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Auditing Problems
Review Schedule, Topics, and Exams Coverage
Review Schedule
Topics
AP03 – Receivables
Trade and non-trade receivables
Financial statement presentation
Abnormal balances in accounts
Initial measurement
Recognition of trade receivables
o Terms of sale contract
o Trade discounts and cash discounts
Subsequent measurement of accounts receivable
o Accounting for bad debts
o Estimating doubtful accounts
Percentage of credit sales (single loss-rate approach)
Percentage of receivable (single loss-rate approach)
Aging of receivables (provision matrix)
T-account
Receivables denominated in foreign currency
Notes receivable
o Initial measurement
o Subsequent measurement
o Deferred annuities
o Pre-acquisition accrued interest
Loans receivable
o Origination costs and fees
o “Day 1” difference
Receivable financing
o Pledge (hypothecation)
o Assignment
o Factoring
o Discounting of notes receivables
AP04 – Inventories
Inventories
Recognition
Goods in transit
Consigned goods
Inventory financing agreements
Sale with unusual right of return
Sale on trial
Installment sale
Bill and hold arrangement
Lay away sale
Financial statement presentation
Accounting for inventories
o Perpetual inventory system
o Periodic inventory system
Inventory errors under the periodic system
Measurement
Trade discounts and cash discounts
Conversion costs
AP05 – Investments
Financial instruments
Initial recognition
Classification of financial assets
o Business model
„Hold to collect‟ business model
„Hold to collect and sell‟ business model
o Contractual cash flow characteristic
Initial measurement
Fair value measurement
o Requirements of fair value measurement
o Valuation techniques
o Fair value hierarchy
Subsequent measurement
Financial assets measured at FVPL
Investment in equity securities measured at FVOCI
Financial assets at amortized cost
o Bonds
o Investment in bonds measured at amortized cost
o Discount or premium
o Recognition of interest income/investment income
o Acquired interest
o Transaction costs
o Sale of bonds prior to maturity
o Purchase price of bonds
o Serial bonds
o Zero-coupon bonds
o Callable bonds
Financial assets measured at FVOCI (mandatory)
Puttable financial assets
o Investment in redeemable preference shares
Regular way purchase or sale of financial assets
o Trade date accounting
o Settlement date accounting
Reclassification
Dividends
o Recognition of dividend revenue
o Dates relevant to the accounting for dividends
o Dividend-on and ex-dividend
o Measurement of dividends
o Dividend from pre-acquisition retained earnings
o Dividends settled at the option of holder
AP11 – Leases
Lease
Identifying a lease
o Identified asset
Substantive substitution rights
o Right to obtain economic benefits from use
o Right to direct the use
Protective rights
Lease term
Accounting for leases by lessee
o Recognition
o Initial measurement of Lease liability
Discount rate
o Initial measurement of Right-of-use asset
o Subsequent measurement of Lease liability
o Subsequent measurement of Right-of-use asset
o Recognition exemptions
Separating the components of a contract
o Lease of multiple assets
o Non-lease elements
o Practical expedient
In-substance fixed lease payments
Lease incentives
Variable lease payments
Residual value guarantee
Purchase option
Initial direct costs
Lease payments made to lessor at or before commencement date
o Security deposits
Reassessment of lease liability
Lease modifications
Leasehold improvements
Accounting for leases by lessor
Indicators of a finance lease
Inception and commencement of lease
Fiancé lease
o Initial measurement
o Lease payments
o Discount rate
o Subsequent measurement
o Initial direct costs
o Classification of finance lease by lessor
o Residual value
o Lease modifications
Operating lease
o Lease modifications
o Lease of land and building
o Subleases
o Presentation
Sale and leaseback transactions
Exams Coverage
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