i) Question Type The following are guidelines on the type of questions and their approximate weightings:

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1 Purpose Financial Accounting: Assets [FA2] Examination Blueprint 2014/2015 The Financial Accounting: Assets [FA2] examination has been constructed using an examination blueprint. The blueprint, also referred to as the test specifications, outlines the content areas covered on the examination and the weighting allotted to each content area. This document also lists the topics, the level of competence for each topic, and the related learning objectives. In addition, information is provided on the proportion of each question type presented in the examination (that is, multiple choice, quantitative problems, and so on). Use Students should use the examination blueprint to prepare for the course examination. The blueprint may not include all the topics listed in the course materials; however, students are still responsible for acquiring a broad-based knowledge of all topics not listed in the blueprint since these topics will be tested in assignment and review questions. The topics not listed in the blueprint will also provide students with a greater depth of understanding of the concepts. Examination Objectives The objectives of this 3-hour, comprehensive examination are to test CGA students on the prerequisite knowledge that is required for advancement into Financial Accounting: Liabilities & Equities [FA3], and to ensure that students have the broad-based knowledge in financial accounting needed to function properly in upper-level education and certification courses. Examination Guidelines for Questions i) Question Type The following are guidelines on the type of questions and their approximate weightings: Question Item Multiple-choice questions Short-answer questions, including quantitative problems. Description Questions may take a conceptual form or they may require analytical skills to derive the correct solution. Questions may focus on technical or analytical aspects of the material. Short, integrative cases may be used to pull together related issues. For example, a problem may require students to outline alternatives, supporting their recommendations with numerical analysis. Several questions will also be decision oriented, where the student is asked to take the role of creditor, investor, manager or auditor and make a recommendation or a decision based on analysis performed. Percentage 20%-30% 70%-80% ii) Question Content The following table is organized according to content area and provides information on topics, learning objectives, weighting, and levels of competence. Examination sessions: December 2014; March 2015; June 2015 Page 1 of 11

2 Table 1 Financial Accounting: Assets Content 1. Financial reporting and accounting concepts 8%-12% 1.1 Objectives of financial reporting 1.2 Ethics in accounting 1.3 Accounting assumptions and qualitative characteristics 1.4 Measurement methods and recognition criteria 1.5 Elements of financial statements 1.6 Professional judgment in financial reporting 1.7 Accounting information processing system Identify financial statement users and their needs, and describe how users needs are usually satisfied. Explain the importance of ethical behaviour in financial reporting. Evaluate whether accounting practices properly reflect the underlying assumptions and qualitative characteristics of accounting information. Evaluate whether measurement principles are correctly applied and apply recognition criteria. Determine whether an item meets the definition of a financial statement element. Exercise professional judgment in accounting situations. Perform all steps of the accounting cycle and describe the interrelationships between the financial statements. Levels 1, 2 Examination sessions: December 2014; March 2015; June 2015 Page 2 of 11

3 2. Statement of profit or loss and other comprehensive income and statement of financial position presentation 11%-14% 2.1 Nature of income 2.2 Presentation of the statement of profit or loss 2.3 Asset disposals and restructuring 2.4 Intraperiod tax allocation 2.5 Predictive ability of the statement of profit or loss and other comprehensive income: non-recurring items 2.6 Earnings per share 2.7 Statement of profit or loss and other comprehensive income 2.8 Statement of financial position presentation 2.9 Statement of changes in equity 2.10 Restatements 2.11 Disclosure 2.12 Goods and Services Tax and Harmonized Sales Tax Differentiate between economic income, accounting income, and comprehensive income. Prepare a statement of profit or loss in good form, including proper presentation of gains and losses, and discontinued operations. Describe the accounting treatment for asset disposals and restructuring including discontinued operations. Describe intraperiod tax allocation. Explain the possible impact of unusual (non-recurring) items on the quality of earnings. Calculate earnings per share and explain its relevance. Prepare a statement of profit or loss and other comprehensive income in good form, including proper presentation of net income and other comprehensive income. Prepare a statement of financial position in good form. Prepare a statement of changes in equity in good form. Describe the proper presentation for accounting changes and accounting errors. Describe the type of information typically disclosed in the notes to financial statements. Account for the Goods and Services Tax and Harmonized Sales Tax. Levels 1, 2 Examination sessions: December 2014; March 2015; June 2015 Page 3 of 11

4 3. Statement of cash flows and case analysis 8%-12% 3.1 Theoretical foundation 3.2 Classification of cash flows 3.3 Preparation of the statement of cash flows 3.4 Disclosure and special issues 3.5 Interpretation of the statement of cash flows 3.6 Predictive ability of the statement of cash flows: distinguishing profit and cash flow 3.8 The CGA case analysis approach Describe the need for, and the usefulness of, the statement of cash flows (SCF). Differentiate between operating, financing, and investing activities. Prepare a statement of cash flows using both the direct and indirect methods. Describe the manner of presentation and the required disclosure on the SCF. Analyze and interpret data provided in the SCF to evaluate the activities of a firm during a particular period. Describe the importance of the statement of cash flows in assessing the quality of company earnings. Apply the CGA case analysis approach. Examination sessions: December 2014; March 2015; June 2015 Page 4 of 11

5 4. Revenue and expense recognition 12%-16% 4.1 Revenue recognition concepts 4.2 Revenue recognition at delivery 4.3 Revenue recognition before and after delivery 4.4 Revenue recognition by effort expended 4.5 Expense recognition 4.6 Predictive ability of the statement of profit or loss: revenues and expenses 4.7 Ethical considerations Explain the theory underlying current recognition practices for various sources of revenue. Describe the criteria for recognizing revenue at time of delivery. Describe the criteria for recognizing revenue before and after delivery. Apply the percentage-of-completion method of accounting for revenue from long-term contracts. Apply the definitional approach to expense recognition to determine when costs should be capitalized and apply the expense recognition principle to determine when costs should be expensed. Provide examples that illustrate how reported earnings can be impacted by revenue and expense accounting and the impact this has on interpreting the reported earnings information. Decide whether the choice of a particular accounting policy or procedure is ethical under the circumstances. Examination sessions: December 2014; March 2015; June 2015 Page 5 of 11

6 5. Interest concepts of future and present value 5%-7% 5.1 Time value of money 5.2 Basic interest concepts 5.3 Computing present and future values 5.4 Periodic payments required for present value and future value problems 5.5 Computing the term Describe the concept of the time value of money. Describe the concept of interest including simple and compound interest, and effective and nominal rates of interest. Compute the present and future value of a single payment, and an annuity (ordinary and due). Compute the required periodic payments for a given present value or future value. Compute the number of periodic payments and the final payment required to eliminate a debt. Examination sessions: December 2014; March 2015; June 2015 Page 6 of 11

7 6. Current financial assets and current financial liabilities 5%-9% 6.1 Nature of current financial assets 6.2 Cash 6.3 Receivables 6.4 Accounting for bad debt expense 6.5 Notes receivable 6.6 Current financial liabilities 6.8 Managing working capital Describe the nature of current financial assets. Define and account for cash, and explain the features of an effective internal control system. Describe the nature of accounts receivable, and apply IFRS in accounting for these assets. Calculate bad debt expense and explain its effect on financial statements. Describe the nature of notes receivable and apply IFRS in accounting for this asset. Describe the nature of current financial liabilities, and apply IFRS in accounting for these liabilities. Describe factors to be considered in managing working capital. Examination sessions: December 2014; March 2015; June 2015 Page 7 of 11

8 7. Inventory measurement, inventory valuation, and cost of goods sold 9%-12% 7.1 Nature of inventory 7.2 Perpetual and periodic inventory systems 7.3 Inventory cost formulas 7.5 Valuation at lower of cost or net realizable value 7.6 Effect of inventory errors 7.7 Inventory estimation methods 7.8 Internal controls for inventory Describe the nature of inventory and what goods and costs are included in this asset category. Compare and contrast the perpetual inventory system to the periodic inventory system. Contrast specific identification with the FIFO and average cost formulas and determine when each is appropriate. Explain the lower of cost or net realizable value requirement. Explain the effect of inventory errors on the financial statements. Describe the gross margin method and retail inventory method for inventory value estimation, identifying the circumstances where each is appropriate. Describe the features of an effective internal control system for inventory. Examination sessions: December 2014; March 2015; June 2015 Page 8 of 11

9 8. Investments and financial instruments 8%-14% 8.1 Introduction to financial instruments 8.2 Classification of investments 8.3 Accounting for investments at amortized cost (held-to-maturity) 8.4 Accounting for investments at fair value through profit and loss (held-for-trading) 8.5 Accounting for investments at fair value through other comprehensive income (available-for-sale) 8.6 The equity method 8.7 Reclassification of investments 8.8 Presentation and disclosure issues 8.9 Diversifying investments in financial instruments Define financial instruments and provide examples of financial instruments that are assets. Contrast the accounting treatment for the different classifications of investments. Describe and account for investments at amortized cost (held-to-maturity HTM). Describe and account for investments at fair value through profit and loss (held-fortrading HFT). Describe and account for investments at fair value through other comprehensive income (available-for-sale AFS). Describe and account for investments using the equity method. Describe and account for the reclassification of investments. Describe presentation and disclosure issues. Describe factors to be considered in recommending an appropriate mix of equity, debt, and derivative instruments to be held as investments. Levels 1, 3 Examination sessions: December 2014; March 2015; June 2015 Page 9 of 11

10 9. Property, plant and equipment (PPE) and intangible assets 8%-14% 9.1 Definition and valuation of PPE and intangible assets 9.2 Determining the cost of PPE 9.3 Intangible assets 9.4 Disposal of PPE 9.5 Goodwill 9.6 Disclosure and cash flow reporting 9.7 Revaluation of PPE and intangible assets Define PPE and intangible assets, and explain how they are valued. Determine the cost of PPE, including expenditures subsequent to acquisition. Describe and account for the different types of intangible assets. Describe and account for the disposal and retirement of PPE. Describe and account for goodwill. Describe the disclosure requirements for PPE and intangible assets. Apply the revaluation model of accounting for PPE and intangible assets. Levels 1, 2 Examination sessions: December 2014; March 2015; June 2015 Page 10 of 11

11 10. Property, plant and equipment (PPE) and intangible assets: Depreciation, amortization, and impairment 6%-10% 10.1 Nature of depreciation and amortization 10.2 Depreciation and amortization methods 10.4 Additional depreciation or amortization issues 10.5 Impairment of PPE and intangible assets 10.6 Disclosure requirements 10.7 Capital cost allowance 10.8 Depreciation of revalued assets 10.9 Ethical considerations Describe the nature of depreciation and amortization. Describe the primary methods of depreciation and amortization, and calculate depreciation and amortization expense using these methods. Illustrate the use of fractional-year depreciation or amortization. Illustrate accounting for impairments of PPE and intangible assets. Describe disclosure requirements for depreciation and amortization. Describe the relationship between depreciation or amortization and capital cost allowance (CCA). Describe and account for the depreciation or amortization of revalued assets. Justify the reasonableness of accounting practices. Levels 2, 3 Examination sessions: December 2014; March 2015; June 2015 Page 11 of 11