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TESTE DEIN WISSEN

Assets held for sale 

 

Financial Reporting (ASPE)

 

Core – Level B; Elective – Level A

 

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TESTE DEIN WISSEN

Assets held for sale (ASPE)

  • Long-lived assets to be disposed of other than by sale should continue to be classified as held and used until they are disposed of 
  • Long-lived assets to be sold should be classified as held for sale when all of the following are met:
    1. Management commits to a plan to sell
    2. It’s available for immediate sale in its present condition
    3. Steps to locate a buyer and complete the sale have started
    4. The sale is probable and expected to occur within a year
    5. It’s being actively marketed at a reasonable price
    6. Actions required to complete the sale indicate it’s unlikely significant changes to the plan will be made or that the plan will be withdrawn
  • Asset held for sale should be measured at lower of carrying amount or fair value less cost to sell, and should not be amortized

 

Reference: ASPE 3475.04, .08, .13

Lösung ausblenden
TESTE DEIN WISSEN

Review engagements 

 

Audit & Assurance

 

Core – Level B; Elective – Level A

Lösung anzeigen
TESTE DEIN WISSEN

Review engagements (Audit & Assurance)

  • The objective of a review engagement is to obtain limited assurance about whether the financial statements as a whole are free from material misstatement 
  • A conclusion is formed on whether anything has come to the practitioner’s attention to cause them to believe the financial statements are not prepared, in all material respects, in accordance with an applicable financial reporting framework, i.e. ASPE, IFRS
  • Limited assurance about the results of the examination is provided, with an explicit statement that an audit opinion is not expressed
  • Report expresses negative assurance – “nothing has come to our attention…”
  • Similar to an audit, independence is required as it is an assurance engagement
  • Materiality must be determined
  • Typical procedures include:
    1. Obtaining knowledge of the client’s business
    2. Making inquiries of management and client personnel
    3. Performing analytical procedures

Case: Elder Care Centre and Spa, King Street Theatre 

Reference: CSRE 2400

Lösung ausblenden
TESTE DEIN WISSEN

Inventory valuation 

 

Financial Reporting (ASPE)

 

Core – Level A

 

Lösung anzeigen
TESTE DEIN WISSEN

Inventory valuation (ASPE)

  •  Inventories shall be measured at the lower of cost and net realizable value (NRV).
  • The cost of inventories shall comprise all costs of purchase, costs of conversion, and other costs incurred in bringing the inventories to their present location and condition.
  • NRV is the estimated selling price in the ordinary course of business less estimated selling costs
  • Estimates of NRV are based on the most reliable evidence available, at the time the estimates are made, of the amount the inventories are expected to realize upon sale.

 

Reference: ASPE 3031.07, .10-12, .29

Lösung ausblenden
TESTE DEIN WISSEN

Shareholder loan 

 

Taxation

 

Core – Level C

 

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TESTE DEIN WISSEN

Shareholder loan (Taxation)

  • Principal amount must be added to shareholder’s income ITA 15(2)
  • No imputed interest under ITA 80.4(3)
  • Can be deducted under ITA 20(1)(j) when it is repaid
  • Exception: If loan repaid prior to second balance sheet date of corporation, then principal amount need not be added to shareholder’s income, per ITA 15(2.6), but imputed interest under ITA 80.4(2) would apply.  However, it cannot be a series of loans and payments (as per ITA 15(2.6), 20(1)(j))
  • Exception: Loan advanced as an employee, rather than shareholder, to acquire residence, auto for work or shares of the company, under ITA 15(2.4), as long as at the time the loan was made, bona-fide arrangements were made for repayment of the loan within a reasonable amount of time

 

Case: Ferguson Real Estate

Reference: ITA 15, 20(1)(j), 80.4

Lösung ausblenden
TESTE DEIN WISSEN

Investments 

 

Financial Reporting (ASPE)

 

Core – Level A

 

Lösung anzeigen
TESTE DEIN WISSEN

Investments (ASPE)

  • Investments subject to significant influence can be accounted for using the equity or cost method
  • Investments without significant influence:
    1. Not quoted on an active market – accounted for using cost method 
    2. Quoted on active market – accounted for at fair value

 

Reference: ASPE 3051 and 3856.11 - .15

Lösung ausblenden
TESTE DEIN WISSEN

PPE – Betterments 

 

Financial Reporting (ASPE)

 

Core – Level A

 

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TESTE DEIN WISSEN

PPE – Betterments (ASPE)

  • A “betterment” enhances service potential (increase in physical output or service capacity, associated operating costs are lowered, useful life is extended, or quality of output is improved)
  • If the expenditure can be classified as a betterment à capitalize asset
  • If the expenditure cannot be classified as a betterment à expense as repair and maintenance

 

Reference: ASPE 3061.14

Lösung ausblenden
TESTE DEIN WISSEN

Retiring allowance rollover to RRSP 

 

Taxation

 

Core – Level B

 

Lösung anzeigen
TESTE DEIN WISSEN

Retiring allowance rollover to RRSP (Taxation)

A retiring allowance (also called severance pay) is an amount paid to officers or employees when or after they retire from an office or employment, in recognition of long service or for the loss of office or employment.  A retiring allowance includes:

  • payments for unused sick-leave credits on termination; and
  • amounts individuals receive when their office or employment is terminated, even if the amount is for damages (wrongful dismissal when the employee does not return to work).

Individuals with years of service before 1996 may be able to directly transfer all or part of a retiring allowance to a registered pension plan (RPP) or a registered retirement savings plan (RRSP). The amount that is eligible for transfer is limited to:

  • $2,000 for each year prior to 1996 
  • Additional $1,500 for each year prior to 1989 (if no vested contributions to RPP or DPSP by employer)

 

Reference: ITA 60(j.1)

Lösung ausblenden
TESTE DEIN WISSEN

Common business expenses DISALLOWED 

 

Taxation

 

Core – Level B

 

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TESTE DEIN WISSEN

Common business expenses DISALLOWED (Taxation)

  • Amortization / Impairment / Accounting Gains & Losses (deduct via CCA)
  • Personal expenses and membership / club dues
  • Charitable donations – deduction to determine Taxable Income for a Corp.
  • Political contributions – limited tax credit available for an individual; Federal Accountability Act deems corporate political contributions to be illegal, resulting in no deduction or credit.
  • Taxes, interest and penalties related to tax
  • Meals & entertainment (50% for business purposes, deductible for remote or temporary work sites, or special events for employees)
  • Expenses re: issue or sale of shares and refinancing costs (deduct over 5 years)
  • Life insurance premiums (except where the policy has been assigned as collateral)
  • Unpaid amounts & unpaid remuneration (accrued salary which is unpaid 180 days after fiscal period is deemed not to have been incurred until actually paid)
  • Carrying charges on vacant land (non-deductible portion added to ACB)
  • Soft costs on construction of building (include interest, legal, accounting fees, insurance, property taxes; must be capitalized)

Case: Culinary Crawl, TankCo, Elder Care Centre and Spa, Roxanne Kalpert, Solar Panel Solutions, Elcar  Reference: ITA 20(1), 18, 67.1, 78

Lösung ausblenden
TESTE DEIN WISSEN

Goodwill and intangible assets – Amortization 

 

Financial Reporting (ASPE)

 

Core – Level A

 

Lösung anzeigen
TESTE DEIN WISSEN

Goodwill and intangible assets – Amortization (ASPE)

  • Intangibles are to be amortized over their estimated useful lives unless they are considered to have an indefinite life
  • Assets with indefinite lives are not to be amortized until the life is no longer considered indefinite (however it must still be tested for impairment)
  • Amortization method and useful life should be reviewed annually
  • The expected useful life must consider:
    1. expected use of the asset,
    2. expected useful life of related assets,
    3. contractual, legal and regulatory provisions and other economic factors

 

Reference: ASPE 3064.56, .57, .61

Lösung ausblenden
TESTE DEIN WISSEN

Capital Cost Allowance (CCA) 

 

Taxation

 

Core – Level B

 

Lösung anzeigen
TESTE DEIN WISSEN

Capital Cost Allowance (CCA) (Taxation)

  • CCA may be claimed on all tangible capital property other than land, must be available for use
  • Inducements (such as leasehold improvements) may be included in income or used to reduce capital cost
  • Most classes subject to Accelerated Investment Incentive of 1.5 × CCA on net additions (except 53, 43.1, and 43.2, which are subject to 100% CCA in the year of purchase)
  • Dispositions are credited to UCC at lesser of cost and proceeds (excess of proceeds over original cost result in a capital gain)
  • Terminal loss – when there is a balance of UCC in the class but there are no assets remaining, the UCC can be claimed as a terminal loss (capital loss cannot arise on the disposition of depreciable property)
  • Recapture – arises when the balance in the class is negative (i.e. when the adjustment re: disposal is in excess of the UCC) and is taken into income
  • Recapture / Terminal loss calculated as: Lesser of a) proceeds and b) cost; less UCC. If positive, then recapture. If negative, then terminal loss.

Case: Culinary Crawl, TankCo, Elder Care Centre and Spa, Roxanne Kalpert, Ferguson Real Estate, Solar Panel Solutions, Veza Eye Centre 

Reference: ITA 20(1)(a), ITR Schedule II

Lösung ausblenden
TESTE DEIN WISSEN

Reporting alternatives – Specific items 

 

Audit & Assurance

 

Core – Level B; Elective – Level A

 

Lösung anzeigen
TESTE DEIN WISSEN

Reporting alternatives – Specific items (Audit & Assurance)

  • CAS 805 Report – Audits of Single Financial Statements and Specific Elements, Accounts or Items of a Financial Statement
    1. A report providing audit level assurance on individual financial statements or accounts, rather than financial statements on the whole
    2. May not be a practical alternative if the financial statements on the whole are not being audited

 

Case: TankCo 

Reference: CAS 805

Lösung ausblenden
TESTE DEIN WISSEN

Asset criteria 

 

Financial Reporting (ASPE)

 

Core – Level A

 

Lösung anzeigen
TESTE DEIN WISSEN

Asset criteria (ASPE)

Definition of an asset:

  • Future benefit
  • Entity can control the benefit
  • Event that caused benefit already occurred

 

Reference: ASPE 1000.25

 

 

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Q:

Assets held for sale 

 

Financial Reporting (ASPE)

 

Core – Level B; Elective – Level A

 

A:

Assets held for sale (ASPE)

  • Long-lived assets to be disposed of other than by sale should continue to be classified as held and used until they are disposed of 
  • Long-lived assets to be sold should be classified as held for sale when all of the following are met:
    1. Management commits to a plan to sell
    2. It’s available for immediate sale in its present condition
    3. Steps to locate a buyer and complete the sale have started
    4. The sale is probable and expected to occur within a year
    5. It’s being actively marketed at a reasonable price
    6. Actions required to complete the sale indicate it’s unlikely significant changes to the plan will be made or that the plan will be withdrawn
  • Asset held for sale should be measured at lower of carrying amount or fair value less cost to sell, and should not be amortized

 

Reference: ASPE 3475.04, .08, .13

Q:

Review engagements 

 

Audit & Assurance

 

Core – Level B; Elective – Level A

A:

Review engagements (Audit & Assurance)

  • The objective of a review engagement is to obtain limited assurance about whether the financial statements as a whole are free from material misstatement 
  • A conclusion is formed on whether anything has come to the practitioner’s attention to cause them to believe the financial statements are not prepared, in all material respects, in accordance with an applicable financial reporting framework, i.e. ASPE, IFRS
  • Limited assurance about the results of the examination is provided, with an explicit statement that an audit opinion is not expressed
  • Report expresses negative assurance – “nothing has come to our attention…”
  • Similar to an audit, independence is required as it is an assurance engagement
  • Materiality must be determined
  • Typical procedures include:
    1. Obtaining knowledge of the client’s business
    2. Making inquiries of management and client personnel
    3. Performing analytical procedures

Case: Elder Care Centre and Spa, King Street Theatre 

Reference: CSRE 2400

Q:

Inventory valuation 

 

Financial Reporting (ASPE)

 

Core – Level A

 

A:

Inventory valuation (ASPE)

  •  Inventories shall be measured at the lower of cost and net realizable value (NRV).
  • The cost of inventories shall comprise all costs of purchase, costs of conversion, and other costs incurred in bringing the inventories to their present location and condition.
  • NRV is the estimated selling price in the ordinary course of business less estimated selling costs
  • Estimates of NRV are based on the most reliable evidence available, at the time the estimates are made, of the amount the inventories are expected to realize upon sale.

 

Reference: ASPE 3031.07, .10-12, .29

Q:

Shareholder loan 

 

Taxation

 

Core – Level C

 

A:

Shareholder loan (Taxation)

  • Principal amount must be added to shareholder’s income ITA 15(2)
  • No imputed interest under ITA 80.4(3)
  • Can be deducted under ITA 20(1)(j) when it is repaid
  • Exception: If loan repaid prior to second balance sheet date of corporation, then principal amount need not be added to shareholder’s income, per ITA 15(2.6), but imputed interest under ITA 80.4(2) would apply.  However, it cannot be a series of loans and payments (as per ITA 15(2.6), 20(1)(j))
  • Exception: Loan advanced as an employee, rather than shareholder, to acquire residence, auto for work or shares of the company, under ITA 15(2.4), as long as at the time the loan was made, bona-fide arrangements were made for repayment of the loan within a reasonable amount of time

 

Case: Ferguson Real Estate

Reference: ITA 15, 20(1)(j), 80.4

Q:

Investments 

 

Financial Reporting (ASPE)

 

Core – Level A

 

A:

Investments (ASPE)

  • Investments subject to significant influence can be accounted for using the equity or cost method
  • Investments without significant influence:
    1. Not quoted on an active market – accounted for using cost method 
    2. Quoted on active market – accounted for at fair value

 

Reference: ASPE 3051 and 3856.11 - .15

Mehr Karteikarten anzeigen
Q:

PPE – Betterments 

 

Financial Reporting (ASPE)

 

Core – Level A

 

A:

PPE – Betterments (ASPE)

  • A “betterment” enhances service potential (increase in physical output or service capacity, associated operating costs are lowered, useful life is extended, or quality of output is improved)
  • If the expenditure can be classified as a betterment à capitalize asset
  • If the expenditure cannot be classified as a betterment à expense as repair and maintenance

 

Reference: ASPE 3061.14

Q:

Retiring allowance rollover to RRSP 

 

Taxation

 

Core – Level B

 

A:

Retiring allowance rollover to RRSP (Taxation)

A retiring allowance (also called severance pay) is an amount paid to officers or employees when or after they retire from an office or employment, in recognition of long service or for the loss of office or employment.  A retiring allowance includes:

  • payments for unused sick-leave credits on termination; and
  • amounts individuals receive when their office or employment is terminated, even if the amount is for damages (wrongful dismissal when the employee does not return to work).

Individuals with years of service before 1996 may be able to directly transfer all or part of a retiring allowance to a registered pension plan (RPP) or a registered retirement savings plan (RRSP). The amount that is eligible for transfer is limited to:

  • $2,000 for each year prior to 1996 
  • Additional $1,500 for each year prior to 1989 (if no vested contributions to RPP or DPSP by employer)

 

Reference: ITA 60(j.1)

Q:

Common business expenses DISALLOWED 

 

Taxation

 

Core – Level B

 

A:

Common business expenses DISALLOWED (Taxation)

  • Amortization / Impairment / Accounting Gains & Losses (deduct via CCA)
  • Personal expenses and membership / club dues
  • Charitable donations – deduction to determine Taxable Income for a Corp.
  • Political contributions – limited tax credit available for an individual; Federal Accountability Act deems corporate political contributions to be illegal, resulting in no deduction or credit.
  • Taxes, interest and penalties related to tax
  • Meals & entertainment (50% for business purposes, deductible for remote or temporary work sites, or special events for employees)
  • Expenses re: issue or sale of shares and refinancing costs (deduct over 5 years)
  • Life insurance premiums (except where the policy has been assigned as collateral)
  • Unpaid amounts & unpaid remuneration (accrued salary which is unpaid 180 days after fiscal period is deemed not to have been incurred until actually paid)
  • Carrying charges on vacant land (non-deductible portion added to ACB)
  • Soft costs on construction of building (include interest, legal, accounting fees, insurance, property taxes; must be capitalized)

Case: Culinary Crawl, TankCo, Elder Care Centre and Spa, Roxanne Kalpert, Solar Panel Solutions, Elcar  Reference: ITA 20(1), 18, 67.1, 78

Q:

Goodwill and intangible assets – Amortization 

 

Financial Reporting (ASPE)

 

Core – Level A

 

A:

Goodwill and intangible assets – Amortization (ASPE)

  • Intangibles are to be amortized over their estimated useful lives unless they are considered to have an indefinite life
  • Assets with indefinite lives are not to be amortized until the life is no longer considered indefinite (however it must still be tested for impairment)
  • Amortization method and useful life should be reviewed annually
  • The expected useful life must consider:
    1. expected use of the asset,
    2. expected useful life of related assets,
    3. contractual, legal and regulatory provisions and other economic factors

 

Reference: ASPE 3064.56, .57, .61

Q:

Capital Cost Allowance (CCA) 

 

Taxation

 

Core – Level B

 

A:

Capital Cost Allowance (CCA) (Taxation)

  • CCA may be claimed on all tangible capital property other than land, must be available for use
  • Inducements (such as leasehold improvements) may be included in income or used to reduce capital cost
  • Most classes subject to Accelerated Investment Incentive of 1.5 × CCA on net additions (except 53, 43.1, and 43.2, which are subject to 100% CCA in the year of purchase)
  • Dispositions are credited to UCC at lesser of cost and proceeds (excess of proceeds over original cost result in a capital gain)
  • Terminal loss – when there is a balance of UCC in the class but there are no assets remaining, the UCC can be claimed as a terminal loss (capital loss cannot arise on the disposition of depreciable property)
  • Recapture – arises when the balance in the class is negative (i.e. when the adjustment re: disposal is in excess of the UCC) and is taken into income
  • Recapture / Terminal loss calculated as: Lesser of a) proceeds and b) cost; less UCC. If positive, then recapture. If negative, then terminal loss.

Case: Culinary Crawl, TankCo, Elder Care Centre and Spa, Roxanne Kalpert, Ferguson Real Estate, Solar Panel Solutions, Veza Eye Centre 

Reference: ITA 20(1)(a), ITR Schedule II

Q:

Reporting alternatives – Specific items 

 

Audit & Assurance

 

Core – Level B; Elective – Level A

 

A:

Reporting alternatives – Specific items (Audit & Assurance)

  • CAS 805 Report – Audits of Single Financial Statements and Specific Elements, Accounts or Items of a Financial Statement
    1. A report providing audit level assurance on individual financial statements or accounts, rather than financial statements on the whole
    2. May not be a practical alternative if the financial statements on the whole are not being audited

 

Case: TankCo 

Reference: CAS 805

Q:

Asset criteria 

 

Financial Reporting (ASPE)

 

Core – Level A

 

A:

Asset criteria (ASPE)

Definition of an asset:

  • Future benefit
  • Entity can control the benefit
  • Event that caused benefit already occurred

 

Reference: ASPE 1000.25

 

 

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