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Notes for Common test: RFA

by: Lin Jingwen

Notes for Common test: RFA ACC (Accountancy)

Lin Jingwen
GPA 3.67
Regulatory Framework Accounting
Quah Wei-Wei, Karen ; Yeow Kinn Leong

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About this Document

RFA test is on 14/12/2015
Regulatory Framework Accounting
Quah Wei-Wei, Karen ; Yeow Kinn Leong
Test Prep (MCAT, SAT...)
75 ?




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This 0 page Test Prep (MCAT, SAT...) was uploaded by Lin Jingwen on Thursday December 10, 2015. The Test Prep (MCAT, SAT...) belongs to ACC (Accountancy) at Ngee Ann Polytechnic taught by Quah Wei-Wei, Karen ; Yeow Kinn Leong in Fall 2015. Since its upload, it has received 32 views. For similar materials see Regulatory Framework Accounting in Accounting at Ngee Ann Polytechnic.


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Date Created: 12/10/15
Regulatory Framework of Accounting RFA Study Notes for Common Test mustwrite wordphrase Bold important wordphrase Common test format 1 question on theoriesproblem solving FRS 16 40 23 32 39 and 107 1 question on selected published financial statement and notes Answering theory question Relate to FRS and apply the concepts eg question ask how should the new purchased van be accounted State whether it is a PPE or IP Eg The van should be capitalised and recorded as PPE Explain why Eg The van is purchase for the deliverv of goods hence it is held for use in the business to help generating sales It is expected to benefit the companv for more than accounting period since its useful life is 10 years Cost recognition eg the van is expected to bring future economic benefits as it would be used for delivery of good lts cost can be measure reliablv as 50000 Item FRS 16 Property Plant amp Equipment FRS 40 Investment Property Definition Tangible items 6 use in the business Property held by owner held for use in the 5 for to others or for to and for expected to be used for eg owneroccupied employeeoccupied property eg land held for long term capital appreciation machine used in producing the goods or services building lease out under operating lease property or land with uncertain future value buy low sell high or Recognition FRS167 FRS4016 An item of property plant and equipment investment property should be recognised as an asset when a it is probable that associated with the asset will flow to the enterprise and b the cost of the asset to the enterprise can be Measurement at Recognition Initial Measured at its cost 15 and comprises the following 16 22 Purchase price including import duties and non refundable purchase taxes after deducting trade discounts and rebates and Directlv attributable costs includes interest expense for qualifving asset takes a substantial period of time to get ready for its intended use or sale FRS 23 Measured at its cost Transaction costs shall be included in the initial measurement 20 21 Purchase price and Directlv attributable costs Measurement after Recognition Subsequent at every accounting year end date W Carried at its cost accumulated depreciation accumulated impairment losses Fair value to be disclosed disclosure of fair value in notes of financial statement for investment property is required even though cost model is adopted Revaluation Model 31 42 Carried at its revalued amt subsequent accumulated depreciation subsequent accumulated impairment losses Gains are made via BS account Revaluation Reserve unless it reverses a previous debit for same asset in PL Losses are made via PL account Loss on Revaluation of PPE unless it reverses a previous credit for same asset in 88 Note Journal entries for revaluation 1Record depreciation Dr Dep Exp Cr AccDep Fair Value Model 33 35 Adjustments are made via PL account Gain Loss in fair value of investment property No depreciation and impairment is required Note Journal entries for adiustments to fair value eg Dr Loss on revaluation Cr Property loss on revaluation administrative cost Gain on revaluation other comprehensive income items that will not be subsequently classified to profit or loss 2Clear AccDep Dr AccDep Cr Asset eg Building atcosD 3Account for difference in fair value and net book value eg if there is a gain Dr Buildingat cost Cr ARR If there is a loss Dr Loss on revaluationARRRetained Profit Cr Buildingat cost Derecognition Disposal Recognise gain loss on disposal of PPE Transfer Revaluation Reserve balance if any to Retained Earnings only for Revaluation model eg Dr Cash Dr AccDep Cr Property Cr Gain on sales of office unit Dr ARR Cr Retained Profit Recognise gain loss on disposal of IP Disclosure Notes of financial statement Disclose only information provided in the question In Note 2 Significant Accounting Policies disclose accounting policies for fixed assets and depreciation In Note 3 Fixed Assets disclose the values for additions disposal depreciation etc Notes of financial statement Disclose only information provided in the question In Note 2 Significant Accounting Policies disclose accounting policies for investment property In Note 4 Investment Property disclose the values for additions disposal adjustment for fair value etc Must remember the financial assets as FRS 32 39 and 107 which are not in the FRS manual Loan and Receivable Held to Maturity HTM intention to sell there is maturity date can be noncurrent or current assets depends on the maturity Fair value thru PL Heldfortrading Trading current assets Available for Sale AFS anything no belong to the previous 3 categories will be AFS no intention to sell noncurrent assets Definition Characteristics Financial assets created through providing goods Non derivative financial assets with fixed or determinable payments Held for trading financial assets held for shortterm profit All other financial assets that are not classified as belonging to the other FRS 39 9 services or money maturity date held with making categories directly to a debtor intention and ability to eg shares purchased 39 Fixed determinable hold to maturity eg via SGX payments bonds and redeemable 39 Net quoted and net preference shares Designated out of classified as AFS Syllabus Initial At fair value amt as At fair value amt as At fair value amt as At fair value amt as measurement transacted the price purchased purchased purchased Le at point of that other market m transaction costs transaction costs M transaction costs purchase participant are willing to buy and sell too often FRS 39 43 pay thus ignore transaction m transaction costs cost Subsequent Measured at amortised Measured at amortised Measured at fair Measured at fair value Measurement cost cost valuemarket value BS date Accounting Treatment Valuation subsequent years Note you are not required to know what amortised cost is Note you are not required to know what amortised cost is BS date FRS 39 46 Gain or loss from change in fair value recognised in PampL FRS 39 55a Gain Dr Investment in T8 BS Cr Fair value gain of TS PL other income Gain or loss from change in fair value recognised directly in equity eg Investment reserve capital reservecan t use to pay dividend Gain Dr Investment in AFS A Loss Dr Fair value loss of TS PL admin cost Cr Investment in T8 BS Cr Investment Reserve E other comprehensive income items that may be subsequently reclassified to profit or loss Loss Dr Investment Reserve El Cr Investment in AFS A Impairment Testing required Impairment expected cash flow from asset is less than carrying amt permanent drop in value Yes If fair value lt NBV and it is a permanent impairment that will not be reverse in the future Otherwise left it at cost Impairment loss recog d in PampL eg Bad or doubtful debts Dr Impairment loss of AR PL Cr AR or Allowance For impairment of AR Yes If fair value lt NBV and it is a permanent impairment that will not be reverse in the future Otherwise left it at cost Impairment loss recog d in PampL Dr Impairment of HTM PL Cr Allowance For impairment of HTM A No Loss in fair value is already recog d in PampL Not within scope of module A Derecognition No Gain Loss on Recognise Gain or Loss Recognise Gain or Loss Recognise Gain or Loss Disposal on disposal in PampL on disposal in PampL on disposal in PampL Transfer Investment Reserve to PampL Selected Published financial statement and notes Only give the aggregate values don t break down Eg write revenue 1800000 instead of sale revenue 1000000 and service revenue 800000 do the note as required If no additional information given need not to disclose Eg registered office address not given Do not write address in the note 1 generals The values given in the trial balance are the final values as at the accounting year end date no further adjustment are required Published financial statement templates for SCI SCE SFP and notes for financial statement are provided in the FRS manual Statement of Comprehensive Income Note Revenue 11 Cost of sales Gross profit Other income Distribution costs Administrative costs Finance costs Profit before tax Income tax expense 12 Net profit for the period 13 Other comprehensive income Items that will not be reclassified subsequently to profit or loss Surplus in revaluation of fixed assets Notes 3 Items that may be reclassified subsequently to profit or loss AFS investment valuation gains losses Other comprehensive income for the period Total comprehensive income for the period at the temetete is given euttne the exam eut thte sentence was not printed write down Statement of Changes in Equity Accumulated Balance at eg31 Dec 20X1 trial balance balance trial balance balance Share Revaluation Dividend General Profit Retained Total Capital Reserve Reserve Reserve hum Balance at eg1 Jan 2ox1 GiVen in the trial balance Total comprehensive income for the penod Dividends Note 14 Transfer to dividend reserve Issue of shares Note 8 Given inthe Given inthe trial Given inthe Given inthe trial at the temetete te etven eurtne the exam eut ttte sentence was not printed write down Statement of Financial Position as at ASSGtS NonCurrent Assets Fixed assets Investment property Investment Current Assets Inventories Trade receivables less allowance Investments Other receivables and prepaymentd Loan to a director Bank and cash balances Total Assets Equity and Liabilities ht the temptate ts given during the exam but this sentence was not printed write down XXXXXXX name of the company Notes for financial statement For the Year Ended XXXXX Yearend date 1Genera State only what is given in the question the country of incorporation brief description of the principal activities the registered office address who gave the authorisation and on which date Example 1 General XYZ Pte Ltd incorporated in Singapore is engaged principally in the activities of the manufacture and sale of precision equipment for the local and export market The principle address of the company is at 31 Genting Lane Singapore 556666 The financial statements were authorised for issue by the board of directors on 28 May 20X9 2 Significant Accounting Policies Basis of Accounting XXXXXXXXXXX Only disclose what is provided in the question Eg No mention of historical conversion etc Only mention FRS Companies Act and Singapore dollars Basis of Accounting The financial statements are prepared in accordance with Singapore Financial Reporting Standards FRS as required by the Companies Act The financial statements are presented in Singapore dollars Fixed Assets XXXXXXXXXXX Investment Prooertv XXXXXXXXXXX Investments XXXXXXXXXXX Inventories XXXXXXXXXXX Revenue Recognition XXXXXXXXXXX Depreciation XXXXXXXXXXX Taxation XXXXXXXXXXX 3 Fixed Assets Plant and Freehold Land Buildings Machine Equipment Total Fl Fl SP Fl Fl Cost Valuation Balance at eo1 lan 90X1l Revaluation Surplus Addmons Disposals Elimination of accumulated deoreciation on revaluation given in the trial given in the trial given in the given in the Balance at ed31 DeC 20X1l balance balance trial balance trial balance Representing Independent valuation Cost Accumulated Depreciation Ralance at e111 lan 90X1l Depreciation for the year Disposals Elimination of accumulated deoreciation on revaluation given in the trial given in the trial given in the given in the Balance at 9031 Dec 20X1l balance balance trial balance trial balance Net Book Value Balance at eo31 Dec 20X1l 4lnvestments Property Fair value as at 1 January 20X3 Adjustments to fair value Additions Disposal Fair value as at 31 December 20X3 given in the trial balance 5 Investments 31 DeC Fairvalue measurement at 20X3 31 Dec 20X3 using Level1 Level2 Heldtomaturity investment at cost Allowance for impairment in value Availableforsale investments Trading investments Even it cost model is adopted still have to disclose the fair values If it is quoted value it is level 1 If there is some calculation required it is level 2 6 Inventories Inventories comprise Raw material Work in process Finished goods 7Loan to a director XXXXXXXXXXX 8 Share Capital Issued and fully paid ordinary shares Noof shares As at XXXXX eg 1Jan 2ox1 Issue of shares As at XXXXX eg 31 Dec 2ox1 During the year XXXXat which dateXXXXXX 9 Resewee Revaluation resenre Accumulated profits Dividend reserve 10Longterm Bank Loan Noncurrent portion Portion due in 12 mounths The longterm bank loan XXXXXXX 11 Bank overdraft XXXXXXX 12 Revenue Revenue f rern eele ref geede Revenue frel39n eereleee rendered 13 Profit Before Tax Profit before tax is determined after charging crediting the following items Inventory obsolescence expense Depreciation Note 3 Directors remuneration Exchangeloss Impairment loss on HTM investments Loss on fair value of trading investments Loss on disposal of fixed assets Staff costs Impairment loss on trade receivables Interest on longterm bank loan Rental income Dividend income Interest income Exchange gain Gain in value of trading securities Gain in value of fixed assets Gain in value of investment property no subtotal these items are extracted for the purpose of disclosure not all items are required to disclose 14 Ineeme Tee Expense Eurrenir iiheeme Di39i prefit for the year Current IEUVEFWLUWUEF pr39i hri i i chi p riear igreater iEIETEIIFFE 15 I ilviden fe Imerirh said X cents per share Mter the statement ef lhant jiel pesireh date the ilf E i ir39S p the felieyy g divi eh ei Final prepeeeei X cents per share The repeeee tiieieeheie have her been ineiueeei e e iiehiiity in the fiherieiel statements 16 iaiital emmiiiments Capital EEDEWWUH ES eehimihied fer as at The and Di the reperiiihe eeried but met ereeided ii er in ilhe iiheiheial sietememe is es felilewe XXXXXXXXXXXX 17 Event Occurring After the Reporting Period XXXXXXXXXXXXXX


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