Certificate in International Financial Reporting Leases, Provisions, and Employee Benefits 1

Question 1

Under IFRS 16, how does a lessee recognise most leases on its balance sheet at commencement?

Accepted Answer

As a right-of-use asset and a corresponding lease liability

Answer

As an operating expense over the lease term

Answer

As a finance lease asset only

Answer

No recognition; disclosed in notes only

Question 2

Which of the following is an exemption under IFRS 16 that allows a lessee to expense lease payments straight-line?

Accepted Answer

Short-term leases (12 months or less) and low-value asset leases

Answer

All operating leases

Answer

Leases with purchase options

Answer

Leases with variable payments only

Question 3

Under IAS 37, a provision should be recognised when:

Accepted Answer

There is a present obligation, it is probable an outflow will be required, and the amount can be reliably estimated

Answer

An obligation exists regardless of probability

Answer

A constructive obligation exists with any probability of outflow

Answer

Legal proceedings have commenced

Question 4

Under IAS 37, a contingent liability is:

Accepted Answer

Disclosed in the notes but not recognised in the financial statements

Answer

Recognised as a provision

Answer

Recognised as a liability at fair value

Answer

Ignored unless the outflow is certain

Question 5

Under IAS 19, a defined benefit obligation is measured using:

Accepted Answer

The projected unit credit method

Answer

The accumulated benefit method

Answer

The current unit credit method

Answer

The corridor approach

Question 6

Under IAS 19, actuarial gains and losses on defined benefit plans are recognised in:

Accepted Answer

Other comprehensive income (OCI)

Answer

Profit or loss immediately

Answer

Deferred as a separate balance sheet item

Answer

Amortised through profit or loss using corridor approach

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