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2. b 3. b 4. a 5. a 6. b 7. b 8. b 9. c 10. b 11. d 12. b 13. c 14. a 15. c 16. b 1. b 2. c 3. b 4. c 5. a 1. b 2. d 3. d 4. b 5. d 1. a 2. a 3. b 4. b 5. a 6. d 7. b 1. c 2. b 3. c 4. b 5. a 6. c 7. d 8. d 9. a 10. a 11. a 12. b 13. a 14. a 15. d 16. b Chapter 28 Chapter 29 Chapter 30 Chapter 31 Chapter 32
1. d 2. c 3. c 4. b 5. d 6. a 7. b 8. a 9. c 10. b 1. c 2. d 3. a 4. b 5. c 6. c 7. c 8. d 9. c ➀ 10. b ➁ 11. d ➂ 12. c 13. c 14. a ➃ 15. c ➄ 16. d ➅ 17. d 18. b ➆ 19. c ➇ ➀ ($6 million × 95% × 1/3) ➁ ($6 million × 94% × 2/3 – $1.90 million) ➂ ($6 million × 95% – $3.78 million) ➃ (100 × 1,000 × 90% × $10 × 1/3) ➄ [20 × 500 × 80% × ($21 – $15)] ➅ [20 × 500 × 80% × ($19 – $15)] that is, $32,000 Chapter 33 ➆ At December 31, 20X4, 30% of $12 million divided by three years = $1.2 million to statement of comprehensive income as the tax effect of the cumulative remuneration expense exceeds the tax benefit ($5 million @ 30% compared with $4 million @ 30%). ➇ A portion of the tax benefit is recognized in equity as the tax benefit of $21 million × 1/3 × 30% ($2.1 million), exceeds the tax effect of the accumulated remuneration expense $15 million × 1/3 × 30% ($1.5 million). 1. d 2. d 3. a 4. d 5. a 6. a 7. d 8. c 9. b 10. b 11. b 12. d 13. a 14. d 15. d 16. b 17. b 18. d* Chapter 34
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Title Page Copyright Page Foreword
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DIVIDENDS DISCLOSURE: KEY ELEMENTS
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CONSOLIDATED FINANCIAL STATEMENTS A
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ELABORATION AND INTERPRETATION OF T
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MULTIPLE-CHOICE QUESTIONS Chapter 3
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FOREWORD TO THE FIRST EDITION by th
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PREFACE Achieving consistency in fi
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ABOUT THE AUTHORS Abbas Ali Mirza i
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ecognition and use of IFRS. A major
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SIC 12, Consolidation—Special-Pur
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The IFRS Advisory Council shall com
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Chapter 2 IASB FRAMEWORK INTRODUCTI
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ELEMENTS OF FINANCIAL STATEMENTS Th
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Chapter 3 PRESENTATION OF FINANCIAL
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XYZ Inc. is a manufacturer of telev
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Statement of Comprehensive Income I
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Available-for-sale financial assets
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Notes The notes should disclose the
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equired by the counterparty to sett
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The costs of purchase constitute al
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Based on the FIFO cost flow assumpt
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• Accounting policies adopted for
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f. Choices a and c. g. Choices a, b
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1. They should be “short term”
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2. Proceeds from disposal of debt i
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1. Cash collections from customers
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3. Placements and withdrawals of de
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Additional Information Retained ear
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c. Indirect Method Cash paid to sup
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Notes to the Consolidated Cash Flow
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Chapter 6 ACCOUNTING POLICIES, CHAN
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een applied. The impact of the new
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• For current and each prior peri
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An entity should disclose amounts a
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Notes to the Financial Statements (
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d. The entity would find the determ
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Given these facts, what is the “a
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existed at the end of the reporting
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Chapter 8 CONSTRUCTION CONTRACTS (I
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2. Costs that are attributable to c
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4. Revenue, costs, and profits to b
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Facts 34 Construction contracts Mil
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ecognized as revenue. Therefore, $7
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The Standard Applies to the Account
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ACCOUNTING FOR DEFERRED TAX To acco
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TEMPORARY DIFFERENCES NOT RECOGNIZE
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Required Show the impact on the fin
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Solution Zero. There is no temporar
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Solution Facts CASE STUDY 13 East i
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Since 20X4, Frontier has incurred s
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calculated that the liability and e
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Chapter 10 PROPERTY, PLANT, AND EQU
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Required 2. Initial delivery and ha
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disposal. Any gain on disposal is t
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financing liability and the financi
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Chapter 11 LEASES (IAS 17) BACKGROU
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the fair value of the asset. During
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ate in the lease is 9.3% (approxima
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Discuss how this transaction should
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The basic lease accounting model ha
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6. The lease of land and buildings
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Chapter 12 REVENUE (IAS 18) BACKGRO
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• Do not involve the same counter
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• The costs incurred and the cost
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Up to March 31, 20X9, the value of
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e that the real estate developer as
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Turnover is recognized when the ris
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Chapter 13 EMPLOYEE BENEFITS (IAS 1
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The accounting for a defined contri
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The amount of the expense or income
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• Fair value of plan assets: $50
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8. Past service cost: $115 million.
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Pensions Employee costs Employee co
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9. An entity operates a defined ben
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For quite some time, it has been un
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Solution Citimart Inc. would need t
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The Standard does not favor either
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Chapter 15 THE EFFECTS OF CHANGES I
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Facts An entity purchases equipment
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The exchange difference is calculat
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disposal was recognized. The same a
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Difference 7 Total 89.5 (say 90m) T
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ate on December 31, 20X9 is $1 =
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On December 1, 2009, Compassionate
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1. In order to capitalize the borro
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Chapter 17 RELATED-PARTY DISCLOSURE
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Solution Yes, under IAS 24 (revised
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warrant disclosure because it may n
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Facts Zeeba Inc. is part of a major
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The Used Equipment Co (Pty) Limited
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Key management personnel are define
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Chapter 18 ACCOUNTING AND REPORTING
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Total accounts payable 41,000 Accru
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Employee contributions 50,000 Total
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Chapter 19 CONSOLIDATED AND SEPARAT
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2. Noncontrolling interests in the
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When an entity loses control of a s
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Initially, the fair value of the as
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c. The ultimate parent entity produ
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EQUITY METHOD Under the equity meth
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What is the relationship between Co
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What amount should be shown in A’
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(f) (g) (h) December 31 60 73 Assoc
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. The carrying value of the associa
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PRACTICAL INSIGHT Turkiye Petrol Ra
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Cash 5,150 Share capital (300/100
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Chapter 22 INTERESTS IN JOINT VENTU
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Facts Three entities decide to form
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current period (IFRIC 1.5). Thus in
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Methods of valuation techniques use
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of impairment exists, the carrying
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Chapter 23 FINANCIAL INSTRUMENTS: P
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Contracts for contingent considerat
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has the unconditional right to refu
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principal and interest cash flows)
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On January 15, 20X5, Entity A issue
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instruments. A financial instrument
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The major components of market risk
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Credit risk is the risk that a cust
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1. Are there any circumstances when
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• A purchased put option to sell
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• Sales that are so close to matu
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eceived nothing on entering into th
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price plus interest. In this case,
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CASE STUDY 4 This case illustrates
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financial liabilities measured at f
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Example If Entity A receives a cash
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If the reporting period does not co
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cash flow pattern, credit quality,
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of the cash flows. 2. Entity A purc
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PRACTICAL INSIGHT IAS 39 does not p
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This case illustrates how to accoun
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This case illustrates how to accoun
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This case illustrates when to separ
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change in fair value of the derivat
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A cash flow hedge is a hedge of the
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This case illustrates the accountin
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PRACTICAL INSIGHT It is often possi
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Derivatives are measured on the bal
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15. Which of the following is not o
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• As amounts attributable to the
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The theoretical ex-rights fair valu
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Diluted earnings per share Adjusted
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Earnings: diluted earnings per shar
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• Basic and diluted earnings per
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The numbers of shares included in t
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Chapter 26 INTERIM FINANCIAL REPORT
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should be applied and previously re
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Consolidated balance sheet at June
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1. Under IAS 34, interim financial
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was $5 million. It was planned at t
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development costs. An impairment lo
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The fair value less cost to sell of
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can be reasonably allocated. 3. Thi
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PRACTICAL INSIGHT Austrian Airlines
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Impairments charge in the year Ther
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. Loss on goodwill. c. Loss on a bu
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Recognition of Provisions Those lia
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An onerous contract is an agreement
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In order to recognize a provision (
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A Singapore-based shipping company
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c. Because Amazon Inc. can avoid th
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In order to meet the definition of
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Examples of activities that may fai
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• These costs can be measured rel
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Entities are to apply the provision
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Future changes in expected cash flo
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Chapter 30 INVESTMENT PROPERTY (IAS
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If, on acquisition, it is not possi
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pool in which the fair value model
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Chapter 31 AGRICULTURE (IAS 41) BAC
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Required Value of biological asset
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2-year-old animal at November 1, 20
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Notes to Group Financial Statements
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d. There is no requirement in the S
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Financial statements presented by a
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Solution In order to prepare the op
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• Identification of assets acquir
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2. No journal entry is required as
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IFRS 1 discusses exemptions under t
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Solution In valuing the shares of V
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• Unilever was an early adopter (
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Chapter 33 SHARE-BASED PAYMENTS (IF
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date of the cancelation is deducted
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party, to satisfy its obligations t
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Playful has ordered an amount of in
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May 31, 20X8 August 1, 20X8 5,000
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Should the plans be valued at fair
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4. An entity issues fully paid shar
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Chapter 34 BUSINESS COMBINATIONS (I
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Future losses or other costs that a
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93 Interest (13) Profit before tax
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This choice of method of accounting
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The error in 20X9, regarding the om
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This makes a total NCI of $554m. c)
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$m J retained earnings 360 Share of
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Intercompany transactions and the r
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11. The “excess of the acquirer
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Chapter 35 INSURANCE CONTRACTS (IFR
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Required Discuss how the reinsuranc
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Guaranteed residual values Guarante
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Chapter 36 NONCURRENT ASSETS HELD F
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SUNDRY POINTS Exchanges of noncurre
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Before classification of the item a
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Noncurrent assets Current assets No
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Page 416 and 417: IAS 8 specifies a hierarchy of crit
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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
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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 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
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