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International Financial Reporting Standards Flashcards

7 cards from real ACCA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 International Financial Reporting Standards flashcards as text

  1. Under IFRS 16, how should a lessee classify lease payments in the statement of cash flows?

    Answer: Principal repayments as financing and interest as operating or financing

    IFRS 16 requires lessees to present principal repayments of the lease liability within financing activities and interest paid per IAS 7 policy (operating or financing).

  2. IAS 36 requires an impairment test for goodwill at minimum how often?

    Answer: Annually, regardless of indicators

    Goodwill must be tested for impairment annually and whenever there is an indicator of impairment, even if no indicator is present.

  3. Which method is prohibited under IAS 2 for measuring the cost of inventories?

    Answer: Last-in, first-out (LIFO)

    IAS 2 explicitly prohibits the LIFO method because it does not represent an approximation of actual cost flows.

  4. Under IFRS 15, when does a performance obligation become distinct?

    Answer: When the customer can benefit from the good or service on its own or with other readily available resources, and it is separately identifiable

    A performance obligation is distinct if the customer can benefit from it on its own and it is separately identifiable from other promises in the contract.

  5. Under IAS 21, monetary items denominated in a foreign currency are retranslated at year-end using which rate?

    Answer: Closing rate at the balance sheet date

    IAS 21 requires monetary items to be retranslated using the closing (spot) rate at the reporting date, with exchange differences recognized in profit or loss.

  6. An entity adopts a new IFRS standard early. Under IAS 8, this is disclosed as:

    Answer: Voluntary early adoption with disclosure of the nature and effect

    Early adoption of an IFRS is permitted in most standards and must be disclosed, including the nature and financial effect of the early adoption.

  7. Under IFRS 9, which category requires financial assets to be measured at amortized cost?

    Answer: Assets whose cash flows are solely payments of principal and interest, held in a hold-to-collect business model

    Amortized cost applies when the asset passes both the SPPI test and is held within a business model whose objective is to collect contractual cash flows.