Financial Accounting 2 SUMMARY VALIX

Financial accounting 2 SUMMARY SUMMARY *Conceptually, *Conceptually, all liabilities are measured at present value 1 !"e essence o# provision is t"at t"ere is an uncertainty about t"e timing or amount o# t"e #uture e$penditure 2 Recognition o# provision a present obligation% legal or constructive  b probable out#lo& o# bene#it c amount o# obligation can be measure reliably ' Constructive obligation is derived d erived #rom entity(s actions Creates a valid e$pectation ) An accounting provision cannot be created in an ticipation o# #uture event  An entity s"all determine &"et"er a present obligation e$ists at t"e end o# reporting period by ta+ing into account all available evidence, including t"e opinion o# e$perts vidence considered includes any additional evidence provided by events after the end of the reporting period  - !"e estimates o# outcome are determined by t"e .udgement o# management o# t"e entity supplemented by t"e e$perience o# similar transactions and reports #rom independent e$perts / Midpoint o# t"e range is used 0 t"er measurement considerations a Ris+s and uncertainties3describes t"e variability o# outcome May increase or decrease t"e amount o#  liability liability 4rudence is re5uired  b present value c Future events3t"ere must be su##icient evidence t"at t"ey &ill occur 6ne& legislation, c"anges in tec"nology7 d Cas" in#lo&s #rom disposal are treated separately #rom provision e Reimbursement s"all be treated as a separate asset and not netted against estimated liability # C"ange in provision3s"ould be reversed i# it is no longer probable g $pectation o# #uture operating losses is an indication t"at certain assets may be impaired An impairment test is necessary necessary 8 Restructuring is a program t"at is planned and controlled by management and materially c"anges eit"er t"e scope o# a business o# an entity en tity or t"e manner in &"ic" t"at business b usiness is conducted a Sale or termination o# a line o# o # business  b closure o# business location or relocation c C"ange in management structure d #undamental reorgani9ation o# an entity 1: ;n 4rovision #or restructuring t"ere must be a detailed plan and valid e$pectation 11 ;t s"all include only direct e$penditures t"at are necessarily incurred #or t"e restructuring and not associated &it" t"e ongoing activities o# t"e entity $ample salaries and bene#its o# employees to be incurred a#ter operations cease and t"at are associated &it" t"e closure o# operation ;t e$cludes a cost o# retraining and relocating continuing sta##   b M+tg and admin c ;nvestment in ne& system and distribution net&or+ *!"ese are considered to be e$penses relating to t"e #uture conduct o# business 12 nerous contract is measured at t"e least net cost o# e$iting #rom t"e contract or t"e lo&er o# cost bet&een to pay #or t"e penalty o# o # not #ul#illing it or #or t"e lease payments  Bonds payable payable 1.

Financial accounting 2 SUMMARY SUMMARY 5. Collateral trust bonds3bonds secured by stoc+s and bonds o# ot"er corporation 6. ?ebenture3&it"out collateral Unsecured and t"ere#ore ran+ as gen eral creditors in t"e pre#erence o# credit 7. Coupon or bearer bonds% interest is paid to t"e person submitting a detac"able interest coupon 8. Registered bonds3interest is paid to bond"olders o# record 9. @ournal entry Unissued Aut"ori9ed 10.

Financial accounting 2 SUMMARY Sales Unearned ;nventory

',1-,02: 1,:)',10: 2,:::,:::

;nitial direct cost 1::! Cas" 1::! 0 Unguaranteed residual BR ),2::,::: ;nitial 1::! Cost o# Sales 1,0/,02: Cas" 1::! Sales ',:'2,-): Unearned 1,:)',10: ;nventory 2,:::,::: *!"e present value o# residual value is deducted #rom cost o# sales and revenue because t"e asset is conceived as not sold

1,2:,::: /:,::: 1,:::,::: 1,:::,:::

Financial accounting 2 SUMMARY  ;# S are canceled or settled during t"e vesting period, it is as i# t"e vesting date "ad been broug"t #or&ard and t"e balance o# t"e #air value not yet e$pensed is recogni9ed immediately !otal compensation ),:::,::: Cumulative 2:1: and 2:11 2,::,::: )ompensation expense '*+' 1,8:,::: $ercise in 2:12 Cas" S   SC   S4

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- ;# it is settled in cas" S 2,::,::: Salaries 6e$pense7 ):,::: Cas" 2,::,::: / S"are appreciation creates liability 0 ?uring t"e vesting period #rom t"e date o# grant to t"e e$ercise date, i# t"ere are increases or decreases in t"e mar+et value o# s"are over a predetermined price #or a given number o# s"ares, t"e liability #or t"e compensation s"all be ad.usted !"e predetermined price is t"e beginning of the earliest period! 8 Mar+et value o# s"ares at t"e end o# t"e period less t"e predetermined price times t"e no o# s"ares e5uals t"e total compensation to be distributed e5ually over t"e service period ;# t"ere is no increase at t"e end o# t"e service period, t"e entry is Accrued salaries payable ain on reversal o# SAR  1: ;# t"e entity "as t"e c"oice o# settlement, entity s"all account #or t"e instrument eit"er as a liability or e5uity ;# t"e employee "as t"e rig"t to c"oose t"e settlement, entity is deemed to "ave issued a compound #inancial instrument ;t s"all be accounted #or as partly liability 6cas" alternative7 and partly e5uity 6s"are alternative7 11 Fair value o# s"are alternative612,:::$)07 /-,::: Fair value o# liability on grant date,.an161:,:::$17 1:,::: 5uity component --,::: 12 Cas" alternative Accrued salaries payable -:,:::6,-$1:,:::7 S"are options outstanding --,::: Cas" -:,::: S"are premium --,::: S"are alternative 1' Accrued salaries payable S"are options outstanding S"are capital S"are premium

1) Fair value o# t"e e5uipment purc"ased Fair value o# t"e liability6):!$11:7 5uity component =!ype "ere>

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Financial accounting 2 SUMMARY

5uipment Accounts payable S"are options outstanding

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Cas" alternative6mar+et price is 1':,dec'17 Accounts payable ),)::,::: S"are options outstanding -::,::: ;nterest e$pense 0::,::: Cas" S"are premium S"are alternative Accounts payable S"are options outstanding SC S"are premium

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 $etained earnings and Boo al%e per s/are +! 4roperty dividends is distribution o# noncas" assets or s"ares o# anot"er entity to o&ners '! ntity s"all measure a noncurrent asset classi#ied #or distribution at t"e lo&er o# carrying amount and #air value less cost to distribute ;# #air value is lo&er, t"ere is impairment loss .! ;n closely "eld entities, i# stoc+ dividends are declared, retained earnings s"all be capitali9ed only to t"e e$tent o# par value or stated value of the shares! /! Jasting asset doctrine states t"at entity can declare dividends n ot only to t"e e$tent o# t"e retained earnings balance but also to t"e e$tent o# t"e accumulated depreciation balance Retained earnings ',:::,::: Capital li5uidated%acc ?epletion 2,:::,::: ?ividends payable ,:::,::: -! ?istribution to "olders o# an e5uity instrument classi#ied as #inancial liability are recogni9ed in t"e same &ay as interest e$pense on a bond ?ividends paid to "olders o# mandatorily redeemable pre#erence s"are s"all be accounted #or as interest e$pense as component o# #inance cost ,! Appropriation may be legal, contractual, or voluntary 0! Kuasi%reorgani9ation is a permissive but not a mandatory procedure under &"ic" a #inancially troubled entity restates its accounts and establis"es a #res" start in accounting sense ;t is called corporate readjustment  ;t may be accomplis"ed t"roug" recapitali9ation or revaluation o# 44 644(s #air value is -,:::,:::7 Accumulated dep 1,:::,::: R ::,::: 44e 1,::,:::

 &evaluation: 44 Acc ?ep Revaluation surplus

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Financial accounting 2 SUMMARY Cost Replacement cost 44 ,:::,::: 8,:::,::: ),:::,::: Acc ?ep6':G7 61,::,:::7 2,/::,::: 1,2::,::: ',::,::: -,'::,::: 2,0::,::: 0 !"e result o# revaluation o# 44 must be made by an independent e$pert or specialist 8 !"e resulting de#icit #rom t"e reorgani9ation is o##set against t"e revaluation surplus 1: Retained earnings subse5uent to t"e 5uasi%reorg s"all be restricted to t"e e$tent o# t"e de#icit &iped out during t"e reorgani9ation and t"ere#ore cannot be declared as a dividend 11 !"e 5uasi%reorg s"all be disclosed #or at least ' years3date, mec"anics, purpose and e##ect o# 5uasi% reorg on t"e entity(s statement 12 Kuasi%reorgani9ation must be approved by SC 1' J"en pre#erence as to assets, t"e pre#erence s"are"olders are entitled to payment not only #or t"e li5uidation value but also #or dividends in arrears 1) ?ividends in arrears usually include current dividends 1 ;n case &"ere t"ere are t&o classes o# pre#erence s"are &it" di##erent dividend rates and bot" are  participating, t"e lo1er rate s"all be t"e basis #or allocation to t"e ordinary s"are 1- 4articipating up to 1-G means t"at t"e pre#erence s"are s"all receive #or t"e current year a ma$imum o# 1- percent on t"e par value Since t"e pre#erence s"are already receives 12G as basic dividend #or t"e current year, t"en it participates only to t"e e$tent o# )G on t"e par o# 2,::,::: or 1::,::: 1/ J"en dividends "as pre#erence as to assets, it s"all be given dividends even &"en t"ere is a de#icit !otal de#icit is c"arged to rdinary s"are"olders 10 4re#erence as to dividends means t"at pre#erence "olders &ill receive #irst dividends i# and &"en dividends are declared Io dividends can be declared &"en t"ere is de#icit 4re#erence and ordinary s"are on t"e de#icit on a pro rata basis 18 Subscribed s"ares are entitled to dividends  ;ssued 2,::,:::  Subscribed 1,:::,::: !otal ',::,::: !reasury at par 6::,:::7 utstanding ',:::,::: treasury s"ares are treated as retired #or boo+ value purposes 1 4re#erence s"are capital ::! !reasury )::! S4 1::! 2: Subscription receivable is not deducted #or boo+ value purposes 

 ,arnings per s/are 1 4S pertains only to ordinary s"are"olders 2 2 computations o# earnings per s"are is covered by 4AS '' &"ic" re5uires t&o presentations o# earnings  per s"are basic earnings per s"are and diluted ' 4ublic entities are re5uired to present earnings per s"are ) An entity s"all present basic and diluted earnings per s"are on t"e #ace o# income statement &it" e5ual  prominence #or all periods presented  J"en an entity presents bot" consolidated and separate, disclosures re5uired by t"e standard need be  presented only on t"e basis o# t"e consolidated in#o - An entity t"at c"ooses to disclose earnings per s"are on its separate #inancial statements s"all present suc" earnings per s"are in#o on t"e #ace o# its separate income statement An entity s"all not present suc" earnings per s"are on t"e consolidated #inancial statements =!ype "ere>

Financial accounting 2 SUMMARY / Iet income is e5ual to t"e amount a#ter deducting dividends on pre#erence s"are 0 ;# t"e pre#erence s"are is cumulative, pre#erence dividend #or t"e current $ear onl$ is deducted #rom t"e net income &"et"er suc" dividend is declared or not ;# t"e pre#erence s"are is noncumulative,  pre#erence dividend #or t"e current year is deducted #rom net income only i# t"ere is declaration 8 ;# t"ere is a signi#icant c"ange in t"e ordinary s"are capital during t"e year, &eig"ted average no o# ordinary s"ares outstanding during t"e period s"ould be used 1: J"ere stoc+ dividends or s"are splits create a c"ange in t"e capital structure, t"e increase and decrease in t"e number o# s"ares s"all be recogni9ed retroactively, meaning t"e stoc+ dividends or split s"all be treated as a c"ange #rom t"e date t"e original s"ares &ere issued

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