Corporate Reporting Open Book Notes for ACA exam of ICAEW. Open Book Notes needed to take with you in the exam and pass the exam. No more notes are required to take with you. Everything is covered in these.
,Table of Contents
Consolidation ....................................................................................................................................................... 4
Consolidated statement of financial position .................................................................................................................. 4
Consolidated statement of profit or loss .......................................................................................................................... 7
Consolidated statement of changes in equity ................................................................................................................ 10
Disposals ............................................................................................................................................................ 13
Subsidiary to Subsidiary.................................................................................................................................... 13
Financial instruments ....................................................................................................................................... 14
Financial asset classifications .........................................................................................................................................14
Business model test.......................................................................................................................................................................... 15
The contractual cashflows (“SPPI”) test .......................................................................................................................................... 15
Derecognition of financial assets .....................................................................................................................................................16
Sample Answer (Classification of assets under IFRS 9 – QB 1, 52)................................................................................................ 17
Financial Asset reclassifications .................................................................................................................................... 18
Embedded derivative .......................................................................................................................................................19
Sample Answer (Embedded derivative interest rate cap/floor – SM 296) ....................................................................................19
Financial liability classifications .................................................................................................................................... 20
Derecognition of financial liabilities................................................................................................................................................21
Sample Answer (Classification of liabilities under IFRS 9, QB 46) ................................................................................................21
Financial instruments: Fair Value ................................................................................................................................. 22
Valuation techniques (absence of Level 1 input) ............................................................................................................................ 22
Sample Answer (FV under IFRS 13, QB 1) ..................................................................................................................................... 23
Financial instruments: Impairment .............................................................................................................................. 24
Sample answers ............................................................................................................................................................................... 25
Hedging .............................................................................................................................................................. 27
Types of hedge accounting ............................................................................................................................................. 27
Fair value hedge .............................................................................................................................................................................. 27
Cash flow hedge .............................................................................................................................................................................. 27
Net investment hedge ..................................................................................................................................................................... 27
Reporting ........................................................................................................................................................................ 28
Discontinuance ............................................................................................................................................................... 28
Sample Answer (QB 57.2) .............................................................................................................................................. 28
Differences between IAS 39 and IFRS 9 ........................................................................................................................ 29
Interest rate risk ............................................................................................................................................................. 30
Audit and assurance ............................................................................................................................................. 31
Small/New companies ....................................................................................................................................................... 32
Risks ................................................................................................................................................................................. 32
Audit work ........................................................................................................................................................................ 32
First Time audit ................................................................................................................................................................. 35
Derivatives ........................................................................................................................................................................ 36
Hedge accounting.............................................................................................................................................................. 37
2
, Internal controls over clients’ assets .................................................................................................................................. 38
Embedded derivatives ....................................................................................................................................................... 40
Risks ..................................................................................................................................................................................41
Fee and commission income .............................................................................................................................................. 42
Trading portfolio - Trading desk ......................................................................................................................................... 43
Provisions and contingent liabilities ................................................................................................................................... 44
Audit approach..................................................................................................................................................... 47
Ethics .................................................................................................................................................................. 48
ICAEW Code of Ethics ........................................................................................................................................................ 48
FRC Ethical Standard.......................................................................................................................................................... 49
Questions Index (TBU) .......................................................................................................................................... 53
3
, Consolidation
Consolidated statement of financial position
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ASSETS
Non-current assets
Goodwill (W3) x
PPE (x + y + FVadj – Acc. Dep’n) x
Investment in Associate (W7) x
Investments (x – Consideration paid in subsidiary & associate) x
Current assets
Inventories (x + y) x
Less: PURP (x)
Trade receivables (x + y – intra-group adjustments) x
Cash and cash equivalents (x + y – cash in transit Δ) x
TOTAL ASSETS X
EQUITY AND LIABILITIES
Equity
Share capital (P’s only) x
Share premium (P’s only) x
Retained earnings (W5) x
NCI (W4) x
Non-current liabilities
Borrowings (x + y – intra-group loan) x
Finance lease liability x
Current liabilities
Trade payables (x + y – intra-group transfers) x
Taxation (x + y) x
Deferred consideration (x + unwinding of interest) x
TOTAL EQUITY AND LIABILITIES X
W1 – Group Structure
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