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
Under IFRS 10, when does an investor control an investee?
Answer: When it has power over the investee, exposure to variable returns, and can use power to affect those returns
IFRS 10 defines control through three cumulative elements: power, exposure to variable returns, and the ability to use power to affect returns.
Under IAS 38, internally generated goodwill is:
Answer: Not recognized as an asset
IAS 38 prohibits recognition of internally generated goodwill because it is not an identifiable resource controlled by the entity that can be reliably measured.
Under IFRS 11, a joint venture is accounted for using:
Answer: The equity method
IFRS 11 requires joint ventures to be accounted for using the equity method, eliminating the option of proportionate consolidation that existed under IAS 31.
Under IAS 7, which of the following is classified as an investing activity in the cash flow statement?
Answer: Purchase of property, plant and equipment
Purchases of non-current assets such as property, plant and equipment represent investing activities under IAS 7.
Under IAS 33, diluted earnings per share adjusts the denominator for dilutive potential ordinary shares. Options are dilutive when the exercise price is:
Answer: Lower than the average market price for the period
Options are dilutive when the exercise price is below the average market price, meaning additional shares can be notionally issued at a discount under the treasury stock method.
Under IFRS 1, a first-time adopter of IFRS must present its opening IFRS statement of financial position as at:
Answer: The date of transition to IFRS (beginning of prior comparative year)
IFRS 1 requires an opening IFRS balance sheet at the transition date, which is the beginning of the earliest comparative period shown in the first IFRS financial statements.
Under IAS 41, biological assets are measured at:
Answer: Fair value less costs to sell, with changes in profit or loss
IAS 41 requires biological assets to be measured at fair value less costs to sell at each reporting date, with gains or losses recognized in profit or loss.