IFRS Operations and Process Management 3

Question 1

Under IAS 23, which borrowing costs must be capitalized?

Accepted Answer

Borrowing costs directly attributable to the acquisition, construction, or production of a qualifying asset

Answer

IAS 23 requires capitalization of borrowing costs directly attributable to a qualifying asset; other borrowing costs are expensed.

Question 2

A food manufacturer classifies raw materials as inventory. If net realizable value (NRV) falls below cost, IAS 2 requires the inventory to be:

Accepted Answer

Written down to NRV with the loss recognized in profit or loss

Answer

IAS 2 requires inventory to be measured at the lower of cost and NRV, with any write-down recognized as an expense in profit or loss.

Question 3

Under IFRS 8, an operating segment must be reported separately if its revenue, profit/loss, or assets exceed what threshold of all segments combined?

Accepted Answer

10%

Answer

IFRS 8 requires separate disclosure of an operating segment that meets any of the 10% quantitative thresholds for revenue, profit or loss, or assets.

Question 4

Under IAS 16, which model allows upward revaluations of property, plant and equipment after initial recognition?

Accepted Answer

Revaluation model

Answer

IAS 16's revaluation model permits assets to be carried at fair value less subsequent depreciation and impairment, allowing upward revaluations.

Question 5

A construction company uses input methods to measure progress on a long-term contract under IFRS 15. Which input measure is most commonly used?

Accepted Answer

Costs incurred to date relative to total estimated costs

Answer

The costs-incurred input method measures progress as costs incurred to date divided by total expected contract costs, and is the most common input method under IFRS 15.

(IFRS) International Financial Reporting Standards Practice Test

(IFRS) International Financial Reporting Standards Practice Test

IFRS Operations and Process Management 3