Certificate in International Financial Reporting IFRS Framework and Financial Statements 3

Question 1

Under IAS 8, how should an entity account for a change in accounting estimate?

Accepted Answer

Prospectively

Answer

Changes in accounting estimates are applied prospectively, affecting current and future periods.

Question 2

Which IAS standard addresses accounting policies, changes in accounting estimates, and errors?

Accepted Answer

IAS 8

Answer

IAS 8 covers the selection and application of accounting policies, estimate changes, and prior period errors.

Question 3

Under IAS 8, how should material prior period errors be corrected?

Accepted Answer

By restating the comparative amounts for prior periods presented

Answer

IAS 8 requires retrospective restatement of comparative information for material prior period errors.

Question 4

What is the hierarchy for selecting accounting policies under IAS 8 when no specific IFRS standard applies?

Accepted Answer

IFRSs dealing with similar issues, then Conceptual Framework

Answer

IAS 8 requires management to look at IFRSs for analogous situations, then the Conceptual Framework.

Question 5

Under IAS 10, which of the following is an example of an adjusting event after the reporting period?

Accepted Answer

Resolution of a court case confirming a liability that existed at period end

Answer

An adjusting event provides evidence of conditions that existed at the balance sheet date and must adjust the figures.

Certificate in International Financial Reporting Practice Test