CA (Chartered Accountancy) Final: Financial Reporting and Advanced FM Syllabus

Final: Financial Reporting and Advanced FM syllabus — full chapter and topic list

Expand any chapter to see its topics and sub-topics. This is the whole examinable outline for Final: Financial Reporting and Advanced FM in CA (Chartered Accountancy), not a summary of it.

1. 1

   Indian Accounting Standards (Ind AS) Framework

   4 topics

   • Conceptual Framework and Roadmap of Ind AS
   • Presentation Standards (Ind AS 1, 7, 8, 34)
     • Presentation of financial statements and accounting policies
   • Ind AS 115 - Revenue from Contracts with Customers
     • Five-step model of revenue recognition
   • Ind AS 116 - Leases
2. 2

   Ind AS - Assets, Liabilities and Financial Instruments

   4 topics

   • Ind AS on Non-financial Assets
     • Ind AS 16, 38, 40 and 36 - PPE, intangibles and impairment
   • Financial Instruments (Ind AS 32, 107, 109)
     • Classification, measurement and hedge accounting
   • Ind AS 12 and Ind AS 19
     • Income taxes and employee benefits
   • Ind AS 102 and Ind AS 37
     • Share-based payments and provisions
3. 3

   Business Combinations and Consolidation

   4 topics

   • Ind AS 103 - Business Combinations
     • Acquisition method and goodwill
   • Consolidated Financial Statements (Ind AS 110)
   • Joint Arrangements and Associates (Ind AS 111, 28)
   • Ind AS 21 - Effects of Changes in Foreign Exchange Rates
4. 4

   Corporate Reporting and Analysis

   4 topics

   • Integrated Reporting and Sustainability Reporting
   • Analysis of Financial Statements
   • Corporate Social Responsibility Reporting
   • Accounting and Reporting of Financial Instruments - Disclosures

Final: Financial Reporting and Advanced FM flashcards for CA (Chartered Accountancy)

19 of 68 cards from the Final: Financial Reporting and Advanced FM deck — real questions with worked answers.

1. What is the primary objective of general purpose financial statements under the Conceptual Framework for Financial Reporting under Ind AS?

   To provide financial information about the reporting entity that is useful to existing and potential investors, lenders and other creditors in making decisions about providing resources to the entity (e.g., buying, selling or holding equity/debt and providing or settling loans).

2. Name the two fundamental qualitative characteristics of useful financial information under the Ind AS Conceptual Framework.

   Relevance and Faithful representation. Relevance means information capable of making a difference in decisions (predictive value, confirmatory value, materiality); faithful representation means complete, neutral and free from error.

3. List the four enhancing qualitative characteristics under the Conceptual Framework.

   Comparability, Verifiability, Timeliness and Understandability. They enhance the usefulness of information that is relevant and faithfully represented.

4. Under the revised Conceptual Framework, what is the definition of an asset?

   An asset is a present economic resource controlled by the entity as a result of past events, where an economic resource is a right that has the potential to produce economic benefits.

5. Under the revised Conceptual Framework, what is the definition of a liability?

   A liability is a present obligation of the entity to transfer an economic resource as a result of past events.

6. What is the roadmap structure for Ind AS applicability in India based on net worth thresholds for companies (Phase I and Phase II)?

   Phase I (from 1 April 2016): listed/unlisted companies with net worth $\geq ₹500$ crore. Phase II (from 1 April 2017): all listed companies and unlisted companies with net worth $\geq ₹250$ crore. Once Ind AS applies, it applies to the company and its holding, subsidiary, associate and JV.

7. Which financial statements constitute a complete set under Ind AS 1?

   (1) Balance Sheet, (2) Statement of Profit and Loss (with profit/loss and OCI sections), (3) Statement of Changes in Equity, (4) Statement of Cash Flows, (5) Notes (including significant accounting policies), and (6) comparative information; plus an opening balance sheet when a retrospective restatement or reclassification is made.

8. How does Ind AS 1 require items of Other Comprehensive Income (OCI) to be classified?

   Into (a) items that will NOT be reclassified subsequently to profit or loss (e.g., revaluation surplus, remeasurements of defined benefit plans, FVOCI equity gains) and (b) items that WILL be reclassified to profit or loss when conditions are met (e.g., FVOCI debt instruments, effective cash flow hedges, foreign operation translation differences).

9. Under Ind AS 1, what current/non-current classification criteria make an asset current?

   An asset is current if any of: it is expected to be realised or sold/consumed in the normal operating cycle; it is held primarily for trading; it is expected to be realised within 12 months after the reporting period; or it is cash or a cash equivalent (not restricted beyond 12 months).

10. Under Ind AS 7, what are the three classifications of cash flows?

    Operating activities, Investing activities and Financing activities.

11. Under Ind AS 7, how may interest paid, interest received and dividends received be classified?

    Ind AS 7 requires interest and dividends paid to be classified as financing activities and interest and dividends received as investing activities (consistently from period to period). This is more prescriptive than IAS 7's option.

12. Distinguish the direct and indirect methods of presenting operating cash flows under Ind AS 7.

    Direct method discloses major classes of gross cash receipts and payments. Indirect method starts with profit/loss and adjusts for non-cash items, deferrals/accruals and items of investing or financing cash flows. Ind AS 7 encourages the direct method.

13. Under Ind AS 8, define a change in accounting estimate and state how it is accounted for.

    A change in accounting estimate is an adjustment of the carrying amount of an asset/liability resulting from new information or developments. It is accounted for prospectively, recognised in profit or loss in the period of change (and future periods if affected).

14. Under Ind AS 8, how are changes in accounting policy and corrections of prior period errors accounted for?

    Both are applied retrospectively: the entity restates comparative amounts and adjusts the opening balance of retained earnings (or other equity component) of the earliest prior period presented, as if the new policy had always applied / as if the error had never occurred, subject to impracticability.

15. What is the hierarchy under Ind AS 8 for selecting an accounting policy when no Ind AS specifically applies?

    Management uses judgement to develop a policy giving relevant and reliable information, referring first to requirements in Ind AS dealing with similar issues, then the Conceptual Framework definitions/recognition criteria, and may also consider pronouncements of other standard-setters and accepted industry practice that do not conflict.

16. What is the scope and key requirement of Ind AS 34 (Interim Financial Reporting)?

    It prescribes the minimum content of an interim financial report (condensed statements plus selected explanatory notes) and the recognition/measurement principles. Same accounting policies as annual statements are used; the interim period is generally treated as a discrete period for measurement but income tax is based on the estimated annual effective tax rate.

17. What is the core principle of Ind AS 115 (Revenue from Contracts with Customers)?

    An entity recognises revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

18. List the five steps of the revenue recognition model under Ind AS 115.

    Step 1: Identify the contract(s) with a customer. Step 2: Identify the performance obligations in the contract. Step 3: Determine the transaction price. Step 4: Allocate the transaction price to the performance obligations. Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation.

19. Under Ind AS 115, what five criteria must be met to identify a contract with a customer?

    (1) The parties have approved the contract and are committed to perform; (2) each party's rights regarding goods/services are identifiable; (3) payment terms are identifiable; (4) the contract has commercial substance; and (5) it is probable the entity will collect the consideration to which it will be entitled.

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