AC2101 S1 2014 Seminar 21 Expenses (Anil)

AC2101 S1 2014 Seminar 21 Expenses (Anil) - AC2101...

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16/10/13 1 AC2101 – Accounting Recognition and Measurement Anil J N Shukla Adjunct Associate Professor Semester’1’2013-14’ presented by Seminar 21 Expense Review Share Based Payments - I § Review’of’Expenses’ § FRS’102:’Share-based’Payment’Transactions’ * Introduction’(What’are’ESOs?)’ * Vesting’and’Non-vesting’Conditions’ * Equity-settled’share-based’payment’transaction’ * Recognition’and’Measurement’ * Cash-settled’share-based’payment’transaction’ * Recognition’and’Measurement’ * Share-based’payment’transactions’with’cash’alternatives’ (Not in syllabus) * SBPTs’among’group’entities’ 2 ’Seminar’21’Agenda
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16/10/13 2 § Expense’recognition’ principle’ * Matching : aim’to’associate’eforts’against’ accomplishments § Expense’recognition’ methods a. Association’oF’efort’with’accomplishment’ b. Rational’and’systematic’allocation’ c. Immediate’write-of 3 Review’oF’Expenses’ Decreasing degree of matching 4 Clicker’ Seminar’Question’1’ 1. Recognize’$200’warranty’expense’in’ 20x2’&’ $100’in’20x3’ 2. Recognize’$150’each’in’20x2’&’20x3’ 3. Recognize’$300’in’20x1
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16/10/13 3 Systematic’&’rational’allocation’ Examples:’ * Cost’of’goods’sold (Self-study’P1)’ * Depreciation ’(Self-study’P2)’ * Amortization (Self-study’P3) 5 Matching’by’Allocation’ Generally,’there’are’ 3’treatments’when’a’Frm’“spends’money”’ a. Amount’is’ provided ’for before ’it’is’ incurred ’(PROVISION) b. Amount’is’ capitalized when ’it’is’ incurred ’&’then’ subsequently’ amortized ’(CAPITALISATION’AND’AMORTISATION)’ c. Amount’is’ expensed when ’it’is’ incurred’ ’(WRITE-O±±)’ 6 When’to’Write-o²?’
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16/10/13 4 7 When’to’Write-of?’ Time 0 -1 -2 1 2 Cost incurred a. Provision b. Capitalized à Amortized c. Expensed Order of consideration a. To’make’ provision ’(FRS’37)’ * Present’obligation’±rom’past’transaction’ * Probable’outflow’ * Reliable’measurement’ b. To’ capitalize ’as’asset’(FRS’38)’ * Meet’the’de²nition’o±’asset’(control)’ * Probable’inflow’ * Reliable’measurement’ c. Otherwise,’ immediately’expense’ 8 When’to’write’of?
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16/10/13 5 1. FRS’102:’Share-based’Payment’Transactions Another’Common’Expense…’ 9’ § There’are’many’diferent’types’o±’equity-based’ compensation.’Employees’are’sometimes’awarded’an’ option’to’buy’shares’in’the’±uture.’ This is called an Employee Share Option (“ESO”).
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AC2101 S1 2014 Seminar 21 Expenses (Anil) - AC2101...

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