CPA CFE Financial Reporting

Question 1

Under IFRS, which method is required for reporting cash flows from operating activities when using the indirect method?

Accepted Answer

Adjusting net income for non-cash items and changes in working capital

Answer

Listing all cash receipts and payments individually

Answer

Reporting only net cash from operations as a single line

Answer

Using the equity method of consolidation

Question 2

A company acquires 80% of a subsidiary. Under IFRS 3 Business Combinations, how should non-controlling interest (NCI) be measured at acquisition?

Accepted Answer

Either at fair value (full goodwill) or proportionate share of net assets (partial goodwill)

Answer

Only at fair value of net assets acquired

Answer

Always at book value of the subsidiary's equity

Answer

At the parent's cost of investment less subsidiary retained earnings

Question 3

Which of the following is classified as an investment property under IAS 40?

Accepted Answer

Land held for long-term capital appreciation

Answer

A building used as the company's head office

Answer

A factory used in manufacturing operations

Answer

Owner-occupied property leased to employees at market rent

Question 4

Under IFRS 15 Revenue from Contracts with Customers, when should revenue be recognized?

Accepted Answer

When the entity satisfies a performance obligation by transferring a promised good or service

Answer

When cash is received from the customer

Answer

When the invoice is issued to the customer

Answer

When the contract is signed by both parties

Question 5

A company enters into a lease agreement for office space for 5 years. Under IFRS 16 Leases, how should the lessee account for this lease?

Accepted Answer

Recognize a right-of-use asset and a corresponding lease liability on the balance sheet

Answer

Expense the lease payments as incurred (operating lease treatment)

Answer

Capitalize only if the lease transfers ownership at the end of the term

Answer

Record the lease only in the notes to the financial statements

Question 6

Under IAS 36 Impairment of Assets, what is the recoverable amount of an asset?

Accepted Answer

The higher of fair value less costs of disposal and value in use

Answer

The original cost less accumulated depreciation

Answer

The lower of fair value less costs of disposal and value in use

Answer

The net realizable value of the asset