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allocation and classification

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AA Exams › allocation and classification

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by Kim Smith.
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  • August 14, 2021 at 5:16 am #631512
    aarti2407
    Member
    • Topics: 36
    • Replies: 8
    • ☆

    Recalculate the split between current and non-current liabilities: allocation, classification, and presentation.

    Inspect the loan agreement for restrictive covenants (terms) and determine the effect of any loan covenant breaches: allocation, classification, presentation.

    dear tutor, can you explain how allocation and classification are applied in the two scenarios?

    August 14, 2021 at 8:12 am #631523
    Kim Smith
    Keymaster
    • Topics: 100
    • Replies: 6787
    • ☆☆☆☆☆

    I will answer your two posts of today but you MUST comply with the Forum Rules and with the emails from John Moffat yesterday.

    It would help you to help yourself greatly if you refer to the notes:

    Classification – means in proper (ledger) a/cs – transactions and balances
    Presentation – means in FS – transactions and balances
    allocation – is an aspect of “Accuracy, valuation and allocation” – relates only to balances. It’s a particular aspect of valuation – e.g. deprecation of plant and equipment (a factor overhead) may be allocated to inventory (IAS 2).

    I don’t think allocation has anything to do with either scenario. And I think presentation (as current/non-current) is correct rather than classification. The current/non-current portions of liabilities are presented separately in the FS (IAS 1) – but they are not split between separate accounts in the ledger.

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