ACCA Paper P2 INT/UK Corporate Reporting Complete Text British library cataloguinginpublication data A catalogue record for this book is available from the British Library. Published by: Kaplan Publishing UK Unit 2 The Business Centre Molly Millars Lane Wokingham Berkshire RG41 2QZ ISBN: 978‐1‐78415‐219‐2 © Kaplan Financial Limited, 2015 The text in this material and any others made available by any Kaplan Group company does not amount to advice on a particular matter and should not be taken as such. No reliance should be placed on the content as the basis for any investment or other decision or in connection with any advice given to third parties. Please consult your appropriate professional adviser as necessary. Kaplan Publishing Limited and all other Kaplan group companies expressly disclaim all liability to any person in respect of any losses or other claims, whether direct, indirect, incidental, consequential or otherwise arising in relation to the use of such materials. Printed and bound in Great Britain Acknowledgements We are grateful to the Association of Chartered Certified Accountants and the Chartered Institute of Management Accountants for permission to reproduce past examination questions. The answers have been prepared by Kaplan Publishing. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of Kaplan Publishing. ii KAPLAN PUBLISHING Contents Page Chapter The Conceptual Framework Chapter The professional and ethical duty of the accountant 23 Chapter Performance reporting and performance appraisal 31 Chapter Revenue 63 Chapter Noncurrent assets, agriculture and inventories 85 Chapter Foreign currency in individual financial statements 143 Chapter Leases 159 Chapter Employee benefits 191 Chapter Sharebased payment 219 Chapter 10 Events after the reporting period, provisions and 245 contingencies Chapter 11 Financial instruments 269 Chapter 12 Tax 333 Chapter 13 Segment reporting 359 Chapter 14 Related parties 371 Chapter 15 Adoption of IFRS 387 Chapter 16 Specialised entities and specialised transactions 401 Chapter 17 Nonfinancial reporting 449 Chapter 18 Current issues 471 Chapter 19 Group accounting – basic groups 483 Chapter 20 Complex groups 541 Chapter 21 Change in a group structure 577 KAPLAN PUBLISHING iii iv Chapter 22 Group accounting – foreign currency 621 Chapter 23 Group reorganisations 649 Chapter 24 Group statement of cash flows 657 Chapter 25 Questions & Answers 709 KAPLAN PUBLISHING chapter Introduction Paper Introduction v Introduction How to Use the Materials The nature of the P2 Corporate Reporting exam, is that of a ‘pillar topic’. This means that students will need a good understanding of the basics of accounting as covered initially in F3 and then in F7. The ACCA website www.accaglobal.com includes a useful FAQ section. Within this section the examiner recommends: ‘It is important that students have done some precourse work such as attempting as homework a past F7 exam as appropriate revision before starting work on P2. This message applies equally to students who have attempted and passed F7 and to those who have gained an exemption from F7’. P2 examiner – ACCA website These Kaplan Publishing learning materials have been carefully designed to make your learning experience as easy as possible and to give you the best chances of success in your examinations. The product range contains a number of features to help you in the study process. 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Paper introduction Paper background The aim of ACCA Paper P2 (INT), Corporate Reporting, is to apply knowledge and skills and to exercise professional judgement in the application and evaluation of financial reporting principles and practices in a range of business contexts and situations. viii KAPLAN PUBLISHING Objectives of the syllabus • • • • Discuss the professional and ethical duties of the accountant • • Explain reporting issues relating to specialised entities • • Appraise the financial performance and position of entities Evaluate the financial reporting framework Advise on and report the financial performance of entities Prepare the financial statements of groups of entities in accordance with relevant accounting standards Discuss the implications of changes in accounting regulation on financial reporting Evaluate current developments Core areas of the syllabus • • • • • • • • The professional and ethical duty of the accountant The financial reporting framework Reporting the financial performance of entities Financial statements of groups of entities Specialised entities Implications of changes in accounting regulation on financial reporting The appraisal of financial performance and position of entities Current developments Approach to INT and UK syllabus elements Both the International and UK P2 syllabus apply the principles of International Financial Reporting Standards (IFRS). The international syllabus has been used as the basis of the text. UK syllabus students are also required to outline and discuss the differences between the IFRS for small and medium entities and UK accounting standards. They must also have a knowledge of some of the requirements of the Companies Act. The examinable differences are covered in chapter 16 of this text. KAPLAN PUBLISHING ix Introduction Syllabus objectives We have reproduced the ACCA’s syllabus below, showing where the objectives are explored within this book. Within the chapters, we have broken down the extensive information found in the syllabus into easily digestible and relevant sections, called Content Objectives. These correspond to the objectives at the beginning of each chapter. Syllabus learning objective/Chapter A THE PROFESSIONAL AND ETHICAL DUTIES OF THE ACCOUNTANT Professional behaviour and compliance with accounting standards (a) Appraise and discuss the ethical and professional issues in advising on corporate reporting.[3] Ch (b) Assess the relevance and importance of ethical and professional issues in complying with accounting standards.[3] Ch 2 Ethical requirements of corporate reporting and the consequences of unethical behaviour (a) Appraise the potential ethical implications of professional and managerial decisions in the preparation of corporate reports.[3] Ch (b) Assess the consequences of not upholding ethical principles in the preparation of corporate reports.[3] Ch Social responsibility (a) Discuss the increased demand for transparency in corporate reports, and the emergence of nonfinancial reporting standards.[3] Ch 17 (b) Discuss the progress towards a framework for integrated reporting.[3] Ch 17 B THE FINANCIAL REPORTING FRAMEWORK The applications, strengths and weaknesses of an accounting framework (a) Evaluate the valuation models adopted by standard setters.[3] Ch (b) Discuss the use of an accounting framework in underpinning the production of accounting standards.[3] Ch (c) Assess the success of such a framework in introducing rigorous and consistent accounting standards.[3] Ch x KAPLAN PUBLISHING Questions & Answers – If the lessee can cancel the lease then the lessor’s losses are borne by the lessee – Gains or losses from fluctuations in the residual value accrue to the lessee – The lessee has the ability to continue to lease for a secondary period at a rent that is substantially lower than market rent The lease term is only 50% of the useful economic life. This is not the majority and therefore suggests that the lorries are held under operating leases Responsibility for repairs suggests that Sunny Days has assumed the risks of ownership and is suggestive of a finance lease arrangement. Sunny Days benefits from rises in the residual value of the lorries, suggesting that the rewards of ownership have been assumed. This is an indication of a finance lease All things considered, it would seem that the lease is a finance lease (although a comparison of the present value of the minimum lease payments with the fair value of the assets is arguably needed) Test your understanding – Coffee (a) Prior period errors are omissions or misstatements in prior year financial statements resulting from the failure to use reliable information that was available when the financial statements were authorised and which could have reasonably been expected to be taken into account. Such errors include mathematical mistakes, mistakes in applying accounting policies, oversights, mis interpretations and frauds. Prior period errors are adjusted for retrospectively, by restating comparative amounts. Changes in accounting estimates are accounted for prospectively by including the impact in profit or loss in the current period and, where relevant, future periods The court case This is not a prior period error because Coffee had based its accounting treatment on the best information available. The payment of $2m will be expensed to profit or loss in the year ended 30 September 20X4 756 KAPLAN PUBLISHING chapter 25 Tax The mistakes made in the financial statements for the year ended 30 September 20X3 should not have been made based on the information available to Coffee. This therefore satisfies the definition of a prior period error. In the financial statements for the year ended 30 September 20X3 the current tax expense and the income tax payable should both be increased by $1m (b) According to IFRS 9, an investment in debt should be held at amortised cost if it passes the ‘contractual cash flows characteristics’ test and if an entity's business model is to hold the asset until maturity. The contractual cash flows characteristics test is passed if the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding If an entity's business model is to both hold the assets to maturity and to sell the assets, and the asset passes the contractual cash flows characteristics test, then the debt instrument should be measured at fair value through other comprehensive income. All other investments in debt instruments should be measured at fair value through profit or loss. Coffee's individual financial statements Coffee regularly sells the financial assets, and therefore does not hold them in order to collect the contractual cash flows. In Coffee’s individual financial statements, the financial assets should be measured at fair value at the reporting date with any gains or losses reported in profit or loss. Consolidated financial statements Consolidated financial statements are financial statements where the incomes, expenses, assets and liabilities of a parent and its subsidiaries are presented as a single economic entity. Any profit or loss arising on the sale of the assets between Coffee and Tea must be eliminated when producing the consolidated financial statements Tea holds the financial assets until maturity. Therefore, the financial assets are held within the Coffee group in order to collect the contractual cash flows. In the consolidated financial statements of the Coffee group, the financial assets should be measured at amortised cost. Assuming that credit risk is low at the reporting date, a loss allowance must be created equal to 12month expected credit losses. KAPLAN PUBLISHING 757 Questions & Answers The group could designate the financial assets to be measured at fair value through profit or loss if it reduces an accounting mismatch that arises from recognising gains or losses on different bases (c) IAS 7 defines ‘cash equivalents’ as shortterm, highly liquid investments that are readily convertible to a known amount of cash and which are subject to an insignificant risk of a change in value The gold bullion is held for investment purposes, not for the purpose of meeting shortterm cash commitments. There is also a substantial risk that the gold will go up or down in value and therefore it is not convertible to a known amount of cash. The gold bullion must therefore be excluded from cash and cash equivalents in the statement of cash flows. The money spent on the gold bullion would most likely be presented within cash flows from investing activities. (d) Purchased intangible assets are initially measured at cost. The customer list will therefore be initially recognised at its cost of $2m Expenditure on internally generated intangible assets (except those arising from development activities) cannot be distinguished from the cost of developing the business as a whole. Such items are not recognised as intangible assets. The enhancement to the list is internally generated and consequently cannot be recognised Intangible assets can only be held under a revaluation model if an active market exists. The customer list is bespoke and so no active market will exist. Therefore, it cannot be held at fair value The customer list should be amortised over its estimated useful life of 18 months. This is the period over which the benefits of the $2m expenditure will be realised. The amortisation expense in profit or loss in the current period is $1.3m ($2m × 12/18) and the carrying amount of the intangible at the reporting date is $0.7m ($2m – $1.3m) 758 KAPLAN PUBLISHING chapter 25 Test your understanding – Bath (a) According to IFRS 8 Operating Segments, an entity must report information about an operating segment if its: – total revenue (internal and external) is 10% or more of the combined revenue of all segments – reported profit or loss is more than 10% of the greater, in absolute amount, of (i) the combined reported profit of all operating segments that did not report a loss and (ii) the combined reported loss of all operating segments that reported a loss, or – assets are 10% or more of the combined assets of all operating segments If total external revenue reported by operating segments is less than 75% of the entity’s total revenue, additional operating segments must be identified as reportable Revenue All segments with total revenue of greater than $60.9m (10% × $609m) must be reported. Delivery Services and Vehicle Hire pass this test Reported profit or loss The total profit of the profit making segments is $87m ($62m + $14m + $8m + $3m). The total loss of the loss making segments is $10m. 10% of the greater is therefore $8.7m (10% × $87m). This means that segments with a profit or loss of greater than $8.7m must be reported. Delivery Services, Vehicle Hire and Removal Services pass this test Assets All segments with total assets of greater than $49.6m (10% × $496m) must be reported. Delivery Services, Vehicle Hire and Removal Services pass this test. KAPLAN PUBLISHING 759 Questions & Answers 75% test Based on the above three tests, Delivery Services, Vehicle Hire and Removal Services are reportable. Together, their external revenue is $423m ($281m + $96m + $46m). This amounts to 93.6% ($423m/$452m) of Bath’s external revenue. Therefore, no other segments need to be reported (b) According to IFRS 15 Revenue from Contracts with Customers, an entity should recognise revenue when (or as) the entity satisfies a performance obligation by transferring a promised good or service to a customer. Entities must decide at the inception of a contract whether a performance obligation is satisfied over time or at a point in time An entity transfers control of a good or service over time and, therefore, satisfies a performance obligation and recognises revenue over time, if one of the following criteria is met: – the customer simultaneously receives and consumes the benefits provided by the entity’s performance as the entity performs – the entity’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced, or – the entity’s performance does not create an asset with an alternative use to the entity and the entity has an enforceable right to payment for performance completed to date The recovery service is consumed as time passes, since the service for a prior month cannot be reperformed again in the future. Revenue should therefore be recognised over time, rather than upfront. An output method based on the time that has elapsed on the contract would probably provide the best estimate of the amount of revenue to recognise. 760 KAPLAN PUBLISHING chapter 25 (c) Per IFRS 5, an asset is classified as held for sale if it is available for immediate sale in its present condition and the sale is highly probable. To be highly probable, there must be an active plan to find a buyer, the asset must be being marketed at a price that is reasonable in relation to its fair value, and the sale should be expected within 12 months. An asset that is classified as held for sale should be measured at the lower of its carrying amount and fair value less costs to sell On 30 September 20X4 the sale appeared to be highly probable as the building was being marketed at its fair value. The carrying amount of the asset at 30 September 20X4 was $16m ($20m × (40/50)). This is lower than the fair value less costs to sell of $16.9m ($17m – $0.1m). Therefore, the asset should continue to be held at $16m The rise in interest rates occurs after the end of the reporting period. Therefore, the decline in the asset’s fair value does not represent conditions that existed at the reporting date. This is a nonadjusting event. The asset will remain classified as held for sale in the financial statements for the period ended 30 September 20X4. The decline in the asset's value should, however, be described in a disclosure note. (d) In accordance with IFRS 9 Financial Instruments, financial assets measured at fair value through other comprehensive income are remeasured to fair value each reporting date with the gain or loss recorded in other comprehensive income (OCI) IFRS 9 defines fair value as the price paid to sell an asset in an orderly transaction amongst market participants at the measurement date. When determining fair value, priority is given to level 1 inputs, which are quoted prices for identical assets in active markets. Management’s estimate of the dividends that will be received from the shares is a level 3 input to the fair value hierarchy. This should not be used to determine fair value because a level 1 input exists (a quoted price for an identical asset) The shares should be revalued to $20m and a gain of $4m ($20m – $16m) recognised in OCI. The gain in OCI should be classified as an item that will not be recycled to profit or loss in future periods. The dividend received of $3m is recognised in profit or loss. KAPLAN PUBLISHING 761 Questions & Answers According to IAS 12, deferred tax should be calculated on the difference between the carrying amount of a revalued asset and its tax base, even if there is no intention to dispose of the asset. The temporary difference of $4m ($20m – $16m) will give rise to a deferred tax liability of $1m ($4m × 25%). The gain on the investment was recognised in OCI and therefore the deferred tax charge will also be recognised in OCI Test your understanding – Arc (a) Arc – restatement Initial Adjusts Notes $m $m Noncurrent assets: Tangible noncurrent assets Cost of investment in Bend Cost of investment in Curve Loan to Curve Current assets 500 150 95 125 ––––– 870 ––––– Equity and liabilities: Ordinary share capital Retained earnings 100 720 ––––– 870 Noncurrent liabilities: Longterm loan Current liabilities: Trade payables 762 (95) (1) 105 (2) 105 (1) (105) (2) 25 (3) ––––– 345 ––––– 10 (1) 25 (3) ––––– 35 Final $m 500 150 105 150 ––––– 905 ––––– 100 755 ––––– 855 5 5 45 ––––– 870 ––––– ––––– 35 ––––– 45 ––––– 905 ––––– KAPLAN PUBLISHING chapter 25 Notes: (1) Disposal of investment in Curve for $105m, resulting in a profit of $10m (2) Longterm loan made to Curve (3) Dividend due from Bend. (a) Bend restatement Initial Adjusts Notes $m $m Noncurrent assets: Tangible noncurrent assets Cost of investment in Curve Current assets Equity and liabilities: Ordinary share capital Share premium Retained earnings Noncurrent liabilities: Longterm loan Current liabilities: Trade payables Final $m 200 145 ––––– 345 ––––– 25 (3) 105 (1) (105) (1) ––––– 25 ––––– 225 105 40 ––––– 370 ––––– 100 230 ––––– 330 10 (3) 11 (3) (25) (2) ––––– (4) 110 11 205 ––––– 326 4 (3) 4 15 ––––– 345 ––––– ––––– 25 ––––– 15 ––––– 370 ––––– Notes: (1) Purchase of investment in Curve for $105m (2) Dividend due to Arc (3) Purchase of land and buildings from Curve – comprising: Nonvoting shares of $1 each Share premium (bal fig) Mortgage liability taken over KAPLAN PUBLISHING $m 10 11 4 ––––– 25 ––––– 763 Questions & Answers – Finance lease obligation as follows: Bal b/fwd Int @ 10.2% Cash paid Bal c/fwd $000 $000 $000 $000 Y/end 30/06/X1 3,000 306 (700) 2,606 Y/end 30/06/X2 2,606 266 (700) 2,172 Current liability element = $2,606,000 – $2,172,000 = $434,000 (a) Curve – restatement Initial Adjusts Notes $m $m Noncurrent assets: Tangible noncurrent assets Finance lease assets 55 Cost of investment in Bend Current assets 25 ––––– 80 ––––– Equity and liabilities: Ordinary share capital Share premium Retained earnings 35 8 5 ––––– 48 Noncurrent liabilities: Longterm loan Loan from Arc Finance lease obligation Current liabilities: Finance lease obligation Trade payables 764 12 20 ––––– 80 ––––– Final $m (15.0) (2) 3.0 (3) (0.5) (3) 21.0 105.0 (1) (0.7) (3) ––––– 112.8 ––––– 10.0 (2) (0.5) (3) (0.3) (3) ––––– 9.2 40.0 2.5 21.0 129.3 ––––– 192.8 ––––– 35.0 8.0 14.2 ––––– 57.2 (4.0) 105.0 (1) 3.0 (3) 0.3 (3) (0.7) (3) (0.4) (3) 8.0 105.0 2.2 (0.4) (3) ––––– 112.8 ––––– 0.4 20.0 ––––– 192.8 ––––– KAPLAN PUBLISHING chapter 25 Notes: 1 – Loan from Arc of $105m. 2 – Sale of land and buildings to Bend as follows: $m 25 15 ––– 10 Profit on disposal ––– (b) The plan has no impact on the group financial statements as all of the internal transactions will be eliminated on consolidation but does affect the individual accounts of the companies. The reconstruction only masks the problem facing Curve. It does not solve or alter the business risk currently being faced by the group Disposal proceeds (Mort tfr at + shares at FV $21m) CV of land and buildings A further issue is that such a reorganisation may result in further costs and expenses being incurred. Note that any proposed provision for restructuring must meet the requirements of IAS 37 Provisions, Contingent Liabilities and Contingent Assets before it can be included in the financial statements. A constructive obligation will arise if there is a detailed formal plan produced and a valid expectation in those affected that the plan will be carried out. This is normally crystallised at the point when there is communication by the company with those who are expected to be affected by the plan. The transactions outlined in the plans are essentially under common control and must be viewed in this light. This plan overcomes the shortterm cash flow problem of Curve and results in an increase in the accumulated reserves. The plan does show the financial statements of the individual entities in a better light except for the significant increase in longterm loans in Curve’s statement of financial position. The profit on the sale of the land from Curve to Bend will be eliminated on consolidation. In the financial statements of Curve, the investment in Bend should be accounted for under IFRS 9. There is now cash available for Curve and this may make the plan attractive. However, the dividend from Bend to Arc will reduce the accumulated reserves of Bend but if paid in cash will reduce the current assets of Bend to a critical level. KAPLAN PUBLISHING 765 Questions & Answers The purchase consideration relating to Curve may be a transaction at an overvalue in order to secure the financial stability of the former entity. A range of values are possible which are current value, carrying amount or possibly at zero value depending on the purpose of the reorganisation. Another question which arises is whether the sale of Curve gives rise to a realised profit. Further, there may be a question as to whether Bend has effectively made a distribution. This may arise where the purchase consideration was well in excess of the fair value of Curve. An alternative to a cash purchase would be a share exchange. In this case, local legislation would need to be reviewed in order to determine the requirements for the setting up of any share premium account. 766 KAPLAN PUBLISHING Index A ACCA Code of Professional Ethics 24 Acquisition method 509 Adjusting events 246 Adoption of IFRS 388 Agricultural produce 128 Agriculture (IAS 41) 125 Contingent liabilities 254 Contract costs 76 Control 504 Current cost Current issues 472 Current service cost 196 Curtailments 197, 200 Amortisation 107 D Amortised cost 276 Date of transition 389 Assessing financial performance 56 Deferred tax 335 Asset Defined benefit plans 193 Asset ceiling 207 Defined contribution plans 193 Associates and joint ventures (IAS 28) 492, 523 Depreciation 88 B Derecognition of financial instruments 294 Biological assets 126 Borrowing costs (IAS 23) 96 Business combinations and deferred tax 348 Business model test 285 C Capital reduction scheme 421 Capitalising interest 96 Cash equivalents 658, 663 Cash flow characteristics test 285 Cash flow hedge 302, 305 Cash flows from financing activities 662 Cash flows from investing activities 662 Cash flows from operating activities 660 Cash generating units 112 Cash-settled share-based payments 231 Changes in accounting estimates 46 Changes in accounting policies 45 Classification of financial instruments 272, 274, 283, 285 Classifying a lease 160 Codes of ethics 24 Comparability Complex groups 542 Compound instruments 279 Conceptual framework Confidentiality 24 Derecognition of provisions 253 Derivatives 296 Diluted earnings per share 52 Direct method: cash flows 660 Disclosure of interests in other entities (IFRS 12) 527 Discontinued operation 41, 593 Discontinuing hedge accounting 309 Disposal group 120 Disposal of a foreign entity 636 Disposal of a subsidiary 587 Disposal without losing control 597 E Earnings per share (IAS 33) 47 Elements Embedded derivatives 300 Employee benefits (IAS 19) 192 Environmental provisions 258 Environmental reporting 452 Entity reconstruction schemes 419 Equity Equity accounting 492, 525 Equity-settled share-based payments 222 Ethics and ethical issues 24 Events after the reporting period (IAS 10) 246 Exchange differences 147, 148 Consolidated financial statements (IFRS 10) 486 Exchange differences on retranslation of foreign subsidiary 626 Consolidated statement of profit or loss 490 Expense Consolidation 485 Consolidation of a foreign operation 622 F Constructive obligation 251 Fair value hedge 302, 303 Contingent assets 254 Fair value hierarchy 13 Contingent consideration 514 Fair value measurement (IFRS 13) 10 KAPLAN PUBLISHING I.1 Index Fair value of net assets 511 Fair value of share options 222 Fair value option for financial liabilities 275 Faithful representation Finance lease 160 I IAS Presentation of financial statements 32 IAS Inventories 130 IAS Statement of cash flows 658 Financial asset 271, 283 IAS Accounting policies, changes in accounting estimates and errors 44 Financial asset impairment 288 IAS 10 Events after the reporting period 246 Financial instruments Disclosures (IFRS 7) 310 IAS 12 Income taxes 334 Financial instruments (IFRS 9) 271 IAS 16 Property, plant and equipment 86 Financial instruments derecognition 294 IAS 17 Leases 160 Financial instruments derivatives 296 IAS 19 Employee benefits 192 Financial liabilities 272, 274 IAS 20 Accounting for government grants and disclosure of government assistance 93 Financing activities: cash flows 662 First-time adoption (IFRS 1) 388 Foreign currency transactions 144 Foreign subsidiary 622 Forward contract 296 Forward rate agreements 297 IAS 21 The effects of changes in foreign exchange rates 144, 622 IAS 23 Borrowing costs 96 IAS 24 Related party disclosures 372 IAS 27 Separate financial statements 528 FRS 100 -102 409 IAS 28 Investments in associates and joint ventures 492 Full goodwill method 515 IAS 32 Financial instruments: presentation 272 Functional currency 144 IAS 33 Earnings per share 47 Future operating losses 256 IAS 34 Interim financial reporting 55 Future repairs to assets 256 IAS 36 Impairment of assets 108 Futures contracts 297 IAS 37 Provisions, contingent liabilities and contingent assets 251 G IAS 38 Intangible assets 103 Going concern 3, 250 IAS 40 Investment property 98 Goodwill 513 IAS 41 Agriculture 125 Goodwill impairment 518 IFRS First-time adoption of IFRS 389 Government grants (IAS 20) 93 IFRS Share based payment 220 Grant date 223 IFRS Business combinations 509 Group accounts – basic groups 485 Group accounts – change in group 578, 650 IFRS Held for sale and discontinued operations 41, 120, 593 Group accounts – complex groups 542 IFRS Financial instruments: disclosures 310 Group accounts – foreign currency 622 IFRS Segment reporting 360 Group accounts – statement of cash flows 658 IFRS Financial instruments 272 Group reorganisation 650 IFRS 10 Consolidated financial statements 504 Groups: exclusion of subsidiary 506 IFRS 11 Joint arrangements 523 H IFRS 12 Disclosure of interests in other entities 527 IFRS 13 Fair value measurement 10 Hedge accounting 301 IFRS 15 Revenue from Contracts with Customers… 64 Hedge effectiveness 307 IFRS for SME 405 Hedged item 302 Impairment of assets (IAS 36) 108 Hedging instrument 302 Impairment of financial assets 288 Held for sale 120 Impairment of goodwill 518 Historical cost Impairment loss reversals 116, 293 Income Income tax (IAS 12) 334 Indirect method: cash flows 661 I.2 KAPLAN PUBLISHING Index Intangible assets (IAS 38) 103 Integrated Reporting 461 Integrity 25 Interim reporting (IAS 34) 55 Inventories (IAS 2) 130 Investing activities: cash flows 662 Investment entities 507 Investment property (IAS 40) 98 Investment property and deferred tax 343 J Joint arrangements (IFRS 11) 523 Joint control 523 Joint operations 523 Joint venture 524 P Parent 486 Past service costs 197 Performance conditions 225 Performance reporting 32 Post-employment benefits 193 Potential voting rights 505 Present value Presentation currency 145 Presentation of financial statements (IAS 1) 32 Principal or most advantageous market 12 Prior period errors 46 Professional behaviour 24 Professional ethics 24 Property, plant and equipment (IAS 16) 86 L Proportionate goodwill 515, 518 Leases (IAS 17) 160 Professional competence and due care 24 Liability Provisions (IAS 37) 251 Long-term employee benefits 192 PS1 Management commentary 451 M Management commentary (PS1) 451 Materiality Measurement Mixed groups 556 N Negative goodwill (bargain purchase) 517 Net interest component 196 Non-adjusting events 248 Non-controlling interest 515 Non-current assets held for sale (IFRS 5) 41, 120, 593 Non-financial reporting 450 Non-financial performance measures 60 Not-for-profit entities 402 Purchase consideration 513 Purchase of additional shares after control acquired 595 Q Qualitative characteristics R Realisable value Recognition of elements of financial statements Reconstruction schemes 419 Recoverable amount 109 Related parties (IAS 24) 372 Relevance Remeasurement component 197 Reportable segments 361 Research and development expenditure 107 O Restructuring provisions 260 Objectivity 24 Retranslation of monetary items 148 Offsetting financial assets and financial liabilities 274 Revaluation and deferred tax 342 Onerous contracts 256 Revenue recognition (IFRS 15) 64 Operating lease 160, 167 Reverse acquisition 655 Operating segment 360 S Operating activities: cash flows 660 Option contracts 298 Other comprehensive income (IAS 1) 33 Sale and leaseback 171 Segment reporting (IFRS 8) 360 Separate financial statements (IAS 27) 528 Service cost component 196 Settlements 198 Share-based payment (IFRS 2) 220 KAPLAN PUBLISHING I.3 Index Share options and deferred tax 345 Short-term employee benefits 209 Significant influence 492 Small- and medium-sized entities 405 Social reporting 459 Social responsibility 459 Specialised entities 402 Statement of changes in equity 37 Statement of cash flows (IAS 7) 658 Statement of financial position 33 Statement of profit or loss and other comprehensive income 33 Step acquisition 583 Subsidiary 486 Subsidiary acquired with view to disposal 600 Sustainability 460 T Tax 334 Tax base 336 Temporary difference 336 Termination benefits 260 Timeliness Total comprehensive income 33 Transactions between equity holders 595 U UK syllabus focus 408 Understandability Unremitted earnings and deferred tax 349 Unused tax losses and deferred tax 347 V Value in use 109 Variable consideration… 68 Verifiability Vertical groups 542 Vesting conditions 225 Vesting date 223 Vesting period 234 I.4 KAPLAN PUBLISHING ... revision before starting work on P2. This message applies equally to students who have attempted and passed F7 and to those who have gained an exemption from F7’. P2 examiner – ACCA website These Kaplan Publishing learning materials have been carefully designed to ... Detailed study guide and syllabus objectives (2) Description of the examination (3) Study skills and revision guidance (4) Complete text or essential text (5) Question practice The sections on the study guide, the syllabus objectives, the examination ... are designed to familiarise you with the nature and content of the examination and give you tips on how to best to approach your learning. The complete text or essential text comprises the main learning materials and gives guidance as to the importance of topics and where