IFRS and Financial Reporting
Exam Materials
Course Introduction
This course provides an in-depth understanding of International Financial Reporting Standards (IFRS) and their application in financial reporting processes. Students will explore the conceptual framework and principles underlying IFRS, examining how these standards guide the preparation and presentation of financial statements for multinational organizations. The course covers key topics such as revenue recognition, financial instruments, leases, consolidation, and the transition from local Generally Accepted Accounting Principles (GAAP) to IFRS. Through case studies and practical exercises, students will enhance their ability to interpret and analyze financial information, ensuring compliance with global reporting standards.
Recommended Textbook
Intermediate Accounting Vol. 1 4th Edition by Kin Lo
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10 Chapters
1100 Verified Questions
1100 Flashcards
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Chapter 1: Fundamentals of Financial Accounting Theory
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33 Verified Questions
33 Flashcards
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Sample Questions
Q1) Which is not a question that financial accounting theory can answer?
A)Why do companies provide financial information to external parties?
B)Why do all companies use the same accounting policies?
C)Why is certain disclosure mandatory in financial reporting?
D)What is the role of financial accounting and reporting?
Answer: B
Q2) Which statement appropriately explains the meaning of "publicly accountable enterprise"?
A)Firms without equity, debt or other securities traded in public markets.
B)Firms with equity, debt or other securities traded in public markets.
C)Firms with assets and liabilities that provide goods and services in public markets.
D)New firms entering the public markets to provide goods and services.
Answer: B
Q3) Explain the meaning of generally accepted accounting principles (GAAP).
Answer: GAAP refers to broad principles and conventions of general application as well as rules and procedures that determine accepted accounting practices.
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3
Chapter 2: Conceptual Frameworks for Financial Reporting
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60 Verified Questions
60 Flashcards
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Sample Questions
Q1) Which of the following accurately describes the objective of financial reporting under the IFRS Conceptual Framework?
A)The Conceptual Framework focuses on a narrow set of users such as investors and lenders.
B)Special purpose financial statements are required under the Conceptual Framework.
C)In the Conceptual Framework, users include a broad range such as employees and customers.
D)Under the Conceptual Framework, general purpose financial statements increase moral hazard.
Answer: A
Q2) Which is not a qualitative characteristic of financial information in the IFRS Conceptual Framework?
A)Understandability.
B)Historical cost.
C)Representational faithfulness.
D)Comparability.
Answer: B
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Chapter 3: Accrual Accounting
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160 Verified Questions
160 Flashcards
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Sample Questions
Q1) Why is determining the "cut-off" point critical in the accrual basis of accounting?
A)Based on the periodicity concept, financial statements are prepared on a regular basis.
B)It is important to reflect business transactions and events in the subsequent accounting period.
C)The point in time at which one reporting period ends and another begins is important.
D)Transactions must be reported in the cut-off period before the statements are authorized.
Answer: A
Q2) Which statement is correct about expenses in the income statement?
A)The nature of expense format classifies expenses based on their source.
B)Some nature of expense categories are cost of sales, administration or warehouse.
C)Expenses must be classified by their function.
D)Expenses should be classified in decreasing order of magnitude.
Answer: A
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5
Chapter 4: Revenue and Recognition
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105 Verified Questions
105 Flashcards
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Sample Questions
Q1) Explain how the transaction price should be allocated to the performance obligations in a multiple performance obligation sales arrangement.
Q2) What disclosures are required under IFRS for construction contracts?
A)Method used to determine the percentage complete in the period.
B)Contract revenue recognized in the period.
C)Method of revenue recognition.
D)All of the above are required.
Q3) Soorya Manufacturing makes educational toys that are sold to retailers on the following contractual terms: Each type of toy has a fixed wholesale price, is shipped F.O.B. shipping point, and payment is due 45 days after the shipment. The retailer may return a maximum of 45% of an order at the retailer's expense up to 6 months after delivery. Sales are made only to retailers that have a good credit rating.
Required:
a)Identify at least four different revenue recognition points that Soorya could use for its sales.
b)What revenue recognition criteria should Soorya use to determine when revenue should be recorded?
Q4) List the five key steps in the revenue recognition process.
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Page 6
Chapter 5: Cash and Receivables
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119 Flashcards
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Sample Questions
Q1) Brasser Co. started using the percentage of sales method to account for bad debts in 2021. In 2020, the company's first fiscal year, the company had used the direct write-off method because the amount of bad debts was judged to be immaterial. The following information relates to the company's sales and receivables.
\[\begin{array} { | l | r | r | }
\hline & 2020 & 2021 \\
\hline \text { Credit sales } & \$ 18,750,000 & \$ 18,900,000 \\
\hline \text { Estimated bad debts as a percentage of credit } & & \\
\text { sales } & 0.5 \% & 0.4 \% \\
\hline \text { Accounts written off } & 65,750 & 93,600 \\
\hline
\end{array}\] Required:
a. Calculate the correct balance in the allowance for doubtful accounts (ADA)at the end of 2021. Remember to include the effect of the change in accounting policy on 2020 accounts.
b. Record the write-off entry for 2021 and the year-end adjusting entries for 2021 to adjust the ADA. (Ignore income tax effects)
Q2) Identify the two criteria for classifying an investment as a cash equivalent.
Q3) Explain why a bank reconciliation is necessary.
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Page 7
Chapter 6: Inventories
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157 Verified Questions
157 Flashcards
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Sample Questions
Q1) Assume that a purchase invoice for $1,000 was appropriately recorded in fiscal 2019, but the inventory was excluded in error during the ending inventory count. What impact will this not have on fiscal 2020 financial reporting?
A)Beginning inventory is understated by $1,000.
B)Gross margin is overstated by $1,000.
C)Cost of sales is understated by $1,000.
D)Inventory is overstated on the balance sheet.
Q2) Explain what happens if the value of inventory recovers after it has been written down. How often will such an adjustment actually be made to inventory?
Q3) Which statement is correct about cost allocation methods under GAAP?
A)LIFO method expenses the oldest costs first.
B)LIFO method has the most recent costs on the balance sheet.
C)LIFO method has the most recent costs in the income statement.
D)LIFO is an acceptable cost allocation method.
Q4) Explain how items of inventory should be grouped for purposes of testing for impairment.
Q5) What inventory costing methods are permissible under GAAP? Explain the impact of these alternative methods on the income statement and the balance sheet.
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Chapter 7: Financial Assets
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137 Flashcards
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Sample Questions
Q1) Which item is an example of a real asset?
A)Share certificates.
B)Building.
C)Bonds.
D)Accounts receivable.
Q2) According to the table above.What method of accounting can Fisher not use to account for its investment in Cookstown?
A)Amortized cost.
B)Equity method.
C)Fair value through other comprehensive income.
D)Fair value through profit or loss.
Q3) Explain the difference between a joint arrangement, joint control, joint operation and a joint venture.
Q4) What is a "joint arrangement"?
A)An entity where unanimous consent by the owners for all decisions is required.
B)An entity that is controlled by another entity.
C)An entity over which the investor has the ability to participate in decisions affecting the entity's operations.
D)An entity that sells shares to the public.
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Chapter 8: Property, Plant and Equipment
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Sample Questions
Q1) On April 1, 2019, Omega Company paid $15,000 for office furniture. The furniture is expected to last 10 years with no residual value. Omega uses the double declining balance method of depreciation and fractional-year depreciation based on the number of months.
Required:
What is the depreciation expense for the year ended December 31, 2019?
Q2) Seall-Test Ltd. owns a machine that it purchased on Jan 1, 2019 for $600,000. The machine had an estimated useful life of 10 years and an estimated residual value of $100,000. The company uses the declining balance method with a rate of 20%. The machine was sold on December 31, 2021 for $140,000. What was the depreciation expense for 2020?
A)$50,000
B)$60,000
C)$96,000
D)$120,000
Q3) What costs should not be capitalized to "equipment"?
A)Non-refundable sales tax.
B)Equipment purchase cost.
C)General training.
D)Transportation and delivery.
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Chapter 9: Intangible Assets, Goodwill, Mineral Resources, and
Government Grants
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81 Flashcards
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Sample Questions
Q1) What factor will not affect the estimated useful life of a finite lived intangible asset?
A)Legal life of the asset.
B)Productive capacity.
C)Competitive pressures.
D)Technological obsolescence.
Q2) Explain the accounting for assets in the mineral resource exploration industry.
Q3) Which statement is correct?
A)In the exploration phase, the mineral site is ready for mineral production.
B)In the extraction phase, the mineral site is assessed for commercial viability.
C)In the extraction phase, the mineral site is assessed for technical viability.
D)In the development phase, the mineral site is prepared for resource extraction.
Q4) Which criteria under IAS 38 would be met if the "project plan outlines the feasibility and timeline of the project"?
A)Measurement reliability.
B)Ability to use or sell.
C)Technical feasibility.
D)Management intention.
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Chapter 10: Applications of Fair Value to Non-Current Assets
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Sample Questions
Q1) Which of the following is not a concept supporting impairment testing?
A)An asset should be presented at its fair value.
B)An asset's carrying value should be recoverable from sale.
C)An asset's carrying value should be recoverable from use.
D)An asset should not be overstated.
Q2) Based on the following information, what is the impairment booked at December 31, 2021? \[\begin{array} { | l | r | }
\hline \text { Cost } & \$ 750,000 \\
\hline \text { Accumulated depreciation } & 300,000 \\
\hline \text { Value in use (sum of discounted cash flows) } & 300,000 \\
\hline \text { Fair value } & 200,000 \\
\hline \text { Disposal costs } & 15,000 \\
\hline
\end{array}\]
A)$150,000
B)$185,000
C)$300,000
D)$450,000
Q3) Explain when a non-current asset is impaired.
Q4) Explain the accounting under the revaluation model available under IFRS.
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