Certificate in International Financial Reporting Intangibles, Tax, and Cash Flow 3

Question 1

Under IAS 33, basic earnings per share (EPS) is calculated as:

Accepted Answer

Profit attributable to ordinary equity holders divided by the weighted average number of ordinary shares outstanding

Answer

Basic EPS uses profit attributable to ordinary shareholders and a time-weighted average share count.

Question 2

Under IAS 33, diluted EPS is lower than basic EPS because:

Accepted Answer

Potential ordinary shares (options, convertibles) are assumed to have been exercised/converted

Answer

Diluted EPS includes the dilutive effect of options and convertible instruments in the denominator.

Question 3

Under IAS 7, which of the following is NOT a cash equivalent?

Accepted Answer

An equity investment held for long-term capital appreciation

Answer

Equity investments are not cash equivalents because they are subject to significant value changes.

Question 4

Under IAS 12, the deferred tax rate used should be:

Accepted Answer

The tax rate expected to apply when the temporary difference reverses

Answer

IAS 12 requires use of enacted or substantively enacted rates at the balance sheet date that apply when differences reverse.

Question 5

Under IAS 38, how is an intangible asset with a finite useful life subsequently measured?

Accepted Answer

At cost or revalued amount less accumulated amortisation and impairment losses

Answer

Finite-life intangibles are amortised over their useful life and tested for impairment under IAS 36.

Certificate in International Financial Reporting Practice Test