Financial Statements (Companies) Flashcards
6 cards from real AAT L4 practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Financial Statements (Companies) flashcards as text
The non-controlling interest (NCI) in a consolidated balance sheet represents:
Answer: The portion of the subsidiary's equity not owned by the parent
NCI is the equity interest in a subsidiary not attributable to the parent company — it represents the minority shareholders' share of the subsidiary's net assets.
Under FRS 102, development costs are capitalised when:
Answer: Specific criteria are met including technical feasibility, intention to complete, and probability of future economic benefits
FRS 102 Section 18 permits (and in some cases requires) capitalisation of development costs when specific recognition criteria are met, similar to IAS 38 criteria.
Under FRS 102, a finance lease is one in which:
Answer: Substantially all risks and rewards of ownership are transferred to the lessee
Under FRS 102 Section 20, a finance lease transfers substantially all the risks and rewards incidental to ownership of the underlying asset to the lessee, regardless of whether title ultimately passes.
Which of the following is shown as a non-current liability in a company's balance sheet?
Answer: A 5-year loan from the bank, classified by repayment profile
A 5-year bank loan's non-current portion (repayable after more than 12 months) is classified as a non-current liability. The portion due within 12 months is reclassified as current.
When preparing a statement of cash flows under the indirect method, which of the following is deducted from operating profit?
Answer: An increase in inventories
An increase in inventories means the business purchased more inventory than it sold — a use of cash. This is deducted from operating profit in the indirect method cash flow statement.
Under FRS 102, investment property is measured at:
Answer: Either fair value (with changes through profit or loss) or cost, as an accounting policy choice
FRS 102 Section 16 allows investment property to be measured at fair value (gains and losses through profit or loss) or under the cost model (depreciated cost less impairment). The entity chooses a policy and applies it consistently.