FCCA Financial Reporting and Standards Flashcards

Which IFRS standard deals with the presentation of financial statements and prescribes minimum content requirements?

Answer: IAS 1

IAS 1 (Presentation of Financial Statements) establishes overall requirements for the presentation and minimum line item content of financial statements.

Under IAS 16, which model allows property, plant, and equipment to be carried at fair value less accumulated depreciation after initial recognition?

Answer: Revaluation model

IAS 16 permits the revaluation model as an alternative to the cost model, allowing PP&E to be carried at revalued amounts adjusted for depreciation.

An FCCA preparing consolidated financial statements must eliminate which of the following inter-company transactions?

Answer: Intra-group sales of inventory between subsidiaries

Consolidation requires the elimination of intra-group transactions, such as sales between subsidiaries, to prevent double-counting of revenues and profits.

Under US GAAP ASC 842, how must lessees classify leases?

Answer: As either finance leases or operating leases

ASC 842 classifies leases for lessees as either finance leases or operating leases, with both types now requiring recognition on the balance sheet.

Which statement best describes the going concern assumption in financial reporting?

Answer: The entity will continue to operate indefinitely unless there is evidence to the contrary

The going concern assumption presumes the entity will continue in operation for the foreseeable future, with no intention or necessity to liquidate or materially curtail operations.

Under IFRS, research and development costs are accounted for under which standard?

Answer: IAS 38 — Intangible Assets

IAS 38 (Intangible Assets) governs the accounting for internally generated intangible assets, including the distinction between research (expensed) and development (potentially capitalized) costs.