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net assets available for benefits nonvested benefits participants retirement benefit plans scope of standard statement of changes in net assets available for benefits statement of net assets available for benefits trustees report vested benefits IAS 27, Consolidated and Separate Financial Statements associates, investments in case studies consolidated financial statements control disclosures financial statement examples and IAS 31, Interests in Joint Ventures and IFRIC 5, Rights to Interests Arising from Decommissioning Activities, Restoration and Environmental Funds and IFRIC 17, Distributions of Noncash Assets to Owners joint control joint ventures key terms defined loss of control noncontrolling interest ownership interests, changes in parent presentation and related-party transactions scope of standard separate financial statements special-purpose entities, consolidation of subsidiaries IAS 28, Investments in Associates acquisition of an associate background case studies consolidated financial statements disclosures equity method fair value financial statement examples impairment losses impairment testing investments held for sale joint ventures key terms defined other comprehensive income separate financial statements significant influence statement of changes in equity voting rights IAS 29, Financial Reporting in Hyperinflationary Economies amendments to case studies cessation of hyperinflation countries with highly inflationary economies current cost financial statements disclosures and functional currency general price index hyperinflation economy, characteristics of and IAS 21, The Effects of Changes in Foreign Exchange Rates and IFRIC 7, Applying the Restatement Approach under IAS 29, “Financial Reporting in Hyperinflationary Economies” nonmonetary items restatement of financial statements scope of standard severe hyperinflation statement of comprehensive income
terminology, consistency with other IFRS watch list countries IAS 30, Disclosures in the Financial Statements of Banks and Similar Financial Institutions IAS 31, Interests in Joint Ventures case studies consolidated financial statements contractual arrangement cost method disclosures entity held for sale equity method fair value financial statement examples and IAS 27, Consolidated and Separate Financial Statements and IAS 28, Investments in Associates and IAS 39, Financial Instruments: Recognition and Measurement and IFRS 9, Financial Instruments investors joint control defined jointly controlled assets jointly controlled entities jointly controlled operations key terms defined loss of joint control nonmonetary contributions proportionate consolidation scope of standard separate financial statements and SIC 13, Jointly Controlled Entities—Nonmonetary Contributions by Venturers transactions between venturer and joint venture IAS 32, Financial Instruments: Disclosure and Presentation. See also IAS 32, Financial Instruments: Presentation; IFRS 7, Financial Instruments: Disclosures IAS 32, Financial Instruments: Presentation amendments to background case studies classification of equity instruments compound instruments, split accounting for convertible bonds convertible debt instruments cooperative entities embedded derivatives equity instrument defined financial asset defined financial instrument defined financial liability defined financial statement examples foreign currency, rights, options, and warrants denominated in and IAS 39, Financial Instruments: Recognition and Measurement and IFRS 7, Financial Instruments: Disclosures and IFRS 9, Financial Instruments instruments settled in own equity interest, dividends, losses, and gain key terms defined liabilities and equity liquidation, obligations arising on nonfinancial items, contracts to buy or sell at future date offsetting financial assets and liabilities puttable financial instruments rights, options, and warrants scope exceptions scope of standard treasury shares IAS 33, Earnings Per Share adjustments antidilution background basic earnings per share case studies dilution disclosures
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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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c. At carrying value. d. In accorda
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IAS 8 specifies a hierarchy of crit
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fuel used, rig costs, delay rentals
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Chapter 38 FINANCIAL INSTRUMENTS: D
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other than credit risk (i.e., chang
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2. Whether fair values are determin
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d. Transfers into or out of Level 3
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equires that any derivative that do
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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 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 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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