
Difference
Tax Future ✗ Tax Rates
.
Income A Profit T Tax T
Deferred tax Ka :
Provision Compensation to customer
Accounting
Allowance for doubtful debts
or ur
Expense provision ctiability ]
Tax cash paid Expense
Alc
Expense Tax
Expense
Future Expense
Hotel
ax
Deductible Temporary
Difference ✗ Tax Rats
Deferred tax Assets
Development cost
Accounting Capitalised 2
Amortise over useful life
cash
Tax paid (incursed) Expenses
Amount
Carrying Tax Base =
Taxable Temporary
wit Difference
Future Expense
profit
Tax
Revaluation of PPE
Accounting Revaluation Surplus (Unrealised
Profit)
OCI -
Equity
Tax-PPE Sold -
Gain Future Gain
profit
Tax
carrying Tax Base =
Taxable Temporary
Amount Difference
Journal
I I I
Dr St 25$
PDE XX
Deferred tax liabilite XX
Revaluation surpl xX
Other comprehensive Income (OCI)
$
Revaluation surplus (PPE) xX Dr -
Revaluation
Deferred Tax (xx) Surplus
Net Amount XX
cr-Deferred
tax Lab:
Inventory write off
Accounting cost write off
NRY =
(Expense)
Tax Inventory sold Loss (Expense)
Accounting Tax
expense
= Deductibl Temporary
Expenses Difference
Future loss/Expenses
profit
Tax
carrying Tax Base
Amount
Property ,
Plant &
Equipment Impairment
Accounting Impairment Loss (Expenses
Tax PPI gold Loss (Expense)
Accounting Tax
expense
= Deductibl Temporary
Expenses Difference
Future loss/Expenses
profit
Tax
carrying Tax Base
Amount
Tax Rate Changes
20×1 20×2
Tax Rate Tax Rate
20% 25%
Tax Rate change
cursent Tax Rate
31 Dec current tax 20% ( Non -
adjusting
•× , events ]
Future
31 Dec Taxable Tax Rates Defused
Temporary ✗ .
=
20×1 Difference 25% Tax liability
Taxabl loss carried forward
20 x 1 20x2 20x3
Taxable lose Taxable Profit Taxable Profit
Future Tax relief
25
Du
Deferred Tax Tax belief
Assets sope-Income
IFRS15 - Revenue from Contracts with Customers
'
Revenue recognition
Construction contracts
As 11
3 IRS 15
-
1As 18- Revenue
Trade discount Price (->
Selling
Allowed
Discount
Allowed cast discount Expense
Allowed (SOP)
Expect to take Not expect to take
discount discount
Revenue (-) Revenue (full)
Recognise Revenue
Performance obligation satisfied
At a
point in time over time
product) (Services
Recognise revenue
Recognise revenue
immediately over time <service period)
sales 2 Years settlement
Date Time value of money Date
Interest Rate %-
Recognise revenue Present value of
Future cast receive
ce
38
Trade Receivables Revenue
Interest Income
(SOPL)
Stage of Completion
-certificate of work complete , 100 =cost to date X00
Contract price Total contract cost
Contract Assets
$
Revenue X X
Invoice to ustomer (xx)
Contract assets Xx
Trade Receivables
$
Amount invoice XX
cash received 2xx)
Bal ed &X
Outcome of the contract /Profit) uncertain
<profit or loas) Results uncertain
Enforceable right to No Enforceable right to
payment for performance payment for performance
date complete date
complete to to
cost to date = Revenue Revence - vit
(No profit/No loss approach) <Loss
approaches
$ $
Original SP 1000 Original SP 1000
Repurchase
·
800 Repurchase 1200
lease -
200 Interest 200
IAS 20 - Government Grants
Grant relates to Grants relates to
Income Assets
Past Future
Condition Deferred Deduct Grant
condition
Grant CL from CA of Assets
CL NCL
Deferred
Recognise Amortise/
immediately
Grant NCL Depreciated
Release over over useful life
Release/Amortise useful life of Asset
SOPL T mome
condition of Asset
-
over
-
period
SOpI-Income
SOPL-Income
Repayments of Government Grants (A 37
De ce
Bank/Payables
Grant relates Grant relates
to Income to Assets
st - Unamortised
Deferred we Deferred Grant
the Deduct Grant from
and CA of assets
same Add CA of asset
Extra depreciation
(SOPL)
