Certificate in International Financial Reporting Intangibles, Tax, and Cash Flow 2

Question 1

Under IAS 38, which of the following development costs can be capitalised?

Accepted Answer

Costs that meet all six criteria including technical feasibility and intention to complete

Answer

All development costs once a project begins

Answer

Costs incurred after a product is launched

Answer

Only materials and labour, not overheads

Question 2

Under IAS 12, current tax and deferred tax arising from items recognised in OCI should be:

Accepted Answer

Recognised in OCI

Answer

Recognised in profit or loss

Answer

Recognised directly in equity

Answer

Disclosed in the notes only

Question 3

Under IAS 7, the indirect method of presenting operating cash flows begins with:

Accepted Answer

Profit before tax, adjusted for non-cash items and working capital changes

Answer

Cash receipts from customers

Answer

Net profit after tax

Answer

Total revenues

Question 4

Under IAS 7, how are dividends paid classified in the cash flow statement?

Accepted Answer

Either as financing or operating activities (entity's choice, consistently applied)

Answer

Always as financing activities

Answer

Always as operating activities

Answer

As investing activities

Question 5

Under IAS 38, intangible assets with an indefinite useful life are:

Accepted Answer

Not amortised but tested for impairment annually

Answer

Amortised over 40 years

Answer

Amortised over 20 years

Answer

Written off in the year of acquisition

Question 6

Under IAS 12, which of the following temporary differences does NOT give rise to a deferred tax liability?

Accepted Answer

Goodwill arising in a business combination

Answer

Accelerated tax depreciation

Answer

Revaluation surplus on PPE

Answer

Interest receivable taxed on receipt