IFRS Strategic Planning and Decision Making 3

Question 1

In strategic planning, management considers the implications of IFRS 15 for long-term contracts. Revenue is recognized when or as the entity satisfies a performance obligation, which is measured using:

Accepted Answer

Progress toward complete satisfaction of the obligation

Answer

IFRS 15 requires revenue to be recognized based on progress (output or input methods) toward satisfying performance obligations.

Question 2

When a company strategically diversifies into a new country, IAS 12 requires it to recognize a deferred tax liability for taxable temporary differences EXCEPT when:

Accepted Answer

The difference relates to goodwill in a business combination

Answer

IAS 12 prohibits recognition of deferred tax liabilities arising from initial recognition of goodwill in a business combination.

Question 3

For strategic capital allocation decisions, IFRS requires that borrowing costs directly attributable to a qualifying asset be:

Accepted Answer

Capitalized as part of the cost of that asset

Answer

IAS 23 requires capitalization of borrowing costs directly attributable to the acquisition, construction, or production of a qualifying asset.

Question 4

A strategic decision to enter a joint arrangement requires IFRS 11 classification. The key distinction between a joint venture and a joint operation is:

Accepted Answer

Whether the parties have rights to net assets versus rights to assets and obligations for liabilities

Answer

IFRS 11 distinguishes joint ventures (rights to net assets) from joint operations (rights to assets and obligations for liabilities).

Question 5

When management's strategic plan indicates significant doubt about an entity's ability to continue as a going concern, IAS 1 requires:

Accepted Answer

Disclosure of the uncertainty regardless of management's mitigating plans

Answer

IAS 1 requires disclosure of material uncertainties about going concern even when management believes its plans will resolve the issue.

(IFRS) International Financial Reporting Standards Practice Test

(IFRS) International Financial Reporting Standards Practice Test

IFRS Strategic Planning and Decision Making 3