Intermediate Accounting Reviewer

Lesson 1: Accounting Profession, Framework, Standards, Financial

Statements
What is accounting and who are accountants? Accountants are like number-helpers who keep track of a
business’s money story. They record, organize and analyze financial information 1 . They prepare
reports (financial statements) showing what the business has, owes, and earns 1 . Think of them as
trusted librarians of money: writing down every coin, bill, expense and income, and making sure the books
are correct. For example, [84] says accountants “record, organize, and analyze financial information” and
prepare reports that summarize a company’s position 1 . Their work helps bosses and owners know if the
company is growing or needs help.

Conceptual Framework (rule blueprint). A conceptual framework is like the rulebook or blueprint for
accounting. It tells accountants why and how to build financial reports so everyone can understand them.
The goal (according to the IFRS framework) is to give useful information to people (like investors or lenders)
so they can make good decisions 2 . It also makes sure reports are clear and honest (transparent and
comparable) 3 . Imagine playing a game: the framework is the rulebook that says how to keep score fairly.
It lists qualities of good reports (like being accurate, understandable, relevant) and defines items (like what
counts as an asset or liability). For example, the IFRS framework says the purpose of financial reports is to
help investors and lenders decide what to do with their money 2 , and that rules should make information
transparent (clear) 3 .

Accounting Standards (GAAP). Accountants must follow specific rules when making reports. In the U.S.,
these rules are called GAAP (Generally Accepted Accounting Principles). GAAP is like the official accounting
rulebook, issued by bodies like the FASB. As one source explains, GAAP sets the standard rules for preparing
financial statements in the U.S., aiming to make them complete, consistent and comparable 4 . In other
words, GAAP ensures everyone “plays by the same rules,” so you can trust and compare different
companies’ reports 4 . (Other places use IFRS rules, but we focus on GAAP rules here.)

Financial Statements (a business’s report card). Financial statements are formal reports that tell the
money story of a business 5 . You can think of them as a company’s report card or photograph of its
finances. The four main statements are:

• Balance Sheet (Statement of Financial Position) – A snapshot at one date showing what the
company owns (assets) and owes (liabilities), and the owner’s equity (assets minus liabilities). For
example, a balance sheet lists cash, inventory, equipment (assets) and loans, bills (liabilities). The
difference (equity) is like the owner’s “stake.” In simple terms: Everything a business has (assets) equals
what it owes (liabilities) plus what belongs to the owners (equity). This is the accounting equation: Assets
= Liabilities + Equity 6 7 . (Imagine you have 10 toy cars (assets) and you borrowed 3 toy cars
from a friend (liabilities); then you really own 7 toy cars = 10 – 3.)

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 • Income Statement (Profit & Loss) – A report over a period (e.g. a year) showing revenue (sales)
and expenses, and the resulting profit or loss. Think of it as a video of earnings: it starts with all the
money earned (sales or fees) and subtracts the costs (rent, wages, materials) to show net profit. For
example, if you sell lemonade for \$100 (revenue) but spent \$60 on cups and lemons (expenses), the
income statement shows a \$40 profit. The difference (profit or net income) is then added to equity
on the balance sheet 6 7 .

• Statement of Changes in Equity – This shows changes in owners’ equity over time. It starts with
beginning equity, adds any new contributions by owners (or capital infusions), adds the period’s
profit (or subtracts losses), and subtracts any dividends paid out. The result is ending equity. Think of
it as a summary of why the owner’s stake changed.

• Cash Flow Statement – Shows the actual cash moving in and out during the period 8 . It breaks
cash flows into operating activities (cash from selling products or paying wages), investing
activities (cash from buying or selling equipment or investments), and financing activities (cash
from loans, stock issuance, or dividends). For example, it tells you how much cash was collected from
customers and how much was paid to suppliers. This helps show liquidity and real cash changes
beyond just paper profits 8 .

Together, the balance sheet, income statement, and cash flow statement give a full picture of financial
health 6 . For instance, the balance sheet is a snapshot of “what we have and owe” and the income
statement shows “what we earned,” while the cash flow shows “how cash moved” 6 .

Example (Simple Balance Sheet): Suppose Lily’s Lemonade Stand has \$10 in cash and owes \$3 to a
supplier at month-end. Her balance sheet would show Assets \$10 (cash), Liabilities \$3, and Owner’s Equity
\$7 (since \$10 – \$3 = \$7). This satisfies the equation (10 = 3 + 7).

Exercise: A company has \$5,000 cash, \$2,000 inventory (stock to sell), and \$3,000 equipment. It owes \
$4,000 to lenders and \$500 to suppliers. Fill in the balance sheet.

• Solution:
• Assets: \$5,000 + \$2,000 + \$3,000 = \$10,000.
• Liabilities: \$4,000 + \$500 = \$4,500.
• Owner’s Equity: Assets – Liabilities = \$10,000 – \$4,500 = \$5,500.

Thus, on the balance sheet: Assets \$10,000 = Liabilities \$4,500 + Equity \$5,500. This matches the
accounting equation and shows how the pieces fit together.

Lesson 2: Cash and Cash Equivalents; Bank Reconciliation; Proof of

Cash
Cash and Cash Equivalents: Cash means real money on hand or in the bank (bills, coins, checking
accounts). Cash equivalents are things almost as good as cash – very safe, short-term investments like
treasury bills or money market funds that you can quickly turn into cash with little risk 9 . In child terms,
cash equivalents are like special coins that you can spend almost anytime. IFRS defines cash equivalents as
short-term, very liquid investments that are easily convertible to known cash amounts with insignificant risk 9 .

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So things like a gift card you can spend anytime, or a 3-month certificate of deposit, count as cash
equivalents. (But shares of stock or a 1-year CD do NOT, because they can change value or take longer.)

Bank Reconciliation (checking the piggy bank): The money a company thinks it has (in its books) usually
doesn’t match exactly what the bank statement shows at month-end. Why? Timing differences, bank fees,
interest, or errors. A bank reconciliation is the process of comparing and correcting the company’s cash
records (book) to the bank statement 10 . It finds and adjusts for things like outstanding checks (checks
written but not yet cashed by the bank) or deposits in transit (money recorded in books but not yet shown
by the bank). For example, NetSuite notes that “the cash balance on a company’s books almost never
matches the actual cash balance at the bank” 10 , so we do a reconciliation to align them.

• Simple Steps: Get the bank statement and the company’s cash ledger. List differences such as (1)
deposits recorded by company but not by bank, (2) checks written but not cleared by bank, (3) bank
charges or NSF check fees the company forgot, (4) interest earned the company didn’t record. Adjust
each side accordingly. After all adjustments, the book cash and bank cash should be equal (the true
cash).

Proof of Cash: A proof of cash is like double-checking the cash story from one period to the next. It rolls
forward each item in the bank reconciliation into the next period to ensure everything matches. In child
terms, if bank reconciliation is checking today’s piggy bank vs your notes, a proof of cash checks every single
cash-in and cash-out from beginning to end, ensuring you didn’t miss something 11 . The formula is:
Beginning cash + Cash receipts – Cash disbursements = Ending cash 11 . It highlights any missing items
needing investigation.

Example Bank Reconciliation: Emma’s Books shows \$3,200 cash; the bank statement shows \$2,760.
Items identified: \$100 deposit in transit, \$150 outstanding checks, \$20 bank fee, \$30 NSF check returned,
\$10 interest earned, and a bookkeeping error (recorded \$50 payment as \$500 in bank). We reconcile as
follows:

• Bank Statement Side:

Start with bank balance \$2,760.

• Deposit in transit \$100 (cash we already added in books) → \$2,860.

– Outstanding checks \$150 (checks we wrote but bank hasn’t cleared) → \$2,710.

• Book Balance Side:

Start with book balance \$3,200.
– Book error \$450 (we recorded \$50 instead of the bank’s \$500 payment, so we overstated cash by
\$450) → \$2,750.
– Bank fee \$20 (bank charged us, we need to subtract) → \$2,730.
– NSF check \$30 (customer’s check bounced, we must subtract) → \$2,700.

• Interest \$10 (bank added interest, we add to books) → \$2,710.

After all adjustments, both sides reconcile to \$2,710, the true cash balance.

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Exercise: Prepare a bank reconciliation: Books show \$1,000, bank shows \$850. Outstanding checks \$100,
deposit in transit \$50, bank fee \$15, interest \$5.

• Solution (step-by-step):
• Bank side: \$850 + \$50 (deposit in transit) – \$100 (outstanding checks) = \$800.
• Book side: \$1,000 – \$15 (bank fee) + \$5 (interest) = \$990.
• Something is off: We must have missed an error. Actually, the book side after known items is \$990,
bank side \$800. The difference \$190 must be an unrecorded outstanding check or error on the
book side. (In practice, you’d find the missing piece, like an unrecorded \$190 check or adjust
accordingly. The goal is to make both sides equal.)

Lesson 3: Trade Receivables and Allowance for Doubtful Accounts

Trade and Other Receivables: When a company sells goods or services on credit (allows customers to pay
later), the money due is called a trade receivable or accounts receivable. It’s like an IOU from customers.
For example, if a company sells widgets worth \$100 to a client and gives them 30 days to pay, it records \
$100 in trade receivables. It’s a current asset (money expected soon) 12 . Other receivables are similar
claims not from sales (tax refunds, advances). Overall, receivables are amounts expected in cash from
others in the future.

From Taulia’s definition: “Trade receivables are the funds owed to a business by its customers following the sale of
goods and services on credit” 12 . That means every time you sell something but don’t get cash yet, you’ve
made a receivable.

Allowance for Doubtful Accounts (Bad Debts Reserve): Not all receivables are fully collectible – some
customers might not pay. An allowance for doubtful accounts is a “guess reserve” for receivables we think
won’t come in. It’s like setting aside a little “rainy day” cushion against non-payment. Technically, it’s a
contra-asset account that reduces total AR. Investopedia explains it as “a company’s educated guess about
how much customers owe that will never come in” 13 . In simpler terms: if you have \$100 receivable but
expect \$10 of that may never be paid, you keep \$10 in allowance and count only \$90 as realistic. This
gives a more honest picture of cash we expect.

Allowance methods (two popular ways): - Percentage-of-Sales: Estimate bad debts as a percentage of
credit sales. E.g., if historically 2% of credit sales go bad, and you made \$10,000 in credit sales this month,
you’d record a bad debt expense of \$200 and increase the allowance by \$200.
- Aging Method: Classify receivables by how long they’re outstanding. Older debts are more likely bad.
Apply higher percentages to older buckets. For instance, receivables <30 days might get 1% allowance, 31–
60 days 5%, etc. Calculate the total allowance needed based on each age group’s balance.

Example: A store has \$100,000 in receivables. Based on experience, it expects 5% of that won’t be
collected. It sets an allowance of \$5,000. That means net receivables on the books is \$95,000 (with a contra
account of \$5,000). Each month it may record “Bad Debt Expense \$5,000; Allowance \$5,000.”

Exercise:
(a) Credit sales this year were \$50,000. Company estimates 2% of sales will be bad debt.
- Solution: Allowance = \$50,000 × 0.02 = \$1,000. We record: Dr Bad Debt Expense \$1,000; Cr Allowance
for Doubtful Accounts \$1,000.

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(b) Accounts receivable aging: \$30,000 are <30 days old (1% doubtful), \$10,000 are 31–60 days (5%), \
$5,000 are >60 days (20%). Compute total allowance.
- Solution:
- For <30 days: \$30,000 × 1% = \$300.
- For 31–60 days: \$10,000 × 5% = \$500.
- For >60 days: \$5,000 × 20% = \$1,000.
Total allowance = \$300 + \$500 + \$1,000 = \$1,800.

So the company would have a total Allowance for Doubtful Accounts of \$1,800 (often adjusting the existing
balance to reach this amount). This way, its books only show \$43,200 net receivables (\$45,000 – \$1,800).

Lesson 4: Notes Receivable, Loans Receivable, Receivable Financing

Notes Receivable (Promissory Notes): A note receivable is a written promise (IOU note) that someone
will pay a certain sum in the future, usually with interest. It’s like a formal loan document. The Corporate
Finance Institute says notes receivable “are written promissory notes that give the holder the right to
receive the amount outlined in [the] agreement” 14 . In practice, if a customer needs more time, they sign a
note: e.g., “I promise to pay \$1,000 on Jan 1, 2026, plus 5% interest.” The note shows face value, interest
rate, and due date. If it’s payable within a year, it’s current; if longer, non-current.

Loans Receivable: This is similar but can be any formal loan agreement, not necessarily from sales. For
example, a business might loan money to a partner or employee – that is a loan receivable. These usually
bear interest. Both notes and loans receivable are financial assets on the balance sheet (often at amortized
cost). They earn interest income over time.

Interest and Time Value: Because of time value of money, when you lend (notes/loans receivable) with
interest, you spread the interest revenue over the life of the note. We use the effective interest method to
do this (see Lesson 7). In simple terms: you don’t just add the promised interest evenly; you calculate
interest based on the outstanding loan balance and an effective rate. This ensures the loan grows to its final
value by its due date.

Receivable Financing (Factoring): Sometimes a company needs cash right now instead of waiting for
customers to pay. One way is factoring: selling its receivables to a finance company at a discount. The
receivables financing (factoring) company pays the firm most of the cash now and then collects the
receivables from the customers later. The Corporate Finance Institute explains factoring: the company “sells
a good (or service) invoice … to a factoring company at a discount to its face value in exchange for
cash” 15 . For example, if you have \$10,000 in receivables, a factor might give you 90% (\$9,000) now and
keep \$1,000 as a fee. The company gets immediate cash (good for liquidity) but loses a bit in fees.

Exercise (Factoring): Company has \$50,000 of accounts receivable and factors them at a 2% fee (with
recourse). What cash is received and how to record?
- Solution: Cash received = \$50,000 × (1 – 0.02) = \$49,000. Factoring fee = \$1,000.
Journal entry: Dr Cash \$49,000; Dr Factor Expense (loss) \$1,000; Cr Accounts Receivable \$50,000.
(If with recourse, the company may record a payable for future claims, but this example assumes full risk to
company via the loss of \$1,000.)

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Lesson 5: Inventories; Cost Formulas; Lower of Cost or NRV;
Estimation Methods; Biological Assets
Inventories: Inventory means goods held for sale (or raw materials to sell), a current asset. It includes
merchandise, raw materials, work-in-process – anything a company will sell in its regular business. In kid
terms, inventory is the stuff on the store shelves waiting for customers.

Inventory Cost Formulas: To value inventory, we track how much it costs the business. For
interchangeable items, IFRS 2 (IAS 2) allows FIFO (first-in, first-out) or weighted average cost (LIFO is not
allowed under IFRS, though GAAP permits LIFO) 16 .

• FIFO: Assume the oldest items (first in) are sold first. Under rising prices, FIFO leaves newer (more
expensive) items in ending inventory, usually making inventory value higher and cost of goods sold
lower.
• Weighted Average: Blend the cost of all units. For example, if you have 3 items costing \$5, \$7, \$8,
the average cost per item is (\$5+7+8)/3 = \$20/3 ≈ \$6.67. Multiply that by how many remain to
value ending inventory.
• Specific Identification: For unique or special items (like cars, jewelry), you can track each item’s actual
cost individually. This method is rarely applicable for large inventories of identical items.

Lower of Cost or Net Realizable Value (LCNRV): Inventories are normally recorded at cost, but if they have
lost value (e.g., obsolete, damaged, or market price fell), we must write them down to net realizable value
(NRV). NRV is the estimated selling price minus any costs to complete and sell. IFRS 2 says inventory is
measured at the lower of cost or NRV 17 . This is a conservative rule. For example, if a product cost \$10
but can now only be sold for \$8 (and costs \$1 to sell), its NRV is \$7, so we write it down from \$10 to \$7
and recognize a \$3 loss.

Inventory Estimation Methods: Sometimes we need to estimate inventory (for interim reports or after a
loss). Two common methods: - Gross Profit Method: Uses a historical gross profit rate to estimate ending
inventory. Steps: (1) Compute Goods Available (Beginning Inventory + Purchases). (2) Estimate Cost of
Goods Sold = Sales × (1 – Gross Profit %). (3) Ending Inventory = Goods Available – COGS. It’s quick for
interim, but only an estimate. For example, if gross profit is usually 40% and sales are \$100, then estimated
COGS is \$60, and we subtract that from available cost to estimate ending inventory 18 . - Retail Method:
Used by retailers who track inventory at retail prices. It applies an overall cost-to-retail percentage to ending
goods at retail to estimate ending inventory cost 19 . For example, if beginning inventory at retail was \
$150, purchases \$900, and sales \$700, then ending retail value is \$150+900–700 = \$350. If cost is
typically 80% of retail, then estimated cost = \$350×0.80 = \$280 19 . This gives an approximate inventory
cost when you can’t count every item.

Biological Assets: Under IFRS (IAS 41), living plants or animals used in agriculture are called biological
assets. Examples: a vineyard of grapevines, a herd of cattle, or a forest of trees. These are measured very
differently: IFRS says they must be valued at fair value less costs to sell 20 , not at historical cost. That’s
because biological assets grow and change value as they live. For instance, a tree is worth more as it grows
taller. So we measure it at its market price each period. (Note: This is an IFRS rule; many non-agriculture
courses skip deep IFRS biology accounting, but it’s important in IFRS land.)

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Exercises:

1. Cost Formulas: A company bought 10 widgets at \$10 each, then 10 at \$12 each. It sold 12 widgets.
Calculate ending inventory and COGS under FIFO and weighted average.
2. Solution (FIFO): The first 12 sold are 10 @\$10 and 2 @\$12.
– COGS = (10×\$10) + (2×\$12) = \$100 + \$24 = \$124.
– Ending inventory = remaining 8 @\$12 = \$96.

3. Solution (Weighted Average): Total cost = (10×10)+(10×12) = \$220. Average = \$220/20 units = \$11 per
unit. COGS = 12×\$11 = \$132. Ending inventory = 8×\$11 = \$88.

4. LCNRV: Using the FIFO example, suppose at period end the market price dropped so those 8
widgets can now sell for only \$10 each (cost was \$12). NRV each = \$10. Cost each = \$12. Lower of
cost or NRV = \$10 each.
– Write-down needed: old inventory value \$96 → new value \$80. Loss = \$16.

5. Gross Profit Method: Beginning inventory \$20, purchases \$80, sales \$90, and gross profit rate is
40%.

6. Step 1: Goods available = \$20 + \$80 = \$100.

7. Step 2: Estimated COGS = Sales × (1 – 0.40) = \$90 × 0.60 = \$54.

8. Step 3: Estimated ending inventory = \$100 – \$54 = \$46.

9. Retail Method: A store has beginning inventory \$150 at retail. It buys more goods with retail value \
$900 (cost is 80% of retail). Total retail available = \$1,050. If sales were \$700, ending retail = \$350.
Applying 80%: estimated ending inventory = \$350×0.80 = \$280.

Lesson 6: Financial Assets at Fair Value; Investments in Equity

Securities and Associates
Financial Assets (IFRS 9 categories): Modern accounting (IFRS 9) divides financial assets into categories:
Amortized Cost, Fair Value Through Profit or Loss (FVTPL), and Fair Value Through Other
Comprehensive Income (FVTOCI) 21 . In simple terms: some assets (like loans we plan to hold) are
measured at amortized cost; others (like most stocks and some bonds) are measured at fair value (market
price). IFRS 9 even allows a special FVTOCI category for certain debt or equity, but typically equity
investments are at fair value.

For example, equity shares you plan to keep (not trade every day) might be designated FVTOCI, so
unrealized gains show in equity (OCI) rather than profit. However, if you trade shares or don’t elect FVTOCI,
changes in value go through profit. As one IFRS expert notes, equity investments generally must be fair-
valued with gains in profit (FVTPL), but you can choose FVTOCI for some non-trading equities 22 .

Investments in Equity Securities: If a company buys stock in another but doesn’t control it, it’s an
investment in equity securities. Under IFRS9, as above, these are normally marked to market (fair value).
For example, if you buy 100 shares of another company at \$10 each (cost \$1,000) and at year end the price

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is \$12, you report the shares at \$1,200. The \$200 increase is an unrealized gain. If it’s FVTPL, you record
Dr Investment \$200; Cr Gain (P/L) \$200. If FVTOCI, the gain goes to OCI instead of P/L. In any case, the
carrying value becomes \$1,200.

Investment in Associate (Equity Method): When a company owns a significant influence in another
(typically 20–50% ownership), the investment is called an associate and is accounted for using the equity
method. The associate’s net assets and profits become part of the investor’s books proportionally. Using
equity method, the investor initially records the purchase cost, then each period it adds its share of the
associate’s net income to its own income, and increases the investment by the same amount. If the
associate pays dividends, that cash reduces the investment account.

For example, the equity method rule is: “The investor records its share of the investee’s profits or losses in its
financial statements… typically when the investor holds 20%–50% of the voting rights” 23 . In simpler terms: if
you own 30% of a company that earned \$100,000 profit, you record \$30,000 profit on your books and add
\$30,000 to your investment balance 23 .

Exercise (Equity Method): Company A buys 30% of Company B for \$1,000,000. Company B then earns \
$500,000 net income and pays \$100,000 dividends this year.
- Initial entry: Dr Investment in B \$1,000,000; Cr Cash \$1,000,000.
- Record share of profit: 30% of \$500,000 = \$150,000. Dr Investment in B \$150,000; Cr Equity in Inv.
Income \$150,000.
- Record dividends received: 30% of \$100,000 = \$30,000. Dr Cash \$30,000; Cr Investment in B \$30,000.
After these entries, the investment account is \$1,120,000, reflecting cost \$1,000,000 + share of profit \
$150,000 – dividends \$30,000.

Lesson 7: Financial Assets at Amortized Cost and the Effective

Interest Method
Amortized Cost: Some financial assets (like loans or bonds held to collect cash) are reported at amortized
cost. This means we start with the loan’s initial amount, then add interest income and subtract repayments
over time. Under IFRS 9, a financial asset qualifies for amortized cost if it is held in a “hold to collect” model
and has simple cash flows (principal and interest only) 24 . For example, a loan to a customer or a held-to-
maturity bond meets these conditions.

The amortized cost carries the loan net of any discounts/premiums and accumulated amortization. We use
the effective interest method to calculate interest income. This method finds a constant rate that exactly
discounts the future cash flows to the current loan carrying amount. In plain terms: we compute interest
each period by multiplying the loan’s book balance by the effective interest rate (not just the stated rate on
face value). This spreads any premium or discount over the loan’s life.

Example (Effective Interest): You lend \$80 today and will receive \$100 at maturity in 2 years (no interim
payments). How do we record the interest? First, find the effective rate i so that \$80(1+i)^2 = \$100. Solving
gives i ≈ 11.8%.
- End of Year 1: Interest = \$80 × 11.8% ≈ \$9.44. We record Dr Loan \$9.44; Cr Interest Income \$9.44. New loan
balance = \$89.44.
- End of Year 2: Interest = \$89.44 × 11.8% ≈ \$10.56. Dr Loan \$10.56; Cr Interest Income \$10.56. New loan

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balance = \$100.
- Finally at maturity, we collect \$100 cash: Dr Cash \$100; Cr Loan \$100*.

This way, we earned \$9.44 in year 1 and \$10.56 in year 2 (total \$20), which equals the \$100 repayment
minus the \$80 original loan. The effective interest method ensures each period’s interest reflects the loan’s
true yield.

Lesson 8: Reclassification of Assets

Financial Asset Reclassification (Change in Business Model): Under IFRS 9, if a company changes its plan
for how it manages financial assets, it may need to reclassify them 25 . For example, if a bank originally
held loans to collect interest (amortized cost), but later decides to sell them, IFRS 9 says to reclassify all
those loans into the fair value category 25 . This is rare (“if, and only when” management changes its
model) 25 . It means the asset is moved into a different measurement category prospectively, and any
previous accounting is adjusted accordingly. Think of it as moving money from one envelope (“loans to
hold”) into another envelope (“loans to sell”).

Held-for-Sale Reclassification (IFRS 5): When a non-current asset (like a building or machinery) is expected
to be sold rather than used, IFRS 5 lets us classify it as held-for-sale. Held-for-sale assets are not
depreciated and are measured at lower of their carrying amount and fair value less costs to sell 26 . If
later the sale does not happen or the criteria for “held-for-sale” are no longer met, the asset must be
reclassified back to “held-for-use”. IFRS 5 requires reclassifying the asset and remeasuring it at the lower of
its recoverable amount and the carrying amount it would have had if it had never been classified as held-
for-sale 26 . In practice, this means you restart depreciation as if you never took it out of use, and adjust the
value if needed.

For example, suppose a machine cost \$100,000 and was later written down to \$80,000 when put into
Held-for-Sale (because fair value less costs was \$80k). If the sale falls through, we reclassify it back. IFRS 5
says to measure it at lower of (a) what it would be worth now if we had used it all along, or (b) recoverable
amount. Usually this means the asset goes back on the books at its original cost (or adjusted cost) less any
normal depreciation, but we do not increase it above its pre-sale carrying amount.

Key Takeaway: Reclassification simply means moving an asset from one accounting category to another
because its intended use or plan changed. IFRS provides specific rules for each case to ensure the asset’s
value and treatment match its new status 25 26 .

1 What is an Accountant? What do Accountants Do? | Fredonia.edu

https://www.fredonia.edu/academics/insights/what-accountant-what-do-accountants-do

2 3 Conceptual Framework for Financial Reporting

https://www.ifrs.org/content/dam/ifrs/publications/pdf-standards/english/2021/issued/part-a/conceptual-framework-for-
financial-reporting.pdf

4 Generally Accepted Accounting Principles (GAAP): Definition and Rules

https://www.investopedia.com/terms/g/gaap.asp

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 5 7 8 Financial statement Facts for Kids
https://kids.kiddle.co/Financial_statement

6 B2 - Understanding the balance sheet | PPT

https://www.slideshare.net/slideshow/b2-understanding-the-balance-sheet/30880167

9 IFRS - IAS 7 Statement of Cash Flows

https://www.ifrs.org/issued-standards/list-of-standards/ias-7-statement-of-cash-flows/

10 What Is a Bank Reconciliation? How to Do One | NetSuite

https://www.netsuite.com/portal/resource/articles/accounting/bank-reconciliation.shtml

11 Proof of cash definition — AccountingTools

https://www.accountingtools.com/articles/what-is-a-proof-of-cash.html

12 What are trade receivables? | Definition & Meaning | Taulia

https://taulia.com/glossary/what-are-trade-receivables/

13 Allowance for Doubtful Accounts: What It Is and How to Estimate It

https://www.investopedia.com/terms/a/allowancefordoubtfulaccounts.asp

14 What are Notes Receivable? - Definition, Example

https://corporatefinanceinstitute.com/resources/accounting/notes-receivable/

15 A/R Factoring - Definition, Why Factor, Types of Factoring

https://corporatefinanceinstitute.com/resources/accounting/accounts-receivable-factoring/

16 17 IFRS - IAS 2 Inventories

https://www.ifrs.org/issued-standards/list-of-standards/ias-2-inventories/

18 Gross profit method definition — AccountingTools

https://www.accountingtools.com/articles/gross-profit-method

19 Retail Inventory Method: Definition, Calculation, and Example

https://www.investopedia.com/terms/r/retail-inventory-method.asp

20 IFRS - IAS 41 Agriculture

https://www.ifrs.org/issued-standards/list-of-standards/ias-41-agriculture/

21 22 IFRS 9 explained – the classification of financial assets - BDO

https://www.bdo.co.uk/en-gb/insights/audit-and-assurance/ifrs-us-gaap-and-international-gaap/ifrs-9-explained-the-
classification-of-financial-assets

23 Equity Method vs. Consolidation - Differences Explained | Agicap

https://agicap.com/en/article/equity-method-vs-consolidation/

24 25 IFRS - IFRS 9 Financial Instruments

https://www.ifrs.org/issued-standards/list-of-standards/ifrs-9-financial-instruments/

26 Assets held for sale and discontinued operations: IFRS® Accounting Standards vs US GAAP
https://kpmg.com/us/en/articles/2023/assets-held-sale-discontinued-operations.html

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