Accounting (IFRS/UK GAAP) Flashcards

Under IAS 33, basic earnings per share is calculated as:

Answer: Profit attributable to ordinary shareholders divided by weighted average ordinary shares outstanding

IAS 33 defines basic EPS as profit or loss attributable to ordinary equity holders divided by the weighted average number of ordinary shares outstanding during the period.

Under IFRS 3, which method must be used to account for a business combination?

Answer: Acquisition method

IFRS 3 mandates the acquisition method (formerly purchase method) for all business combinations, requiring identification of the acquirer and measurement of identifiable assets and liabilities at fair value.

Under IAS 28, the equity method requires the investor to recognise its share of the associate's:

Answer: Post-acquisition profit or loss in profit or loss

Under the equity method, the investment is initially recognised at cost and adjusted for the investor's share of the associate's post-acquisition profits or losses.

Which standard requires disclosure of related party transactions?

Answer: IAS 24

IAS 24 requires disclosure of relationships, transactions, and outstanding balances with related parties so users can assess how those relationships might affect financial statements.

Under FRS 102, a small entity applying the small entities regime must prepare:

Answer: A balance sheet and profit and loss account as a minimum

Under the FRS 102 Section 1A small entities regime, the minimum requirement is a balance sheet and profit and loss account, with reduced disclosure requirements.

Under IAS 7, which method of presenting operating cash flows starts with profit before tax?

Answer: Indirect method

The indirect method starts with profit before tax and adjusts for non-cash items, working capital changes, and investing/financing items to arrive at cash from operations.