PROLOGUE: BASICS OF FINANCIAL ACCOUNTING (II) …………………………………… 13
TOPIC 1. REPORTING AND ANALYSING NON-FINANCIAL LONG-LIVED ASSETS:
TANGIBLE ASSETS, PROPERTYINVESTMENTS AND TANGIBLE ASSETS IN PROGRESS 23
- Concepts, valuation and amortization ………………………………………………………………………….. 23
- Specific standards on property, plant and equipment ………………………………………………….. 28
- Depreciation, impairment and exceptional losses ………………………………………………………. 31
3.1. Recording Depreciation ……………………………………………………………………………………. 32
3.2. Impairment Recognition……………………………………………………………………………………. 35
4.Property, plant and equipment derecognition ……………………………………………………………… 37
5. Non-current assets held for sale and investment property …………………………………………… 40
6. Property, plant and equipment under construction ………………………………………………………. 43
7. Exchanges of property, plant and equipment……………………………………………………………….. 44
8. Multiple-choice ……………………………………………………………………………………………………………. 46
9. Exercises …………………………………………………………………………………………………………………….. 49
10. Solutions …………………………………………………………………………………………………………………… 50
10.1. Múltiple choice Solutions ……………………………………………………………………………….. 50
10.2. Exercise Solutions …………………………………………………………………………………………… 50
TOPIC 2. INTANGIBLE ASSETS ……………………………………………………………………………………………. 55
- Concepts, valuation and amortization ………………………………………………………………………….. 55
- Specific standards on research and development…………………………………………………………. 56
- Other specific standards on intangible assets ………………………………………………………………. 60
- Multiple-Choice Questions…………………………………………………………………………………………… 63
- Exercise ……………………………………………………………………………………………………………………….. 66
- Solutions ……………………………………………………………………………………………………………………… 67
6.1. Múltiple Choice Solutions………………………………………………………………………………… 67
6.2. Exercise Solutions 67
TOPIC 3. FINANCIAL INVESTMENT: EQUITY …………………………………………………………………. 73
- Investment in equity 73
- Accounting for equity investments …………………………………………………………………………….. 76
2.1. Financial asset at Fair Valué through profit or loss (FVTPL) ………………………….. 76
2.1.1. Initial measurement ………………………………………………………………………………… 76
2.1.2. Subsequent measurement ……………………………………………………………………….. 77
2.2. Financial asset at cost………………………………………………………………………………………………. 78
2.2.1. Equity investments in group companies, jointly controlled entities and associates ………………………………………………………………………………………………………. 78
2.2.2. Initial measurement ………………………………………………………………………………… 80
2.2.3. Subsequent measurement and impairment ……………………………………………… 80
2.3. Financial asset at Fair Valué through equity (FVTOCI) ………………………………….. 83
2.3.1. Initial measurement ………………………………………………………………………………… 83
2.3.2. Subsequent measurement ……………………………………………………………………….. 84
2.3.3. Impairment in equity investments held at FVTOCI ……………………………… 85
2.3.4. Reversal of impairments in equity investments held
at FVTOCI …………………………………………………………………………………………………………… 86
2.4. Disposals of equity investments ………………………………………………………………………… 87
2.4.1 Financial assets held at FVTPL ……………………………………………………………… 88
2.4.2 Equity investments held at Cost (for example investments in group
companies, jointly controlled entities and associates) ……………………………………….. 89
2.5. Equity investment retums ………………………………………………………………………………….. 90
2.6. Reclassification of equity investment ………………………………………………………………… 92
3. Multiple-choice …………………………………………………………………………………………………………….. 94
4. Exercises ………………………………………………………………………………………………………………………. 96
5. Solutions ………………………………………………………………………………………………………………………. 98
5.1. Múltiple choice Solutions ………………………………………………………………………………….. 98
5.2. Exercise Solutions ……………………………………………………………………………………………… 98
TOPIC 4. FINANCIAL INVESTMENT IN BONDS ……………………………………………………………….. 105
- Investment in bonds …………………………………………………………………………………………………….. 105
- Accounting for investments in bonds ………………………………………………………………………….. 107
2.1. Bonds held at FVTPL ……………………………………………………………………………………….. 107
2.1.1. Initial measurement ……………………………………………………………………………….. 107
2.1.2. Subsequent measurement …………………………………………………………………….. 107
2.2. Bonds held at Amortised Cosí ………………………………………………………………………. 108
2.2.1. Initial measurement ………………………………………………………………………………. 109
2.2.2. Subsequent measurement …………………………………………………………………….. 109
2.2.3. Impairment in Held to Maturity bond investments …………………………….. 113
2.3. Bonds held at FVTOCI …………………………………………………………………………………. 114
2.3.1. Initial measurement ……………………………………………………………………………… 114
2.3.2. Subsequent measurement …………………………………………………………………….. 115
2.3.3. Impairment of bond investments held at FVTOCI ………………………… 118
2.3.4. Reversal of impairments in equity investments held at FVTOCI ………. 118
2.4. Disposals of bond investments ……………………………………………………………………….. 119
2.4.1. Financial assets held at FVTPL ……………………………………………………………. 119
2.4.2. Equity investments held at Cost …………………………………………………………… 121
2.4.3. Investments in bonds held at FVTOCI ………………………………………………… 122
2.5. Bond investment retums …………………………………………………………………………………. 124
2.6. Reclassification of bond investments ……………………………………………………………… 126
3.Múltiple choice …………………………………………………………………………………………………………. 127
4.Exercises …………………………………………………………………………………………………………………… 129
5. Solutions ……………………………………………………………………………………………………………………. 131
5.1. Múltiple choice Solutions ……………………………………………………………………………….. 131
5.2. Exercise Solutions …………………………………………………………………………………………… 131
TOPIC 5. TRADE AND FINANCIAL LIABILITIES …………………………………………………………. 139
- Liabilities……………………………………………………………………………………………………………………. 139
- Debts and payables ……………………………………………………………………………………………………. 140
- Accounting for payables ……………………………………………………………………………………………. 140
3.1. Short term trade payables without contractual interest …………………………………… 141
3.1.1. Initial measurement ……………………………………………………………………………… 141
3.1.2. Subsequent measurement …………………………………………………………………….. 141
3.2. Long term trade payables, Short term trade payables with contractual
interest and non-trade payables ………………………………………………………………………………… 141
3.2.1. Initial measurement ……………………………………………………………………………… 141
3.2.2. Subsequent measurement …………………………………………………………………….. 142
4. Bonds and obligations ……………………………………………………………………………………………….. 147
5.Múltiple choice…………………………………………………………………………………………………………… 152
6. Exercises …………………………………………………………………………………………………………………… 153
7. Solutions …………………………………………………………………………………… 153
7.1. Múltiple choice Solutions ……………………………………………………….. 153
7.2. Exercise Solutions ………………………………………………………………….. 153
TOPIC 6. INCOME TAX AND VAT ACCOUNTING ………………………………………………. 159
- Introduction to taxes ……………………………………………………………………….. 159
- Income tax accounting …………………………………………………………………….. 160
2.1. Calculation of tax for accounting and tax purposes ………………………. 161
2.1.1. Income tax accounts ………………………………………………………. 162
2.1.2. Examples of taxable differences and deductible temporary
differences …………………………………………………………………………….. 169
3. VAT accounting ……………………………………………………………………………… 173
4. Multiple-choice ……………………………………………………………………………. 181
5. Exercises ……………………………………………………………………………………… 187
6. Solutuions ……………………………………………………………………………………. 187
6.1. Múltiple choice Solutions ………………………………………………………… 187
6.2. Exercise Solutions ………………………………………………………………….. 188
TOPIC 7. SHAREHOLDER EQUITY: GRANTS, DONATIONS AND BEQUESTS ………………. 193
- Introduction: equity concepts …………………………………………………………… 193
- Registration of Grants, donations and bequests received ……………………….. 195
2.1. Grants, donations and bequests awarded by third parties ……………… 195
2.2. Grants, donations and bequests awarded by equity holders or owners … 200
3. Multiple-choice questions ……………………………………………………………….. 200
4. Exercises ……………………………………………………………………………………… 203
5. Solutions ……………………………………………………………………………………… 204
5.1. Múltiple choice Solutions ………………………………………………………… 204
5.2. Exercise Solutions ………………………………………………………………….. 204
TOPIC 8. FINANCIAL STATEMENTS: STATEMENT OF CHANGES IN EQUITY AND STATEMENT OF CASHFLOW 209
- Statement of changes in equity …………………………………………………………. 209
- Statement of cash flows ………………………………………………………………….. 215
2.1. Introduction …………………………………………………………………………. 215
3. Multiple-choice …………………………………………………………………………….. 221
4. Exercises ……………………………………………………………………………………… 225
5. Solutions ……………………………………………………………………………………… 227
5.1. Múltiple choice Solutions ………………………………………………………… 227
5.2. Exercise Solutions ……………………………………………………………………….. 228
TOPIC 9. FOREIGN CURRENCY STANDARDS ………………………………………………… 232
- Introduction ………………………………………………………………………………….. 232
- Monetary ítems …………………………………………………………………………….. 234
2.1. Initial measurement ……………………………………………………………….. 234
2.2. Subsequent measurement……………………………………………………….. 235
3. Non-monetary Ítems ………………………………………………………………………. 237
3.1. Initial measurement ……………………………………………………………….. 237
3.2. Subsequent measurement……………………………………………………….. 237
4. Múltiple choice ……………………………………………………………………………… 242
5. Exercises ……………………………………………………………………………………… 244
6. Solutions ……………………………………………………………………………………. 245
6.1. Múltiple choice Solutions ………………………………………………………….. 245
Exercise Solutions 246
