Please enable JavaScript.
Coggle requires JavaScript to display documents.
B293 - Unit 2 - Coggle Diagram
B293 - Unit 2
Week 1
International Accounting Standard (IAS) 1
Standardises financial statement formats
Ordinary share capital and share premium
Provide ownership
Has value per share
Usually nominal value
Share premium = market value - nominal value
When issued
Dr
Cash
Cr
Ordinary share capital with nominal value
Ordinary share premium with difference between issue price and nominal value
Shown in Equity of balance sheet
Balances taken from statement of changes in equity
Irredeemable preference shares
Fixed return on nominal value
May sell for greater value than nominal
Share premium = market value - nominal value
Taken from Statement of changes in equity
Dividends
Preference
Fixed
Pay before ordinary
Ordinary
Similar to drawings
Interim
May be
Paid in the year
Remain unpaid
Final
Per share
% of nominal value
Total dividend = number of shares issued*dividend per share
Double entry
Dr retained earnings reserve
Cr Cash
Loan finance
Bonds and debentures
Long-term loans
Treated same as bank loan
Non-current liabilities
Current if due
Double entry
Dr Cash
Cr Non-current liabilities
Interest
Shown as finance cost
Income statement
If paid
Dr Finance costs
Cr Cash
If not paid
Current liability as an accrual
Balance sheet
Dr finance costs
Cr Accruals
Commonly paid twice per year
Part paid
Part outstanding
Corporation tax
Applies to profit before tax
Usually due 9 months after financial year end
Always recorded as accrual
Current liability
Double entry
Dr Corporation tax
Cr corporation tax payable
Audit fee
Expense if paid
Accrual if not paid in year
Usually added to admin fee
Provisions
Uncertainty
Payment date
Payment amount
Examples
Organisational restructuring costs
Legal costs
Warranties
Conditions must be met
Probability of settlement
Reliable estimate can be made
Present obligation for past event
Change
Included in statement of financial performance
Dr Provision for expense
Cr Non current or current liability
Can be recorded as
Admin expenses
Distribution costs
Cost of sales
If increases
Only balance added to expenses
Intangible assets
Patents
Know-how
Loyal customer base
R&D
Goodwill
Difference in valuations
Net assets
Three criteria
Company must control
Measured reliably
Separately identifiable
Recorded in statement of financial position
Non-current assets
Separate from other assets
Increases in value
Cost method
Acquisition cost
Do not account for increases in value
Amortisation
Periodic impairment review
Has value decreased?
Statement of financial performance
Admin expenses
Distribution costs
Cost of sales
Value reduced
If impaired
Week 2
Preparing financial statements
Utilise templates
Calculate figures
Show workings and notes
Other information in financial reports
Explanatory notes
Conform to IAS1
Compliance statement
Summary of accounting policies
Items of interest
Directors remuneration
Supporting information
Non-current assets
Inventory
Allowances made
Disclosure of requirements by IAS and IFRS
e.g. post balance sheet events
Non-financial info
CSR report
Risk
Other reports
Stakeholders interest
Management of data by managers
Depreciation method
Straight
Reducing-balance
Closing inventory
AVCO
FIFO
Allowance for irrecoverable receivables %
May create conflict with shareholders