Understand the financial risks, categorise the financial assets,
financial liabilities;
Be able to compound financial Instruments;
Know derivatives, and reclassification of financial instruments;
Understand the impairment of financial instruments, and be
able to make disclosure...
,Table of Contents
STUDY UNIT 1: FINANCIAL INSTRUMENTS.................................................................... 3
[IFRS 9], [IFRS 7], [IAS 32] ................................................................................................. 3
1.1 Introduction ................................................................................................................... 3
1.2 Module overview ........................................................................................................... 3
1.3 Objective of IAS 32, IFRS 7and IFRS 9 32 ................................................................... 3
1.4 Definitions ..................................................................................................................... 4
1.5 Recognition of financial assets ..................................................................................... 5
1.6 Classification of financial assets ................................................................................... 5
1.6.1 Financial assets measured at amortised cost ............................................................ 5
1.6.2 Financial assets measured at fair value ..................................................................... 6
1.7 Financial Asset De-recognition ..................................................................................... 9
1.8 Financial Liability ........................................................................................................... 9
1.9 Definitions ..................................................................................................................... 9
1.10 Financial liabilities recognition .................................................................................... 9
1.11 Financial liabilities classification .................................................................................. 9
1.11.1 Financial liabilities classified at amortisation ......................................................... 10
1.11.2 Financial liabilities classified at fair value through profit or loss ............................ 11
1.12 Financial Liabilities de-recognition ............................................................................ 11
1.13 Reclassification of financial assets ........................................................................... 12
1.14 Impairment of financial assets .................................................................................. 12
1.15 Financial Risks .......................................................................................................... 12
1.15.1 Liquidity risk ........................................................................................................... 13
1.15.3 Credit risk ............................................................................................................... 13
1.15.4 Market risk .............................................................................................................. 13
1.16 Summary ................................................................................................................... 13
1.17 Self-assessment questions ....................................................................................... 13
STUDY UNIT 2: LEASES: LESSEE ACCOUNTING: IFRS 16 ......................................... 21
1.1 Introduction ................................................................................................................. 21
1.2 Overview ..................................................................................................................... 21
2.3 Scope .......................................................................................................................... 21
2.4 Definitions ................................................................................................................... 21
2.5 Identifying if we have a lease or not ............................................................................ 22
2.6 Recognition and measurement ................................................................................... 23
2.6.1 Recognition and measurement using the simplified approach ................................ 26
2.6.2 Recognition and measurement using the general approach ................................... 26
2.7 Subsequent measurement of the lease liability .......................................................... 26
2.8 Tax consequences ...................................................................................................... 27
2.9 Presentation and Disclosure ....................................................................................... 27
2.10 Disclosure ................................................................................................................. 28
,STUDY UNIT 3: LEASES: LESSOR ACCOUNTING IFRS 16 ......................................... 29
3.1 Introduction ................................................................................................................. 29
3.2 Overview ..................................................................................................................... 29
3.3 Definitions ................................................................................................................... 29
3.4 lease classification ...................................................................................................... 31
3.4.1 Finance Lease .......................................................................................................... 31
3.4.2 Operating Lease ....................................................................................................... 32
3.5 Disclosure ................................................................................................................... 32
STUDY UNIT 4: DEFERRED TAXATION [IAS 12] ........................................................... 35
4.1 Introduction ................................................................................................................. 36
4.2 Overview ..................................................................................................................... 36
4.3 Objective of IAS 12 ..................................................................................................... 36
4.4 Scope .......................................................................................................................... 36
4.5 Definitions ................................................................................................................... 37
4.6 Income tax ................................................................................................................... 37
5.7 Measurement of income tax ........................................................................................ 37
4.8 Deferred Tax ............................................................................................................... 39
4.8.1 Deferred tax measurement ...................................................................................... 40
4.9 Summary ..................................................................................................................... 44
4.10 Self evaluation questions .......................................................................................... 44
STUDY UNIT 5: GROUP OF ENTITIES & ITS FINANCIAL STATEMENTS: THEORY &
BACK GROUP .................................................................................................................. 50
5.1 Introduction ................................................................................................................. 50
5.2 Overview ..................................................................................................................... 50
5.3 Definitions ................................................................................................................... 50
5.5 Types of group structures ........................................................................................... 52
5.6 Accounting for a business combination ...................................................................... 54
5.7 Summary ..................................................................................................................... 56
STUDY UNIT 6: CONSOLIDATION AT DATE OF ACQUISITION ................................... 57
6.1 Introduction ................................................................................................................. 57
6.2 Basic consolidation procedures .................................................................................. 57
STUDY UNIT 7: CONSOLIDATION AFTER DATE OF ACQUISITION ........................... 66
7.1 Introduction ................................................................................................................. 66
7.2 Overview ..................................................................................................................... 66
7.3 Objective of IFRS 10 ................................................................................................... 66
7.4 Consolidation procedures ........................................................................................... 66
7.5 Summary ..................................................................................................................... 69
, Module Information
Name of programme B.com in Accounting
Type of programme Contact (Full Time & Part Time)
NQF Level 7
Name of module Financial Accounting 3A
Credits 20
Notional hours 200
Module purpose The purpose of this module is to continue developing student’s
mental power to be able to identify, recognize, present and
disclose financial transactions with regards to the International
Financial Reporting Standards.
Learning Outcomes: At the end of this module learners should be able to:
Understand the financial risks, categorise the financial assets,
financial liabilities;
Be able to compound financial Instruments;
Know derivatives, and reclassification of financial instruments;
Understand the impairment of financial instruments, and be
able to make disclosures regarding them
Define the objective of leases, classify leases, calculate
transaction taxes;
Make accounting practices of lessees and disclose them;
Know the different types of taxation;
Compute secondary tax on companies;
Know normal tax; and make estimation of current normal tax
and payment of current normal tax;
Be able to disclose tax;
Know the difference between current tax and deferred tax;
Be able to measure deferred normal tax and disclose in the
financial statements;
Have a theoretical background of a group of entities and its
financial statements;
Be able to consolidate financial statements of wholly owned
subsidiary and partly owned subsidiary at the date of
acquisition;
Be able to consolidate financial statements of partly owned
subsidiary at the date of acquisition;
Consolidate wholly owned subsidiary after the date of
acquisition;
Be able to Consolidation partly owned subsidiary after the
date of acquisition;
Prescribed textbooks Textbook Author Year Publisher ISBN
and other sources
Gripping
Cathrynne S 2018 LexisNexis 9780409128345
GAAP
Group
Binnekade,
Statements 2017 LexisNexis 9780409128475
C.S.
Volume 1
1
Financial Accounting 3A – Study Guide 2018
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