IFA Financial Reporting & Accounting Standards 3

Question 1

Under IAS 16, subsequent expenditure on property, plant and equipment is capitalized only if it:

Accepted Answer

Increases the future economic benefits beyond the originally assessed standard

Answer

IAS 16 requires capitalization of subsequent costs only when they enhance the asset's future economic benefits beyond the originally assessed standard of performance.

Question 2

Which concept requires that financial statements present a faithful representation of economic events, including recognizing economic substance over legal form?

Accepted Answer

Substance over form

Answer

Substance over form requires transactions to be accounted for according to their economic reality rather than their strict legal form.

Question 3

Under IFRS 16, a lessee must recognize at the commencement of a lease:

Accepted Answer

Both a right-of-use asset and a lease liability

Answer

IFRS 16 requires lessees to recognize both a right-of-use asset and a corresponding lease liability at the commencement date for most leases.

Question 4

The going concern assumption in financial reporting means that:

Accepted Answer

The entity will continue in operation for the foreseeable future

Answer

The going concern assumption presumes the entity will continue operating for the foreseeable future and does not need to liquidate or curtail operations.

Question 5

Under IAS 21, a foreign currency transaction is initially recorded at:

Accepted Answer

The spot exchange rate at the transaction date

Answer

IAS 21 requires foreign currency transactions to be initially recorded using the spot exchange rate at the date of the transaction.

(IFA) Institute of Financial Accountants Certification Practice Test

(IFA) Institute of Financial Accountants Certification Practice Test

IFA Financial Reporting & Accounting Standards 3