Financial Reporting Flashcards
6 cards from real ACA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Financial Reporting flashcards as text
An associate under IAS 28 is defined as an entity over which the investor has:
Answer: Significant influence (typically 20–50% of voting rights)
IAS 28 defines an associate as an entity over which the investor has significant influence — the power to participate in financial and operating policy decisions, typically presumed at 20–50% ownership.
Under IFRS 11, a joint venture is accounted for using:
Answer: The equity method
IFRS 11 eliminated proportional consolidation for joint ventures; they must now be accounted for using the equity method in accordance with IAS 28.
Under IAS 1, items of other comprehensive income must be presented:
Answer: Either in a single statement of comprehensive income or in two statements (P&L and a separate OCI statement)
IAS 1 allows entities to choose between a single statement of comprehensive income (P&L + OCI combined) or two separate statements (a standalone income statement followed by a statement of OCI).
Earnings per share (EPS) is only required to be disclosed by:
Answer: Listed entities (entities whose ordinary shares are traded on a public market)
IAS 33 applies only to entities whose ordinary or potential ordinary shares are publicly traded; other entities may voluntarily disclose EPS but are not required to.
Under IFRS 5, when a disposal group is classified as held for sale:
Answer: Depreciation of non-current assets in the group ceases
Under IFRS 5, once classified as held for sale, non-current assets (including those in a disposal group) cease to be depreciated; they are remeasured to the lower of carrying amount and fair value less costs to sell.
Under the IASB Conceptual Framework, the enhancing qualitative characteristics of useful financial information include:
Answer: Comparability, verifiability, timeliness, and understandability
The Conceptual Framework identifies two fundamental characteristics (relevance and faithful representation) and four enhancing characteristics: comparability, verifiability, timeliness, and understandability.