IFRS Interpretations 3

Question 1

SIC-15 relates to operating leases. Which incentive given by a lessor to a lessee must be recognized on a straight-line basis over the lease term?

Accepted Answer

All lease incentives, including rent-free periods and cash payments to the lessee

Answer

SIC-15 requires all forms of lease incentives to be recognized as a reduction of rental income (or expense) on a straight-line basis over the full lease term.

Question 2

Under IFRIC 13, how should an entity account for award credits granted under a customer loyalty program?

Accepted Answer

Allocate a portion of the transaction price to the award credits and defer revenue until redeemed or expired

Answer

IFRIC 13 requires award credits to be treated as a separately identifiable component, with revenue deferred until obligations are fulfilled.

Question 3

IFRIC 21 addresses levies imposed by governments. When is the liability for a levy recognized?

Accepted Answer

When the activity that triggers the levy, as specified in the legislation, occurs

Answer

IFRIC 21 specifies that the obligating event triggering recognition is the activity identified by legislation, not the passage of time or the payment date.

Question 4

SIC-32 addresses the recognition of website development costs under IAS 38. During which phase are costs most likely to qualify for capitalization?

Accepted Answer

Application and infrastructure development phase

Answer

SIC-32 allows capitalization during the application and infrastructure development phase when technical feasibility and other IAS 38 criteria are met.

Question 5

Under IFRIC 23, how should an entity account for uncertain tax positions where it is not probable that the tax authority will accept the treatment?

Accepted Answer

Reflect the uncertainty by using the most likely amount or expected value method

Answer

IFRIC 23 requires the entity to reflect the effect of the uncertainty using either the most likely amount or the expected value, whichever better predicts the resolution.

(IFRS) International Financial Reporting Standards Practice Test

(IFRS) International Financial Reporting Standards Practice Test

IFRS Interpretations 3