IFRS Operations and Process Management 2

Question 1

Under IAS 2, which cost formula is prohibited for measuring inventories?

Accepted Answer

Last-in, first-out (LIFO)

Answer

IAS 2 explicitly prohibits the LIFO cost formula for measuring inventories.

Question 2

A manufacturer incurs abnormal waste during production. Under IAS 2, how should abnormal waste costs be treated?

Accepted Answer

Expensed in the period incurred

Answer

IAS 2 requires abnormal amounts of wasted materials, labor, or other production costs to be expensed as incurred, not included in inventory cost.

Question 3

Under IFRS 15, when a contract contains a significant financing component, how should revenue be recognized?

Accepted Answer

At the cash selling price adjusted for the time value of money

Answer

IFRS 15 requires revenue to be recognized at the cash selling price (present value), with the financing component recognized as interest income or expense separately.

Question 4

Which standard governs the accounting for service concession arrangements where a private operator provides public services?

Accepted Answer

IFRIC 12

Answer

IFRIC 12 Service Concession Arrangements addresses how operators account for public-to-private service concession arrangements.

Question 5

A company operates a loyalty points program. Under IFRS 15, loyalty points awarded at the time of sale are accounted for as:

Accepted Answer

A separate performance obligation allocated part of the transaction price

Answer

Under IFRS 15, loyalty points represent a separate performance obligation, and a portion of the transaction price is allocated and deferred until points are redeemed or expire.

(IFRS) International Financial Reporting Standards Practice Test

(IFRS) International Financial Reporting Standards Practice Test

IFRS Operations and Process Management 2