Your document headline

More documents

Recommendations

Info

Key management personnel are defined as those persons having authority and responsibility for planning, directing and controlling the activities of HSBC Holdings, being the Directors and Group Managing Directors of HSBC Holdings. Compensation of Key Management Personnel PRACTICAL INSIGHT IAS 24 (revised 2009), paragraph 23, now clarifies that it is only permissible to make a disclosure that related-party transactions were made at an arm’s length (i.e. on terms that are equivalent to those with “third parties”) if such terms can be substantiated. In practice, it was noted that there was a tendency on the part of entities to make disclosures in their financial statements to the effect that “related party transactions are at arm’s length” or were made on “normal terms.” With such an explicit clarification within IAS 24 it is now incumbent upon the entity (and also auditors of the entity) to ensure that such disclosures would only be made if they can be substantiated. Examples of how this requirement of the Standard could present challenges in practice are 1. Credit terms offered to related parties vis-á-vis third parties. If an entity offers 120 days’ credit terms to sales made to a related party when it normally offers 60 days’ credit terms to others it would be difficult for the entity to justify a disclosure to the effect in the financial statements of the entity that “related-party transactions are made at arm’s length.” 2. The pricing of related-party transactions is often a sensitive subject, particularly if pricing is not at arm’s length. This area can be a difficult one that is open to judgment. For example, an entity may sell 60% of its production to a related party at unit prices substantially lower than what it charges other third parties for the balance 40% production. None of the third parties accounted for more than 5% of the sales. It may be very difficult to determine whether the volume discount was at a market rate. It can be even more difficult to determine arm’s length if there are no sales to third parties. In such cases, the Standard states that a transaction can be described as at arm’s length only if it can be substantiated. Thus it is the responsibility of the management to prove the market value of transactions if it wishes to describe transactions as “at market value.” 1. Which of the following is not a related party as envisaged by IAS 24? a. A director of the entity. b. The parent company of the entity. c. A shareholder of the entity that holds 1% stake in the entity. d. The son of the chief executive officer of the entity. MULTIPLE-CHOICE QUESTIONS 2. IAS 24 requires disclosure of compensation of key management personnel. Which of the following would not be considered “compensation” for this purpose? a. Short-term benefits. b. Share-based payments. c. Termination benefits. d. Reimbursement of out-of-pocket expenses. 3. To enable financial statement users to form a view about the effects of the related-party transactions, IAS 24 requires certain disclosures to be made. Which of the following disclosures is not a mandated disclosure under IAS 24? a. Relationships between parents and subsidiaries irrespective of whether there have been transactions between those related parties. b. Names of all the “associates” that an entity has dealt with during the year. c. Name of the entity’s parent and, if different, the ultimate controlling party. d. If neither the entity’s parent nor its ultimate controlling entity produces financial statements available for public use, then the name of the next most senior parent that does so. 4. If there have been related-party transactions during the year, an entity needs to make, at a minimum, certain disclosures. Which of the following is not a required minimum disclosure under IAS 24? a. The amount of the related-party transactions. b. The amount of the outstanding related-party balances and their terms and conditions along with details of guarantees given and received. c. The amounts of similar transactions with unrelated (third) parties to establish that comparable related-party transactions have been entered at arm’s length. d. Provisions for doubtful debts related to the amount of outstanding related-party balances and expense recognized during the year in respect of bad or doubtful debts due from related parties. 5. The minimum disclosures prescribed under IAS 24 are to be made separately for certain categories of related parties. Which of the following is not among the list of categories specified under the Standard for the purposes of separate disclosure?
a. Entities with joint control or significant influence over the entity. b. The parent company of the entity. c. An entity that has a common director with the entity. d. Joint ventures in which the entity is a venturer.
Page 4 and 5:
Title Page Copyright Page Foreword
Page 6 and 7:
DIVIDENDS DISCLOSURE: KEY ELEMENTS
Page 8 and 9:
CONSOLIDATED FINANCIAL STATEMENTS A
Page 10 and 11:
ELABORATION AND INTERPRETATION OF T
Page 12 and 13:
MULTIPLE-CHOICE QUESTIONS Chapter 3
Page 14 and 15:
FOREWORD TO THE FIRST EDITION by th
Page 16 and 17:
PREFACE Achieving consistency in fi
Page 18 and 19:
ABOUT THE AUTHORS Abbas Ali Mirza i
Page 20 and 21:
ecognition and use of IFRS. A major
Page 22 and 23:
SIC 12, Consolidation—Special-Pur
Page 24 and 25:
The IFRS Advisory Council shall com
Page 26 and 27:
Chapter 2 IASB FRAMEWORK INTRODUCTI
Page 28 and 29:
ELEMENTS OF FINANCIAL STATEMENTS Th
Page 30 and 31:
Chapter 3 PRESENTATION OF FINANCIAL
Page 32 and 33:
XYZ Inc. is a manufacturer of telev
Page 34 and 35:
Statement of Comprehensive Income I
Page 36 and 37:
Available-for-sale financial assets
Page 38 and 39:
Notes The notes should disclose the
Page 40 and 41:
equired by the counterparty to sett
Page 42 and 43:
The costs of purchase constitute al
Page 44 and 45:
Based on the FIFO cost flow assumpt
Page 46 and 47:
• Accounting policies adopted for
Page 48 and 49:
f. Choices a and c. g. Choices a, b
Page 50 and 51:
1. They should be “short term”
Page 52 and 53:
2. Proceeds from disposal of debt i
Page 54 and 55:
1. Cash collections from customers
Page 56 and 57:
3. Placements and withdrawals of de
Page 58 and 59:
Additional Information Retained ear
Page 60 and 61:
c. Indirect Method Cash paid to sup
Page 62 and 63:
Notes to the Consolidated Cash Flow
Page 64 and 65:
Chapter 6 ACCOUNTING POLICIES, CHAN
Page 66 and 67:
een applied. The impact of the new
Page 68 and 69:
• For current and each prior peri
Page 70 and 71:
An entity should disclose amounts a
Page 72 and 73:
Notes to the Financial Statements (
Page 74 and 75:
d. The entity would find the determ
Page 76 and 77:
Given these facts, what is the “a
Page 78 and 79:
existed at the end of the reporting
Page 80 and 81:
Chapter 8 CONSTRUCTION CONTRACTS (I
Page 82 and 83:
2. Costs that are attributable to c
Page 84 and 85:
4. Revenue, costs, and profits to b
Page 86 and 87:
Facts 34 Construction contracts Mil
Page 88 and 89:
ecognized as revenue. Therefore, $7
Page 90 and 91:
The Standard Applies to the Account
Page 92 and 93:
ACCOUNTING FOR DEFERRED TAX To acco
Page 94 and 95:
TEMPORARY DIFFERENCES NOT RECOGNIZE
Page 96 and 97:
Required Show the impact on the fin
Page 98 and 99:
Solution Zero. There is no temporar
Page 100 and 101:
Solution Facts CASE STUDY 13 East i
Page 102 and 103:
Since 20X4, Frontier has incurred s
Page 104 and 105:
calculated that the liability and e
Page 106 and 107:
Chapter 10 PROPERTY, PLANT, AND EQU
Page 108 and 109:
Required 2. Initial delivery and ha
Page 110 and 111:
disposal. Any gain on disposal is t
Page 112 and 113:
financing liability and the financi
Page 114 and 115:
Chapter 11 LEASES (IAS 17) BACKGROU
Page 116 and 117:
the fair value of the asset. During
Page 118 and 119:
ate in the lease is 9.3% (approxima
Page 120 and 121:
Discuss how this transaction should
Page 122 and 123:
The basic lease accounting model ha
Page 124 and 125:
6. The lease of land and buildings
Page 126 and 127:
Chapter 12 REVENUE (IAS 18) BACKGRO
Page 128 and 129:
• Do not involve the same counter
Page 130 and 131:
• The costs incurred and the cost
Page 132 and 133:
Up to March 31, 20X9, the value of
Page 134 and 135: e that the real estate developer as
Page 136 and 137: Turnover is recognized when the ris
Page 138 and 139: Chapter 13 EMPLOYEE BENEFITS (IAS 1
Page 140 and 141: The accounting for a defined contri
Page 142 and 143: The amount of the expense or income
Page 144 and 145: • Fair value of plan assets: $50
Page 146 and 147: 8. Past service cost: $115 million.
Page 148 and 149: Pensions Employee costs Employee co
Page 150 and 151: 9. An entity operates a defined ben
Page 152 and 153: For quite some time, it has been un
Page 154 and 155: Solution Citimart Inc. would need t
Page 156 and 157: The Standard does not favor either
Page 158 and 159: Chapter 15 THE EFFECTS OF CHANGES I
Page 160 and 161: Facts An entity purchases equipment
Page 162 and 163: The exchange difference is calculat
Page 164 and 165: disposal was recognized. The same a
Page 166 and 167: Difference 7 Total 89.5 (say 90m) T
Page 168 and 169: ate on December 31, 20X9 is $1 =
Page 170 and 171: On December 1, 2009, Compassionate
Page 172 and 173: 1. In order to capitalize the borro
Page 174 and 175: Chapter 17 RELATED-PARTY DISCLOSURE
Page 176 and 177: Solution Yes, under IAS 24 (revised
Page 178 and 179: warrant disclosure because it may n
Page 180 and 181: Facts Zeeba Inc. is part of a major
Page 182 and 183: The Used Equipment Co (Pty) Limited
Page 186 and 187: Chapter 18 ACCOUNTING AND REPORTING
Page 188 and 189: Total accounts payable 41,000 Accru
Page 190 and 191: Employee contributions 50,000 Total
Page 192 and 193: Chapter 19 CONSOLIDATED AND SEPARAT
Page 194 and 195: 2. Noncontrolling interests in the
Page 196 and 197: When an entity loses control of a s
Page 198 and 199: Initially, the fair value of the as
Page 200 and 201: c. The ultimate parent entity produ
Page 202 and 203: EQUITY METHOD Under the equity meth
Page 204 and 205: What is the relationship between Co
Page 206 and 207: What amount should be shown in A’
Page 208 and 209: (f) (g) (h) December 31 60 73 Assoc
Page 210 and 211: . The carrying value of the associa
Page 212 and 213: PRACTICAL INSIGHT Turkiye Petrol Ra
Page 214 and 215: Cash 5,150 Share capital (300/100
Page 216 and 217: Chapter 22 INTERESTS IN JOINT VENTU
Page 218 and 219: Facts Three entities decide to form
Page 220 and 221: current period (IFRIC 1.5). Thus in
Page 222 and 223: Methods of valuation techniques use
Page 224 and 225: of impairment exists, the carrying
Page 226 and 227: Chapter 23 FINANCIAL INSTRUMENTS: P
Page 228 and 229: Contracts for contingent considerat
Page 230 and 231: has the unconditional right to refu
Page 232 and 233: principal and interest cash flows)
Page 234 and 235:
On January 15, 20X5, Entity A issue
Page 236 and 237:
instruments. A financial instrument
Page 238 and 239:
The major components of market risk
Page 240 and 241:
Credit risk is the risk that a cust
Page 242 and 243:
1. Are there any circumstances when
Page 244 and 245:
• A purchased put option to sell
Page 246 and 247:
• Sales that are so close to matu
Page 248 and 249:
eceived nothing on entering into th
Page 250 and 251:
price plus interest. In this case,
Page 252 and 253:
CASE STUDY 4 This case illustrates
Page 254 and 255:
financial liabilities measured at f
Page 256 and 257:
Example If Entity A receives a cash
Page 258 and 259:
If the reporting period does not co
Page 260 and 261:
cash flow pattern, credit quality,
Page 262 and 263:
of the cash flows. 2. Entity A purc
Page 264 and 265:
PRACTICAL INSIGHT IAS 39 does not p
Page 266 and 267:
This case illustrates how to accoun
Page 268 and 269:
This case illustrates how to accoun
Page 270 and 271:
This case illustrates when to separ
Page 272 and 273:
change in fair value of the derivat
Page 274 and 275:
A cash flow hedge is a hedge of the
Page 276 and 277:
This case illustrates the accountin
Page 278 and 279:
PRACTICAL INSIGHT It is often possi
Page 280 and 281:
Derivatives are measured on the bal
Page 282 and 283:
15. Which of the following is not o
Page 284 and 285:
• As amounts attributable to the
Page 286 and 287:
The theoretical ex-rights fair valu
Page 288 and 289:
Diluted earnings per share Adjusted
Page 290 and 291:
Earnings: diluted earnings per shar
Page 292 and 293:
• Basic and diluted earnings per
Page 294 and 295:
The numbers of shares included in t
Page 296 and 297:
Chapter 26 INTERIM FINANCIAL REPORT
Page 298 and 299:
should be applied and previously re
Page 300 and 301:
Consolidated balance sheet at June
Page 302 and 303:
1. Under IAS 34, interim financial
Page 304 and 305:
was $5 million. It was planned at t
Page 306 and 307:
development costs. An impairment lo
Page 308 and 309:
The fair value less cost to sell of
Page 310 and 311:
can be reasonably allocated. 3. Thi
Page 312 and 313:
PRACTICAL INSIGHT Austrian Airlines
Page 314 and 315:
Impairments charge in the year Ther
Page 316 and 317:
. Loss on goodwill. c. Loss on a bu
Page 318 and 319:
Recognition of Provisions Those lia
Page 320 and 321:
An onerous contract is an agreement
Page 322 and 323:
In order to recognize a provision (
Page 324 and 325:
A Singapore-based shipping company
Page 326 and 327:
c. Because Amazon Inc. can avoid th
Page 328 and 329:
In order to meet the definition of
Page 330 and 331:
Examples of activities that may fai
Page 332 and 333:
• These costs can be measured rel
Page 334 and 335:
Entities are to apply the provision
Page 336 and 337:
Future changes in expected cash flo
Page 338 and 339:
Chapter 30 INVESTMENT PROPERTY (IAS
Page 340 and 341:
If, on acquisition, it is not possi
Page 342 and 343:
pool in which the fair value model
Page 344 and 345:
Chapter 31 AGRICULTURE (IAS 41) BAC
Page 346 and 347:
Required Value of biological asset
Page 348 and 349:
2-year-old animal at November 1, 20
Page 350 and 351:
Notes to Group Financial Statements
Page 352 and 353:
d. There is no requirement in the S
Page 354 and 355:
Financial statements presented by a
Page 356 and 357:
Solution In order to prepare the op
Page 358 and 359:
• Identification of assets acquir
Page 360 and 361:
2. No journal entry is required as
Page 362 and 363:
IFRS 1 discusses exemptions under t
Page 364 and 365:
Solution In valuing the shares of V
Page 366 and 367:
• Unilever was an early adopter (
Page 368 and 369:
Chapter 33 SHARE-BASED PAYMENTS (IF
Page 370 and 371:
date of the cancelation is deducted
Page 372 and 373:
party, to satisfy its obligations t
Page 374 and 375:
Playful has ordered an amount of in
Page 376 and 377:
May 31, 20X8 August 1, 20X8 5,000
Page 378 and 379:
Should the plans be valued at fair
Page 380 and 381:
4. An entity issues fully paid shar
Page 382 and 383:
Chapter 34 BUSINESS COMBINATIONS (I
Page 384 and 385:
Future losses or other costs that a
Page 386 and 387:
93 Interest (13) Profit before tax
Page 388 and 389:
This choice of method of accounting
Page 390 and 391:
The error in 20X9, regarding the om
Page 392 and 393:
This makes a total NCI of $554m. c)
Page 394 and 395:
$m J retained earnings 360 Share of
Page 396 and 397:
Intercompany transactions and the r
Page 398 and 399:
11. The “excess of the acquirer
Page 400 and 401:
Chapter 35 INSURANCE CONTRACTS (IFR
Page 402 and 403:
Required Discuss how the reinsuranc
Page 404 and 405:
Guaranteed residual values Guarante
Page 406 and 407:
Chapter 36 NONCURRENT ASSETS HELD F
Page 408 and 409:
SUNDRY POINTS Exchanges of noncurre
Page 410 and 411:
Before classification of the item a
Page 412 and 413:
Noncurrent assets Current assets No
Page 414 and 415:
c. At carrying value. d. In accorda
Page 416 and 417:
IAS 8 specifies a hierarchy of crit
Page 418 and 419:
fuel used, rig costs, delay rentals
Page 420 and 421:
Chapter 38 FINANCIAL INSTRUMENTS: D
Page 422 and 423:
other than credit risk (i.e., chang
Page 424 and 425:
2. Whether fair values are determin
Page 426 and 427:
d. Transfers into or out of Level 3
Page 428 and 429:
equires that any derivative that do
Page 430 and 431:
The amount recognized in the income
Page 432 and 433:
a. To provide presentation and disc
Page 434 and 435:
amongst the top management personne
Page 436 and 437:
Recreational clubs $ 50 million vs
Page 438 and 439:
Chapter 40 FINANCIAL INSTRUMENTS (I
Page 440 and 441:
Discussion The entity’s objective
Page 442 and 443:
The following are indicators of whe
Page 444 and 445:
However as IFRS 9 eliminates the av
Page 446 and 447:
Facts CASE STUDY 6 Hant has an equi
Page 448 and 449:
Chapter 41 IFRS FOR SMEs INTRODUCTI
Page 450 and 451:
the IFRS for SMEs, if an entity can
Page 452 and 453:
2. The subsidiary’s business acti
Page 454 and 455:
All grants are measured at the fair
Page 456 and 457:
The present value of the fine will
Page 458 and 459:
3. If SMEs choose to follow the Sta
Page 460 and 461:
1. b 2. a 3. a 4. c 5. a 1. a 2. c*
Page 462 and 463:
1. b 2. a 3. b 1. d 2. b 3. c 4. c
Page 464 and 465:
2. b 3. b 4. a 5. a 6. b 7. b 8. b
Page 466 and 467:
18. d* 19. b 20. b 21. a 22. b 23.
Page 468 and 469:
INDEX Abandonment Accounting compou
Page 470 and 471:
Control business combinations conso
Page 472 and 473:
interests. See IAS 32, Financial In
Page 474 and 475:
events after the reporting period G
Page 476 and 477:
gross basis versus net basis indire
Page 478 and 479:
IAS 18, Revenue amendment to backgr
Page 480 and 481:
net assets available for benefits n
Page 482 and 483:
fair value per share financial stat
Page 484 and 485:
initial measurement interest income
Page 486 and 487:
scope of share-based payment transa
Page 488 and 489:
credit risk effective date fair val
Page 490 and 491:
property, plant, and equipment Impa
Page 492 and 493:
Market risk Materiality Measurement
Page 494 and 495:
Recoverable amount, impairment loss
Page 496 and 497:
usiness combinations financial inst
show all

Your document headline

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?