Glossary

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CA Manish K Dhoot

CA B. Com NCFM CPCM

5015 Points Posted on 15 August 2010

Accounting policies

:	The specific principles, bases, conventions, rules and practices applied by an entity in preparing and presenting financial statements

Active market	:	A market in which all the following conditions exist: (a) the items traded within the market are homogeneous; (b) willing buyers and sellers can normally be found at any time; and (c) prices are available to the public.

Replies (9)

CA Manish K Dhoot

CA B. Com NCFM CPCM

5015 Points Posted on 15 August 2010

Capitalisation	:	Recognising a cost as part of the cost of an asset

Cash flows	:	Inflows and outflows of cash and cash equivalents.

CA Manish K Dhoot

CA B. Com NCFM CPCM

5015 Points Posted on 15 August 2010

Equity method	:	A method of accounting whereby the investment is initially recognised at cost and adjusted thereafter for the post-acquisition change in the investor’s share of net assets of the investee. The profit or loss of the investor includes the investor’s share of the profit or loss of the investee.

Exchange rate	:	The ratio of exchange for two currencies

CA Manish K Dhoot

CA B. Com NCFM CPCM

5015 Points Posted on 15 August 2010

Fair value	:	The amount for which an asset could be exchanged, a liability settled, or an equity instrument granted could be exchanged, between knowledgeable, willing parties in an arm’s length transaction.

First-time adopter	:	An entity that presents its first IFRS financial statements.

Goodwill	:	An asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognised.

Historical cost	:	A measurement basis according to which assets are recorded at the amount of cash or cash equivalents paid or the fair value of the consideration given to acquire them at the time of their acquisition.

Inception of a lease	:	The earlier of the date of the lease agreement and the date of commitment by the parties to the principal provisions of the lease.

Inventories	:	Assets: (a) held for sale in the ordinary course of business; (b) in the process of production for such sale; or (c) in the form of materials or supplies to be consumed in the production process or in the rendering of services.

joint venture	:	A contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control.

Lease	:	An agreement whereby the lessor conveys to the lessee in return for a payment or series of payments the right to use an asset for an agreed period of time.

CA Manish K Dhoot

CA B. Com NCFM CPCM

5015 Points Posted on 15 August 2010

Non-controlling interest	:	The equity in a subsidiary not attributable, directly or indirectly, to a parent.

Operating lease	:	A lease other than a finance lease.

Realisable value	:	The amount of cash or cash equivalents that could currently be obtained by selling an asset in an orderly disposal.

Recoverable amount	:	The higher of an asset’s (or cash-generating unit’s) fair value less costs to sell and its value in use.

Separate financial statements	:	Those presented by a parent, an investor in an associate or a venturer in a jointly controlled entity, in which the investments are accounted for on the basis of the direct equity interest rather than on the basis of the reported results and net assets of the investees

Useful life	:	Either: (a) the period over which an asset is expected to be available for use by an entity; or (b) the number of production or similar units expected to be obtained from the asset by the entity.

Value in use	:	The present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life.

Weighted average cost formula	:	Under this formula, the cost of each item is determined from the weighted average of the cost of similar items at the beginning of a period and the cost of similar items purchased or produced during the period. The average may be calculated on a periodic basis, or as each additional shipment is received, depending upon the circumstances of the entity.