IFRS Risk Assessment and Management 2

Question 1

Under IFRS 7, which category of risk requires entities to disclose both the carrying amount and the maximum exposure to credit risk?

Accepted Answer

Credit risk

Answer

IFRS 7 requires disclosure of carrying amounts and maximum credit risk exposure for financial assets subject to credit risk.

Question 2

An entity measures the fair value of a financial liability using observable market inputs. Which IFRS 13 fair value hierarchy level applies?

Accepted Answer

Level 2

Answer

Level 2 inputs are observable market data other than quoted prices in active markets (Level 1), such as interest rates and yield curves.

Question 3

Which IFRS standard specifically addresses hedge accounting and the designation of hedging relationships?

Accepted Answer

IFRS 9

Answer

IFRS 9 introduced a revised hedge accounting model aligning risk management with accounting treatment.

Question 4

A company's treasury sells a floating-rate bond and simultaneously enters into a pay-fixed, receive-floating interest rate swap. This strategy is best described as:

Accepted Answer

Cash flow hedge

Answer

A cash flow hedge is used to fix variable cash flows — here, the swap converts floating receipts to fixed to hedge variability.

Question 5

Under IFRS 7, qualitative disclosures about market risk must describe how risks arise from financial instruments and the entity's:

Accepted Answer

Objectives, policies, and processes for managing risk

Answer

IFRS 7 paragraph 33 requires qualitative disclosures on risk objectives, policies, and processes for managing each type of risk.

(IFRS) International Financial Reporting Standards Practice Test

(IFRS) International Financial Reporting Standards Practice Test

IFRS Risk Assessment and Management 2