IFRS Interpretations 2

Question 1

Under IFRIC 1, how should changes in decommissioning liabilities affect a company's asset and expense recognition?

Accepted Answer

Adjust the cost of the related asset and recalculate depreciation prospectively

Answer

IFRIC 1 requires that changes in decommissioning liabilities adjust the carrying amount of the related asset, with revised depreciation applied prospectively.

Question 2

IFRIC 4 addresses whether an arrangement contains a lease. Which factor is MOST critical in making this determination?

Accepted Answer

Whether the arrangement conveys the right to control the use of a specific asset

Answer

IFRIC 4 (now largely superseded by IFRS 16) focused on whether the fulfillment of the arrangement depended on a specific asset and whether the right to control use was conveyed.

Question 3

SIC-10 addresses government assistance. Which of the following does SIC-10 specifically state is NOT government assistance for the purpose of IAS 20?

Accepted Answer

Infrastructure provided through improvement of the general transport network

Answer

SIC-10 clarifies that general infrastructure improvements benefiting the entire community do not constitute government assistance under IAS 20.

Question 4

IFRIC 12 applies to service concession arrangements. Who recognizes the infrastructure asset under a concession where the grantor controls the infrastructure?

Accepted Answer

The grantor recognizes the asset, not the operator

Answer

Under IFRIC 12, when the grantor controls the infrastructure, the operator does not recognize it as PP&E but instead recognizes a financial or intangible asset.

Question 5

Under IFRIC 14 (IAS 19 – The Limit on a Defined Benefit Asset), when can an entity recognize a surplus in a defined benefit plan as an asset?

Accepted Answer

Only to the extent that it can recover the surplus through refunds or reduced future contributions

Answer

IFRIC 14 limits the defined benefit asset to the present value of economic benefits available as future refunds or reductions in future contributions.

(IFRS) International Financial Reporting Standards Practice Test

(IFRS) International Financial Reporting Standards Practice Test

IFRS Interpretations 2