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property, plant, and equipment Impairment testing associates, investments in insurance contracts mineral resources, exploration for and evaluation of Incentive payments, construction contracts Income defined as element of financial statements offsetting Income statement financial instrument disclosures financial statement presentation small and medium-sized entities (SMEs) Income taxes. See also IAS 12, Income Taxes small and medium-sized entities (SMEs) India Indirect method, statement of cash flows Insurance contracts and first-time adopters of IFRS Intangible assets. See also IAS 38, Intangible Assets agricultural in business combinations combined or contained with tangible assets first-time adopters of IFRS impairment mineral resources, exploration for and evaluation of share-based payments for small and medium-sized entities (SMEs) Interest and financial instruments revenue Interest cost borrowing costs. See IAS 23, Borrowing Costs employee benefit plans Interim reporting. See also IAS 34, Interim Financial Reporting first-time adopters of IFRS operating segments Internally generated intangible assets International Accounting Standards (IAS). See IAS (International Accounting Standards) International Accounting Standards Board (IASB) background “Conceptual Framework for Financial Reporting—The Reporting Entity,” Exposure Draft Framework for the Preparation and Presentation of Financial Statements IASC compared IFRS and US GAAP convergence project International Financial Reporting Interpretations Committee (IFRIC). See IFRIC (IFRS Interpretations Committee ) joint project with FASB on financial statement framework joint project with FASB on leases joint project with FASB on revenue Monitoring Committee responsibilities of standards, process for setting structure and governance International Accounting Standards Committee (IASC) accounting profession, relationship with Board Core Standards Work Program Framework for the Preparation and Presentation of Financial Statements improvements and comparability project initial standards International Accounting Standards (IAS). See IAS (International Accounting Standards) objectives of Standing Interpretations Committee (SIC). See SIC (Standing Interpretations Committee) International Accounting Standards Committee Foundation International Federation of Accountants (IFAC) International Financial Reporting Interpretations Committee (IFRIC). See IFRIC (IFRS Interpretations Committee) International Financial Reporting Standards (IFRS). See also under individual IFRS
about adoption of exceptions to global recognition of first-time adopters of. See IFRS 1, First-Time Adoption of International Financial Reporting Standards global acceptance of IFRS issued by IASB to December 31, 2009, list of need for common standards and US Financial Accounting Standards Board (FASB) and US GAAP International Organization of Securities Commissions (IOSCO) Inventories. See also IAS 2, Inventories share-based payments for small and medium-sized entities (SMEs) Investing activities, statement of cash flows Investment property. See also IAS 40, Investment Property small and medium-sized entities (SMEs) Investments held for sale Investors, joint ventures IOSCO. See International Organization of Securities Commissions (IOSCO) Joint control, related parties Joint ventures and first-time adopters of IFRS related-party transactions and small and medium-sized entities (SMEs) Jointly controlled entities and first-time adopters of IFRS IAS 31, Interests in Joint Ventures Key management personnel, related-party disclosures. See also IAS 24, Related-Party Disclosures Leases. See also IAS 17, Leases and first-time adopters of IFRS land leases small and medium-sized entities (SMEs) Lessees, financial statements of. See also IAS 40, Investment Property Lessors, financial statements of. See also IAS 40, Investment Property Liabilities classification of in business combinations contingent liabilities contingent liabilities assumed in business combinations current liabilities as element of financial statements noncurrent offsetting recognition of identifiable assets in business combinations small and medium-sized entities (SMEs) statement of financial position Liability method, income taxes Liquidation, obligations arising on Liquidity risk Loans, forgiveable (government grants) Loans and receivables (L&R) Losses actuarial gains and losses agricultural financial instruments future operating losses impairment. See Impairment losses profit or loss J K L
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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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The amount recognized in the income
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a. To provide presentation and disc
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amongst the top management personne
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Recreational clubs $ 50 million vs
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Chapter 40 FINANCIAL INSTRUMENTS (I
Page 440 and 441: Discussion The entity’s objective
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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 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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