Questions For IFRS Highlighted

BUSINESS COMBINATION
1. Amortization of goodwill arising from a business combination is permitted.

A. True
B. False
2. Which of the following statements is true about the purchase method for accounting for all business combinations?
A. The acquirer is required to recognize the identifiable assets, liabilities, and contingent liabilities of the acquiree that existed at the date of acquisition at
their fair values at that date, without any possibility to subsequently adjust these values.
B. The first step in the purchase method is measuring the cost of the business combination.
C. The third and final step in the purchase method is allocating the costs to the assets, liabilities, and contingent liabilities; this is done at the
acquisition date.
D. The purchase method is recommended, but not required, for accounting for all business combinations.
3. Based on these data, calculate the fair value of work in progress acquired in a business combination according to IFRS 3.
Selling price of finished product = 500,000
Cost of disposal = 40,000
Cost of completion = 100,000
Profit allowance for the selling effort of the acquirer = 80,000
A. 460,000
B. 420,000
C. 360,000
D. 280,000
E. None of the above
4. Which of the following statements about allocating the costs to the assets and liabilities is false according to the standard?
A. The acquirer is required to recognize the identifiable assets, liabilities and contingent liabilities of the acquiree that existed at the date of acquisition at
their fair values at that date, as long as certain conditions are met.
B. The acquirer can recognize liabilities for future losses or costs of the acquiree based on its intentions for the future.
C. Liabilities that were existing obligations of the acquiree at the acquisition date shall be recognized.
D. For contingent liabilities, fair value must be reliably measurable, but outflow of future economic benefits need not be probable.
E. The exception for noncurrent assets held for sale comes from IFRS 5, and is only that these items are to be valued at fair value minus costs to sell, not
simply at fair value.
5. Which of the following statements is correct about the purchase method for accounting for all business combinations?
A. The purchase method is recommended, but not required, for accounting for all business combinations.
B. The first step in the purchase method is identifying the acquirer.
C. The third and final step in the purchase method is measuring the cost of the business combination.
D. Part of the purchase method is determining the fair value of assets and liabilities, but not contingent liabilities.
6. Which of the following is not an exception for which the cost of goodwill can be subsequently revised once the provisional allocations have been finalized?
A. Adjustments arising from specific future events - contingent consideration
B. The correction of errors under IAS 8
C. Subsequent payment to the seller as compensation for a reduction in the value of the purchase consideration
D. The realization of the benefit of income tax loss carryforwards or other deferred tax assets that were not recognized as assets when the transaction
was initially accounted for
7. Which of the following statements about allocating the costs to the assets, liabilities and contingent liabilities is/are true according to IFRS 3?
A. The acquirer is required to recognize the identifiable assets, liabilities and contingent liabilities of the acquiree that existed at the date of
acquisition at their fair values at that date, as long as certain conditions are met.
B. For contingent liabilities, fair value must be reliably measurable, but outflow of future economic benefits need not be probable.
C. Liabilities that were existing obligations of the acquiree at the acquisition date shall be recognized.
D. The appendix to IFRS 3 explains that the fair value of a contingent liability reflects the amount that a third party would require in order to remove
the liability.
8. Based on these data calculate the fair value of work in progress acquired in a business combination according to IFRS 3.
Selling price = 100,000 Cost of disposal = 10,000
Cost of completion = 20,000 Profit allowance for the selling effort of the acquirer = 5,000
A. 65,000
B. 70,000
C. 75,000
D. 85,000
9. Which of the following statements about combinations that are not restated when a company is a first-time adopter of IFRS is not a requirement according to
IFRS 3?
A. For acquired assets and liabilities that were recognized under previous GAAP, if measured on the basis of cost, the carrying amount at the acquisition
date under previous GAAP is the deemed cost under IFRS at the date of the business combination.
B. Measure assets and liabilities not recognized under previous GAAP on the basis that IFRS would require in the separate balance sheet of the acquiree.
C. The carrying amount of goodwill in the opening IFRS balance sheet is the carrying amount under previous GAAP at the date of transition to IFRS,
with only one exception: any impairment of goodwill that has to be recognized.
D. If an entity recognized goodwill under previous GAAP as a deduction from equity, it does not recognize that goodwill in its opening IFRS balance sheet,
nor does it transfer that goodwill to the income statement if the subsidiary is disposed of or the investment impaired.
10. Which of the following statements is/are true?

A. Goodwill arising from a business combination achieved in stages is determined by comparing the total cost from all steps to the fair values at the date
of gaining control.
B. If an investment was carried as an associate and an additional interest is acquired, giving the investor control, the fair value of assets, liabilities,
contingent liabilities, and goodwill arising will have already been determined for this step, and needs to only be determined for the second tranche.
Any change in fair value of the assets and liabilities is recognized as a revaluation adjustment in equity.
C. If an investment was accounted for as a held-for-trading investment or as a available-for-sale investment, the fair value of the underlying assets and
liabilities and contingent liabilities at the date of acquiring that step will need to be determined to calculate goodwill.
D. A, B and C
11. Which of the following is a required disclosure that supports the principle that “an acquirer shall disclose information that enables users of its financial
statements to evaluate the financial effects of gains, losses, error corrections, and other adjustments recognized in the current period that relate to business
combinations that were effected in the current period or in previous periods?”
A. Details of any adjustments made to the initial accounting for a business combination in the previous period when it had been only provisional
B. The names and descriptions of the combining entities or businesses and the acquisition date
C. The percentage of voting-equity instruments acquired
D. The cost of the combination and a description of its components, including transaction costs
12. Which of the following is a required disclosure that specifically supports the principle that “an entity shall disclose information that enables users of its
financial statements to evaluate changes in the carrying amount of goodwill during the period”?
A. The amount of any “negative goodwill” taken to income and the line item of the P&L in which it has been reported
B. Details of any adjustments made to the initial accounting for a business combination in the previous period where it had been only provisional
C. Opening amounts for gross goodwill and impairment losses
D. The fair values and, if practical, the previous carrying values of each class of assets and liabilities acquired
13. When a business acquisition in stages occurs, which of the following does IFRS 3 not require?
A. All transactions should be treated together for the purpose of determining the amount of any goodwill on that business combination.
B. The acquirer shall compare the costs of the individual investments with the fair values of the identifiable assets and liabilities acquired at each step.
C. If an investment did not qualify previously as an associate, then the fair values of the identifiable assets and liabilities should be recognized by the
acquirer at their fair values at the acquisition date.
D. If an investment did not qualify previously as an associate, then goodwill should be recognized from the date of acquisition.
E. All are requirements.
14. Which of the following statements about business combinations that are not restated is not a requirement according to IFRS 3?
A. For assets acquired and liabilities assumed that were recognized under previous GAAP, if measured on the basis of cost, the carrying amount at the
acquisition date under previous GAAP is the deemed cost under IFRS at that date.
B. Measure assets and liabilities not recognized under previous GAAP on the basis that IFRS would require in the separate balance sheet of the acquiree.
C. The carrying amount of goodwill in the opening IFRS balance sheet is the carrying amount under previous GAAP at the date of transition to IFRS,
with only one exception: any impairment of goodwill that has to be recognized.
D. If an entity recognized goodwill under previous GAAP as a deduction from equity, it does not recognize that goodwill in its opening IFRS balance sheet,
nor does it transfer that goodwill to the income statement if the subsidiary is disposed of or the investment impaired.
E. All are accurately stated requirements.
15. Which of the following statements is true about the purchase method for accounting for all business combinations?
A. You are required to recognize the identifiable assets and liabilities of the acquiree that existed at the date of acquisition at their fair values at that date,
without any conditions.
B. The first step in the purchase method is allocating the cost of the business combination to the assets acquired and liabilities and contingent liabilities
assumed.
C. Measuring the cost of the business combination is the second step in the purchase method.
D. The purchase method is recommended, but not required, for accounting for all business combinations.
16. Which of the following statements is false about allocating the costs to the assets and liabilities, according to the standard?
A. The acquirer can recognize liabilities for future losses or costs based on its intentions for the future.
B. For intangible assets, fair value must be reliably measurable, but the probability of the outflow of future economic benefits need not be tested.
C. Liabilities that were existing obligations of the acquiree at the acquisition date can be recognized.
D. You are required to recognize the identifiable assets and liabilities of the acquiree that existed at the date of acquisition at their fair values at that date,
as long as certain conditions are met.
E. The exception for noncurrent assets held for sale comes from IFRS 5: these items are to be valued at fair value minus costs to sell, not simply at fair
value.
17. Which of the following statements is false about the IFRS 1 requirements for handling business combinations that are not restated?
A. Exclude from the opening IFRS balance sheet any item recognized under previous GAAP that does not qualify for recognition as an asset or liability
under IFRS.
B. Recognize all assets and liabilities at the date of transition to IFRS that were acquired or assumed in a past business combination, without
exception.
C. Adjustments are taken to retained earnings, except any that require an intangible asset to be reclassified as goodwill or vice versa.
D. Classifications (acquisition, reverse acquisition, or uniting of interests) remain the same as in the previous GAAP financial statements.
18. Which of the following is a required disclosure that supports the principle that “an acquirer shall disclose information that enables users of its financial
statements to evaluate the financial effects of gains, losses, error corrections, and other adjustments recognized in the current period that relate to business
combinations that were effected in the current or in previous periods?"
A. Opening amounts for gross goodwill and impairment losses
B. Adjustments from recognition of deferred tax assets
C. Impairment losses recognized in the period
D. Movements in goodwill of a “disposal group” under IFRS 5
19. IFRS 3 is built on the premise that no cases exist in which identifying an acquirer is impossible; consequently, purchase accounting can be applied in all cases.
A. True
B. False
20. Which of the following statements about identifying the acquirer is/are false?
A. In a cash acquisition, the acquirer is generally the entity that pays the cash.
B. When a new holding entity issues shares to effect the combination, another of the combining entities must be identified as the acquirer.
C. Usually the acquirer is the entity that becomes the parent of the other combining party or parties, but not always.
D. In a reverse acquisition, the entity that becomes the subsidiary of the other entity is the acquirer.
E. All of the above are false
21. Which of the following statements about transitional provisions is true according to IFRS 3?
A. Goodwill acquired in a business combination is recognized as an asset.
B. ”Negative” goodwill is recognized immediately in profit or loss after reassessing the identification and measurement of the acquiree’s identifiable
assets, liabilities, and contingent liabilities.
C. Goodwill acquired in a business combination shall not be amortized.
D. All of the above are true.
22. Which of the following statements is/are false about the standard’s provisions for allocating costs to assets and liabilities?
A. The acquirer cannot recognize liabilities for future losses or costs based on its intentions for the future.
B. For intangible assets, fair value must be reliably measurable, but the probability of the inflow of future economic benefits need not be tested.
C. You also must meet the definition of an intangible asset under IAS 38, in that the asset in question is an identifiable nonmonetary asset without
physical substance and it must be separable from the entity or arise from contractual or other legal rights.
D. Liabilities that were existing obligations of the acquiree at the acquisition date can be recognized.
E. All of the above are false
23. Based on the below data, calculate the fair value of work in progress acquired in a business combination according to IFRS 3.
Selling price = 800,000 Cost of disposal = 100,000
Cost of completion = 200,000 Profit allowance for the selling effort of the acquirer = 50,000
A. 450,000
B. 650,000
C. 700,000
D. 750,000
CLASSIFICATION OF INVESTMENT
1. Which of these statements about Special Purpose Entities (SPEs) is not true?
A. An SPE cannot take the form of a partnership or an incorporated entity.
B. SPEs are often created with legal arrangements that impose strict and sometimes permanent limits on the decision-making powers of its governing
board, trustee, or management.
C. The creator or sponsor of the SPE retains a significant beneficial interest in the SPE’s activities (such as a debt instrument, equity instrument,
participation right, residual interest or lease), even though it may own little or none of the SPE’s equity.
D. SIC-12 deals with circumstances under which an entity should consolidate an
E. SPE.All of the statements are true.
2. Separate financial statements are financial statements that are presented by a parent, an investor in an associate, or a venturer in a jointly controlled entity in
which the investments are accounted for on the basis of the direct equity interest rather than on the basis of the reported results and net assets of the investees,
including the financial statements of an entity that does not have a subsidiary, associate, or venturer’s interest in a jointly controlled entity.
A. True
B. False
3. Which of the following statements about control is/are true?

A. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.
B. Control is presumed to exist when the parent owns more than half of the voting power of an entity, without exception.
C. Both of the above
D. None of the above
4. Which of the following indicate the required criteria for a parent to be exempted from the presentation of consolidated financial statements?
A. It is a wholly owned subsidiary or a partially owned subsidiary of another entity, and its owners, including those otherwise not entitled to vote, have been
informed about and do not object to the non-consolidation.
B. Its debt or equity instruments are not traded in a public market.
C. The parent did not file nor is it in the process of filing its financial statements with a security commission or other regulatory organization to issue any class of
instruments in a public market.
D. The ultimate or intermediate parent of the parent has IFRS consolidated financial statements for public use complying with IFRS.
A. A only
B. A and B only
C. A, B, and C only
D. A, C, and D only
E. A, B, C, and D
5. Consolidated financial statements are financial statements that are presented by a parent, an investor in an associate, or a venturer in a jointly controlled
entity in which the investments are accounted for on the basis of the direct equity interest rather than on the basis of the reported results and net assets of the
investees.
A. True
B. False
6. Which of these statements about the scope of consolidation financial statements is/are true?
A. A subsidiary is excluded from consolidation because its business activities are dissimilar from those of the other entities whether the group.
B. A subsidiary is excluded from consolidation simply because the investor is a mutual fund.
A. A only
B. B only
C. Both A and B
D. Neither A nor B
7. Which of these statements about Special Purpose Entities (SPEs) is true?
A. An SPE may take the form of a corporation, a trust, a partnership, or an unincorporated entity.
B. SPEs frequently operate in a predetermined way so that no entity has explicit decision-making authority over the activities of the SPE after its
formation.
C. An SPE can be created to accomplish a narrow, well-defined objective, such as to effect a lease, perform research and development activities, or
securitize financial assets.
D. Economic dependence of an entity on the reporting entity does not by itself lead to control (such as the relationship of suppliers with a significant
customer).
E. All are true.
8. Which of the following statements about control is not true?

A. Control also exists when the parent owns half or less of the voting power of an entity and has power over more than half of the voting rights by virtue
of an agreement with other investors.
B. A parent loses control if it loses the power to govern the financial and operating policies of an investee so as to obtain benefits from its activities.
C. Control exists only when the parent owns more than half of the voting power of an entity.
D. Control also exists when the parent owns half or less of the voting power of an entity and has power to cast the majority of votes at meetings of the
board of directors or equivalent governing body and control of the entity is by that board or body.
E. Control also exists when the parent owns half or less of an entity’s voting power, and has the power to appoint/remove the majority of members of
the board of directors (or equivalent governing body), which controls the entity.
9. The consolidated financial statements of Green Group are prepared for the period ending 31 December 2007. Blue Company, one of the subsidiaries of the
group closed its books at 31 August 2007. Green Group can use the financial statements of Blue Company for consolidation purposes.
A. True
B. False
10. Which of the following statements is not true about minority interests?
A. Minority losses in excess of the interest are not recognized against the minority interest unless the minority has a binding obligation and is able to
make an additional investment to cover the losses.
B. In cases when the minority holds outstanding cumulative preference shares, the parent’s share of profits or losses are computed after adjusting for
dividends on such shares, only when such dividends have been declared.
C. Minority interests should be presented separately in both the income statement and the balance sheet, within equity, separately from the parent’s
equity.
11. Green Group holds a 60 percent interest in Blue Group at 31 December 2007. Inventory is held in the group which was purchased from Blue Group by Green
Group for 50,000. It was purchased at cost plus 25 percent. The group’s consolidated balance sheet has been drafted without any adjustment in relation to the
inventory. What figure in respect of inventory should be included in the group’s consolidated financial statements?
A. 50,000
B. 44,000
C. 40,000
D. None of the above is correct.
12. Which of the following is not a consolidation principle under IAS 27?
A. The results of operations of subsidiaries should be excluded from the date of their acquisition until the date that the parent ceases to control the
subsidiary.
B. The elimination of inter-company transactions and their effects is made in full, even if the subsidiaries are not wholly owned.
C. Unrealized profits and losses (those that remain in the carrying amount of assets such as inventory or fixed assets) should be eliminated in full.
D. There should be a separate presentation of the minority interest share in profit or loss and in net assets.
E. Net assets comprise both the amount calculated at the date of the original combination and the minority’s share of changes in equity since the date of
the combination.
13. Which of the following statements is true about IAS 27’s treatment for preparing separate investors’ financial statements?
A. It mandates which entities should produce separate financial statements for public use and prescribes the accounting treatment in these separate
financial statements.
B. It neither mandates which entities should produce separate financial statements for public use nor prescribes the accounting treatment in these
separate financial statements.
C. It does not mandate which entities should produce separate financial statements for public use, but it prescribes the accounting treatment in these
D. It mandates which entities should produce separate financial statements for public use, but it does not prescribe the accounting treatment in these
14. Which of the following consolidation principles under IAS 27 is not correct?
A. The results of operations of subsidiaries should be included from the date of their acquisition until the date that the parent ceases to control the
subsidiary.
B. The elimination of inter-company transactions and their effects is made in full, even if the subsidiaries are not wholly owned.
C. Unrealized profits (those that remain in the carrying amount of assets such as inventory or fixed assets) should be fully eliminated.
D. The consolidated financial statements should be prepared using uniform accounting policies. If it is not practical to make them the same, this fact
should be disclosed together with the proportions of the items in the consolidated financial statements to which the different accounting policies have
been applied.
15. Which of the following statements is false about treatment of minority interests under the IAS 27?
A. A debit balance on minority interest is not permitted unless the minority has a binding obligation and is able to make an additional investment to cover
the losses.
B. In cases when the minority holds outstanding cumulative preference shares, the parent’s share of profits or losses is computed after adjusting for
dividends on such shares.
C. Minority interests should be presented separately in the income statement.
D. IAS 27 requires minority interests in the balance sheet to be presented separately from both liabilities and equity.
16. If a subsidiary was not consolidated under previous GAAP and the subsidiary has not yet adopted IFRS, the subsidiary’s carrying amounts of assets and
liabilities are those that IFRS would require in its individual financial statements.
A. True
B. False
17. Which of the following statements is false about consolidation principles?

A. The subsidiary’s accounts should be prepared as of the same reporting date as the parent, whether or not the reporting dates are different.
B. If a subsidiary was not consolidated under previous GAAP and the subsidiary has not yet adopted IFRS, the subsidiary’s carrying amounts of assets and
liabilities are those that IFRS would require in its individual financial statements.
C. IAS 27 does not mandate which entities should produce separate financial statements available for public use, but it does prescribe the accounting
treatment to be followed in these separate financial statements.
18. The equity method is used without exception when accounting for an investment in an associate.
A. True
B. False
19. The Red Company owns 30 percent of the Green Company. At 31 December 2007 Red Company holds inventory acquired from Green Company, on which
Green Company earned a profit of 120,000, in 2007. The Red Company’s consolidated financial statements have been drafted without any adjustment in relation
to this holding of inventory. According to IAS 28 which adjustment should be considered in the Red Company’s consolidated balance sheet at 31 December 2007
in determining the inventory and the retained earnings?
A. Inventory reduced by 120,000 and operating profit reduced by 120,000
B. Inventory reduced by 36,000 and operating profit reduced by 36,000
C. Inventory reduced by 84,000 and operating profit reduced by 84,000
D. Inventory reduced by 36,000 and operating profit reduced by 10,800
20. Which of the following statements is false about the equity method?
A. If an investor’s share of an associate’s losses exceeds its interest in the associate, it stops recognizing further losses.
B. On acquisition of an associate, any difference between the cost of the investment and the investor’s share of the fair values of the associate’s net
identifiable assets is treated as goodwill in accordance with IFRS 3.
C. When an investment previously classified as held for sale no longer meets the criteria to be classified, it must be accounted for by using the equity
method retrospectively, from the date it was classified as held for sale.
D. A group’s share in an associate is the aggregate of the holdings by the parent and its subsidiaries.
21. Significant influence is presumed to exist if an investor holds, directly or indirectly, at least what percent of the voting power of the investee (with potential
voting rights included), unless it can be clearly demonstrated that this is not the case?
A. 20
B. 25
C. 50
D. 51
E. 75
22. Which of the following statements is true about accounting by the venturer?
A. The standard does not require the use of equity method, but it permits its use as an alternative method when recognizing interests in joint ventures.
B. The standard requires the use of equity method when recognizing interests in joint ventures.
C. The standard neither requires the use of equity method, nor permits its use as an alternative method when recognizing interests in joint ventures.
D. The standard makes no mention of the use of equity method when recognizing interests in joint ventures.
23. When a venturer purchases assets from a joint venture, it must not recognize its share of the profits of the joint venture from this transaction until it resells
the assets to a third party.
A. True
B. False
24. Which of the following situations is/are out of the scope of IAS 31?
A. Accounting for interests in joint ventures
B. Reporting of joint venture assets, liabilities, income and expenses in the financial statements of venturers and investors
C. Interests in jointly controlled entities held by venture capital organizations that on initial recognition are designated as at fair value through profit or
loss
D. All three are out of scope
E. All three are in scope
25. Which type of joint venture does this case describe?

Three oil production companies jointly control and operate an oil pipeline. Each venturer uses the pipeline to transport its own product in return for which it
bears a proportion of the expenses. Each venturer has control over its share of future economic benefits, but together they do not establish a corporation,
partnership, or other entity.
A. Jointly controlled operation
B. Jointly controlled asset
C. Jointly controlled entity (JCE)
26. Which of the following situations is/are out of the scope of IAS 31?
A. Interests in jointly controlled entities held by mutual funds that are classified as held for trading and accounted for in accordance with IAS 39
B. Reporting of joint venture assets, liabilities, income and expenses in the financial statements of venturers and investors
C. Accounting for interests in joint ventures All three are out of scope.
D. All three are in scope.
27. Which type of joint ventures does this describe?

The joint venture has been established as a corporation, partnership, or other entity in which each venturer has an interest. The entity controls assets, incurs
liabilities and expenses, can enter into its own contracts, can raise finance for the joint venture, maintains its own accounting records, prepares and presents
financial statements, and is entitled to a share of the profits or output.
A. Jointly controlled operations
B. Jointly controlled assets
C. Jointly controlled entities
28. Which of the following statements about joint control is true according to IAS 31?
A. The rules for eliminating unrealized profits and losses as a consolidation adjustment when a venturer purchases assets from its joint controlled entity
are similar to those for purchases from associates.
B. The contractual joint venture arrangement deals with matters such as the activity and duration of the joint venture and the appointment of the board
of directors of the joint venture.
C. The existence of a contractual arrangement distinguishes interests that involve joint control from investments in associates in which the investor has
significant influence.
D. All three statements are true.
29. When a venturer purchases assets from a joint venture, it must not recognize its share of the profits of the joint venture from this transaction until it resells
the assets to a third party.
A. True
B. False
30. Which of the following statements about control is not true?

A. A parent loses control if it loses the power to govern the financial and operating policies of an investee so as to obtain benefits from its activities.
B. Control is presumed to exist when the parent owns more than half of the voting power of an entity, unless it is clear that such ownership does not
constitute control.
C. A group is defined as a parent and all its subsidiaries.
D. It is permissible under international standards to exclude subsidiaries from consolidation on grounds of dissimilarity of activities.
31. Which of the following statements are true about the treatment of minority interests under IAS 27?
A. Losses in excess of the minority’s interest are not recognized against the minority interest, unless the minority has a binding obligation and is able to
make an additional investment to cover the losses.
B. If the minority holds outstanding cumulative preference shares, the parent’s share of profits or losses are computed after adjusting for dividends on
such shares.
C. Minority interests should be presented separately in the income statement.
D. Minority interests are presented in the balance sheet within equity, separately from the parent’s equity.
E. All are true.
32. When a venturer purchases assets from a joint venture, it must immediately recognize its share of the profits of the joint venture from this transaction.
A. True
B. False
33. The Red Company owns 25 percent of the Green Company. At 31 December 2007 Red holds inventory acquired from Green Company, during 2007, at an
amount of €220,000. The cost to Green Company was €120,000. The Red Company’s consolidated financial statements have been drafted without any adjustment
in relation to this holding of inventory. According to IAS 28 which adjustment should be considered in the Red Company’s consolidated balance sheet at 31
December 2007 in determining the inventory and the retained earnings?
A. Inventory reduced by €120,000 and operating profit reduced by €120,000
B. Inventory reduced by €25,000 and and operating profit reduced by €25,000
C. Inventory reduced by €220,000 and operating profit reduced by €120,000
D. Inventory reduced by €100,000 and operating profit reduced by €25,000
34. Which of these statements is true about Special Purpose Entities (SPEs)?
A. An SPE may take the form of a corporation, a trust, an unincorporated entity, or a partnership.
B. An SPE may be created with legal arrangements that impose strict and sometimes permanent limits on the decision-making powers of its board,
trustee, or management.
C. An SPE may be created to accomplish a narrow, well-defined objective, such as to affect a lease, perform research and development activities, or
securitize financial assets.
D. The ability to govern decision-making alone is not sufficient to establish control. It must be accompanied by the objective of obtaining benefits from
the entity’s activities.
E. All are true.
35. Which of the following is not true about the scope of IAS 27?
A. IAS 27 is applied in the preparation and presentation of consolidated financial statements.
B. IAS 27 is applied in accounting for investments in subsidiaries, jointly controlled entities, and associates when an entity presents separate financial
statements.
C. The financial statements of an entity that does not have a subsidiary, associate, or venturer’s interest in a joint controlled entity are within the
definition of separate financial statements.
36. Binfathi has a 100 percent holding in Cairo Fabricating Limited, which is located in a politically unstable country. The government of that country recently
announced that it will not allow any remittances of profits or other cash disbursements to be made to foreign investors for the foreseeable future and has
threatened to nationalize foreign-owned investments without compensation. At the moment, however, Cairo continues to trade within its own local market.
How should this investment be classified?
A. A subsidiary
B. An associate
C. A jointly controlled entity
D. Probably a jointly controlled company but possibly an associate
37. IAS 27 allows a subsidiary to be excluded from consolidation simply because it operates under severe long-term restrictions or because control is temporary.
A. True
B. False
38. Significant influence is presumed to exist if an investor holds, directly or indirectly, at least what percent of the voting power of the investee (with potential
voting rights included), unless it can be clearly demonstrated that this is not the case?
A. 10
B. 20
C. 40
D. 50
E. 75
39. Which of the following statements is true?

A. Proportionate consolidation is a method whereby a venturer’s share of each asset, liability, income and expenses of a jointly controlled entity, is
combined with similar items in the venturer’s financial statement.
B. When applying proportionate consolidation it is appropriate to offset any asset and liability of the jointly controlled entity.
C. The proportionate consolidation method is discontinued at the beginning of the financial year that a venturer loses joint control of a jointly controlled
entity.
D. None of the above is true.
40. Separate financial statements are financial statements that are presented by a parent, an investor in an associate, or a venturer in a jointly controlled entity in
which the investments are accounted for on the basis of the direct equity interest rather than on the basis of the reported results and net assets of the investees.
A. True
B. False
41. According to IAS 28, an investment in an associate is accounted for by using either the equity method or the cost method, under which the investment is
recorded at cost and the income statement of the investor reflects income only if the investor receives distributions from accumulated net profits of the investee
arising since acquisition.
A. True
B. False
42. Which of the following statements is true about preparing investors’ financial statements?
A. IAS 27 both mandates which entities should produce separate financial statements available for public use and prescribes the accounting treatment to
be followed in these separate financial statements.
B. IAS 27 neither mandates which entities should produce separate financial statements available for public use nor does it prescribe the accounting
C. IAS 27 does not mandate which entities should produce separate financial statements available for public use, although it prescribes the accounting
D. IAS 27 mandates which entities should produce separate financial statements available for public use; however, it does not prescribe the accounting
43. Which of the following statements is not a consolidation principle under IAS 27?
A. The results of operations of subsidiaries should be included from the date of their acquisition till the date that the parent ceases to control the
subsidiary.
B. The elimination of inter-entity transactions and their effects is made in full, except if the subsidiaries are not wholly owned.
C. Unrealized profits and losses (those that remain in the carrying amount of assets such as inventory or fixed assets) should be fully eliminated.
D. There should be a separate presentation of the minority interest share in the profit or loss and in equity.
E. Net assets comprise both the amount calculated at the date of the original combination and the minority’s proportion of the net fair value of those
items.
44. Which of the following statements is true about accounting by a venturer?

A. An interest in a jointly controlled operation must be accounted for by applying the equity method of accounting.
B. The standard does not require the use of the equity method, but it permits its use as an alternative method when recognizing interests in joint
ventures
C. An interest in a jointly controlled asset must be accounted for by applying the equity method of accounting.
D. The standard neither requires the use of the equity method nor permits its use as an alternative method when recognizing interests in joint ventures.
IMPAIRMENT OF ASSET
1. An asset is impaired when the ______ amount is higher than the ________ amount.
A. recoverable, depreciable
B. recoverable, carrying
C. depreciable, recoverable
D. carrying, depreciable
E. carrying, recoverable
2. Which of the following are indicators of impairment?

A. The market value of Magnetic Corp.’s main product has declined significantly in the past year.
B. Magnetic Corp.’s reported net assets exceed its market capitalization.
C. Magnetic Corp.’s internal reporting system predicts poor sales.
D. A, B, and C
E. A and B only
3. IAS 36 does not deal with the impairment of which of the following assets?
A. Goodwill
B. Deferred tax assets
C. Tangible fixed assets
D. Intangible fixed assets
E. Financial assets classified as subsidiaries, associates, and joint ventures
4. The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use. Therefore, if an asset’s fair value less costs to sell or its
value in use exceeds the asset's carrying amount, is it necessary to conduct an impairment test?
A. Yes
B. No
5. Is the following statement true or false? IAS 36 requires an impairment test if events or changes in circumstances indicate that an asset’s value may not be
recoverable.
A. True
B. False
6. IAS 36 deals with the impairment of which of the following assets?
A. Investment properties, if measured at fair value
B. Financial assets other than subsidiaries, associates, and joint ventures
C. Investment properties, if measured at historical cost
D. Deferred tax assets
E. Assets arising from employee benefits
7. All of the items listed below except one are examples of impairment indicators. Can you identify it?
A. An increase in interest rates that affects the return required on the company’s assets
B. A minor decline in the asset’s market value
C. Physical damage affecting the asset
D. The asset becoming obsolete
E. The company’s reported net assets exceeding its market capitalization
A. Intangible fixed assets
B. Deferred tax assets
C. Goodwill
D. Investments in subsidiaries, associates, and joint ventures
E. Tangible fixed assets
9. Which of the following steps is not part of the computation of the value in use of a cash-generating unit?
A. Allocating assets to the unit
B. Forecasting future cash flows of the unit
C. Determining discount rate
D. Determining costs to sell
10. Which of the elements below shall be reflected in the calculation of an asset’s value in use?
A. Time value of money
B. Price for bearing the uncertainty inherent in the asset
C. Future cash flows the entity expects to derive from the asset
D. A, B and C
E. B and C
11. Is the following statement true or false? When identifying an asset that may be impaired, the objective is to ensure that the carrying value of the asset is
greater than its recoverable amount.
A. True
B. False
12. When determining value in use, what are the cash flows that shall be reflected in the calculation of an asset’s value in use?
A. Present values of current cash flows
B. Present values of past cash flows
C. Present values of future cash flows expected to be derived from an asset
D. Undiscounted values of future cash flows
E. Future values of cash flows (undiscounted)
13. When assessing the impairment of an asset, the object is to ensure that the carrying value of that asset is not greater than which of the following?
A. Fair value
B. Recoverable amount
C. Selling price
D. Replacement cost
14. Which of the following steps are involved in estimating the value in use of an asset?
A. Estimating the future cash inflows and outflows to be derived from continuing use of the asset and from its ultimate disposal
B. Determining if the company’s reported net assets exceed its market capitalization
C. Applying the appropriate discount rate to those future cash flows
D. A and B
E. A and C
15. What is the final step in the value in use test?

A. Allocate assets to cash-generating units
B. Determine the costs to sell
C. Determine the increase in short-term interest rates
D. Write-down as necessary to reflect any impairment loss thus identified
16. What is the name of the forecast that should not include either the cost or the benefits of restructuring the business, or improving the performance of the
asset?
A. Cash flow forecast
B. Financial forecast
C. Business forecast
D. Performance forecast
17. Is the following statement true or false? The discount rate should reflect the pre-tax return that an investor would require from that asset or cash-generating
unit, with regard to the risks attaching to its cash flows.
A. True
B. False
18. How is a cash-generating unit defined?

A. The higher of an asset’s fair value costs to sell and its value in use
B. The smallest identifiable group of assets that generates cash flows that are largely independent of the cash flows from other assets or groups of
assets
C. The present value of the future cash flows expected to be derived from an asset
19. When is goodwill allocated to the cash-generating units?

A. Purchase date
B. Acquisition date
C. Selling date
D. Closing date
20. When identifying a cash-generating unit, on what do we base our judgment?

A. The amount of the cash-generating unit
B. How the cash-generating unit is monitored internally
C. How the cash-generating unit is monitored externally
D. The independence of the cash flows from other assets or groups of assets
21. Which of the following items is included in a cash flow forecast?

A. All the relevant cash flows of that particular asset or cash-generating unit
B. Cash flows beyond the period covered by budgets, assuming rapid growth
C. Cash flows relating to tax and financing
D. Inventory counts relating to consolidations and financing
22. When determining a discount rate, which of the following are true?
A. The rate should reflect the pre-tax return that an investor would require from that asset or cash-generating unit
B. The rate should reflect the current market rate appropriate for the risks specific to the asset or cash-generating unit
C. The rate should be consistent with previous discount rates offered
D. The rate used must be consistent with the forecast’s treatment of conditions
23. What should be considered when splitting a partial sale that requires goodwill to be apportioned?
A. The relative values of the businesses sold and retained
B. The relative values of the businesses sold and retained, unless another basis of allocation can be shown to be more appropriate.
C. The absolute values of the businesses sold and retained
D. The absolute values of the goodwill to be apportioned compared against the absolute values of the businesses sold and retained
24. How is an impairment loss on an individual asset normally recorded?

A. Provision
B. Revaluation surplus decrease
C. Liability
D. Expense in the income statement
25. When testing goodwill and intangible assets with indefinite lives for impairment, one can use the most recent detailed calculation of recoverable amount
made in an earlier period as long as which of the following conditions are met?
A. The assets and liabilities of its cash-generating unit have not changed significantly
B. The earlier calculation resulted in an amount that exceeded the carrying amount by a substantial margin
C. Analysis of intervening events shows that the likelihood of impairment is remote
D. A, B, and C
E. A and B only
26. Is it possible to reverse any previous impairment of goodwill under IAS 36?
A. Yes
B. No
27. Is the following statement true or false? An impairment loss on a cash-generating unit should be attributed first to any goodwill allocated to the unit and then
against the other assets in the unit.
A. True
B. False
28. The amount of the reversal of an impairment loss is limited to what amount?
A. The amount that brings the asset back to the initial carrying amount before the loss was recognized
B. There is no limit.
C. Its fair value
D. The carrying amount that would have been determined (net of amortization or depreciation) had no impairment loss been recognized for the asset
in prior periods.
29. Which of the following could be indicators that an impairment loss might need to be reversed?
A. Increase in asset’s market value
B. Favorable changes in the company’s environment
C. Decreases in interest rates or other rates of return
D. Favorable changes within the company
E. Improved performance of the asset
30. Should a liability be recognized for an impairment loss for a cash-generating unit?
A. Yes, usually
B. No, never
C. Only if another standard requires such recognition
31. When testing an intangible asset with an indefinite life, the most recent detailed calculation of recoverable amount made in an earlier period can be used,
provided: a) the assets and liabilities of the cash-generating unit to which the intangible asset belongs (in case the intangible asset does not generate inflows from
continuing use that are independent) have not changed significantly; b) the earlier calculation resulted in an amount that exceeded the carrying amount by a
substantial margin; and c) analysis of intervening events shows that the likelihood of impairment is remote. This same applies when testing which of the
following?
A. Material intangible assets with definite lives
B. Goodwill
C. Intangible assets that were impaired in prior periods
D. Tangible assets with an infinite life
32. Is the following statement true or false? A first-time adopter should apply IAS 36 to determine whether any impairment loss exists at the date of transition to
IFRSs. In this case, the first-time adopter should measure the impairment loss using estimates which are consistent with those made for the same date under
previous GAAP.
A. True
B. False
33. Is the following statement true or false? An entity should disclose any impairment losses and reversals recognized in equity.
A. True
B. False
34. Which of the following are disclosure requirements of IAS 36?

A. Disclosure of the key assumptions used to measure the recoverable amount of cash-generating units to which a significant amount of goodwill or
intangibles with indefinite lives has been allocated
B. Disclosure of the discount rate used, which should be that used in the current estimate of residual value and also for the previous estimate (if any)
C. Disclosure of any impairment losses and reversals recognized in profit or loss during the period, and the income statement line in which they are
recognized
D. All of the above
35. Which of the following is/are first-time adoption requirements laid down by IFRS 1?
A. Any changes in assumptions on a later date increasing impairment losses that existed at the transaction date are reflected in the opening balance
sheet
B. The opening balance sheet should reflect any IAS 36 impairment losses that exist at the transition date
C. Any later reversals of impairments recognised on transition are accounted for as normal, in the income stament
D. A and B
E. B and C

A. IAS 36 requires disclosure of the key assumptions made in determining the recoverable amount of each cash-generating unit to which a significant
amount of goodwill or intangible assets with indefinite lives has been allocated.
B. IAS 36 requires disclosure of the key assumptions made in determining the recoverable amount of assets or cash-generating assets units during the
period.
C. IAS 36 recommends disclosure of the key assumptions made in determining the recoverable amount of assets or cash-generating units during the
period
D. A and B
E. A and C
37. What disclosures are required if the impairment loss or reversal of any one asset or cash-generating unit in the period is material?
A. The amount of the loss or reversal
B. Whether recoverable amount is based on fair value less costs to sell or value in use
C. The events and circumstances that led to it
D. A description of the asset or cash-generating unit and the segment to which it belongs if IAS 14 applies
E. All of the above

A. Disclosure of the key assumptions used to measure the recoverable amount of cash-generating units to which a significant amount of goodwill or
intangibles with indefinite lives has been allocated
B. Disclosure of the discount rate used, which should be that used in the current estimate of residual value and also for the previous estimate (if any)
C. Disclosure of any impairment losses and reversals recognized in profit or loss during the period, and the income statement line in which they are
recognized
D. All of the above
39. The elements below are involved in which calculation?
1) The future cash flows the entity expects to derive from the asset; 2) expectations about possible variations in the amount or timing of the cash flows; 3) the
time value of money, being the current risk-free rate of interest; 4) the price for bearing the uncertainty inherent in the asset; and 5) other factors (such as
illiquidity) that market participants would reflect in pricing the cash flows
A. Actual sales
B. Recoverable amount
C. Fair value less cost to sell
D. Value in use
E. Cash-generating unit
40. When accounting for an asset, the objective is to ensure that the carrying value of that asset is not greater than which of the following?
A. Future cash flows
B. Assets arriving from employee benefits
C. Investment properties
D. Recoverable amount
A. Assets arising from construction contracts
B. Assets arising from employee benefits
C. Deferred tax assets
D. Investment property that is measured at fair value
E. All of the above
42. An asset is impaired when the ______ amount is higher than the ________ amount.
A. recoverable, depreciable
B. recoverable, carrying
C. depreciable, recoverable
D. carrying, depreciable
E. carrying, recoverable
43. Is the following statement true or false? IAS 36 requires an impairment test if events or changes in circumstances indicate that an asset’s value may not be
recoverable.
A. True
B. False
44. Which of the following are disclosure requirements?
A. Key assumptions used to measure the recoverable amount of cash-generating units to which a significant proportion of goodwill or intangibles with
indefinite lives has been allocated
B. The discount rate used, which should be that used in the current estimate of residual value and also for the previous estimate (if any)
C. Any losses and reversals recognized in the results of the period, and the income statement line in which they are recognized
D. All of the above
45. An impairment loss on an individual asset is normally recorded as what on the income statement?
A. Revaluation decrease
B. Liability
C. Expense
46. When determining a discount rate, which of the following are true?
A. The rate should reflect the pre-tax return that an investor would require from that asset or cash-generating unit
B. The rate should reflect the current market rate appropriate for the risks specific to the asset or cash-generating unit
C. The rate should be consistent with previous discount rates offered
D. The rate used must be consistent with the forecast’s treatment of conditions
47. Is the following statement true or false? An impairment loss on a cash-generating unit should be attributed first to any goodwill allocated to the unit and then
pro rata against the other assets in the unit.
A. True
B. False
48. When is goodwill allocated to the cash-generating units?

A. Agreement date
B. Acquisition date
C. Selling date
D. Closing date
INTANGIBLE ASSETS
1. True or False: Mineral and exploration rights are not within the scope of IAS 38,
A. True
B. False
2. Which of the following can not be recognized as an intangible asset?

A. Patented drug
B. Import quotas
C. Assembled work force
D. Contractual customer relationship
E. Broadcasting license
3. True or False: An intangible asset is "an identifiable, non monetary asset without physical substance."
A. True
B. False
4. True or false: A definition of an intangible asset is an identifiable, non-monetary asset without physical substance and with no impairments.
A. True
B. False
5. There are several factors to consider when initially recognizing an intangible asset.
A. The cost of the asset can be measured reliably
B. The intangible asset must be identifiable
C. It is probable that future economic benefits will flow to the entity
D. A, B, and C are correct
E. A and B are correct
6. When an intangible asset is acquired by way of a government grant, its original value is usually set at either a nominal amount or at its fair market value, if that
can be determined. True or False.
A. True
B. False
7. Which of the following condition(s) must be demonstrated in order to capitalize development costs?
A. The technical feasibility of the asset as proof that it can be sold or used
B. How the asset will generate future economic benefits
C. The entity’s ability to complete development of the asset
E. All of the above
8. The cost of a separately acquired intangible asset includes which of the following:
A. Import duties
B. Costs to prepare the asset for its intended use
C. Amount paid for the asset
D. All of these
E. None of these
9. Which of the following statements is true for internally generated intangible assets?
A. Internally generated goodwill can never be recognized as an asset.
B. Expenditures incurred in the research phase are expensed.
C. Expenditures incurred in the development phase shall be capitalized if they meet stringent conditions.
D. All of the above
10. True or false: When measuring value subsequent to the initial recognition of an intangible asset, the standard allows either of two accounting models: cost or
revaluation.
A. True
B. False
11. When capitalizing development costs, which of the following costs might be included?
A. Designing and testing of prototypes
B. Staff training costs
C. Amortisation of patents and licenses
D. A and C
E. B and C
12. Which of the following statement(s) is/are true about recognition of intangible assets acquired in the course of a business combination?
A. The acquirer must be able to measure the acquired asset reliably.
B. The assets can be recognized only if the acquiree had recognized them.
C. The fair value of the intangible asset includes two components: value of the asset and value of its goodwill.
D. A and B are correct.
E. B and C are correct.
13. True or false: Intangible assets acquired in an asset swap can be exchanged for non-monetary assets only.
A. True
B. False
14. Which of the following statements is false for internally generated intangible assets?
A. Internally generated goodwill sometimes can be recognized as an asset.
B. Costs incurred in the research phase are expensed.
C. Costs incurred in the development phase are capitalized if they meet stringent conditions.
D. All of the above
15. When capitalizing development costs, which of the following costs might be included?
A. Materials used and services consumed
B. Startup costs
C. Fees to register a legal right
D. B and C
E. A and C
16. Which of the following statements are correct about amortization?

A. Amortization commences when the asset is available for use.
B. Amortization commences when the asset is first used.
C. Amortization should still be charged even if the fair value of the asset exceeds its carrying amount.
D. A and C
E. B and C
17. Which of the following statements are false concerning the revaluation model?
A. If one intangible asset is accounted for using the revaluation model, all of the intangible assets in its class must be accounted for this way.
B. Revaluations need to be made regularly so that at the balance sheet date the carrying amount of the asset does not differ materially from its fair value.
C. The revaluation model is the most often used accounting policy to value an intangible asset.
D. All of the statements are true
E. All of the statements are false.
18. Which of the following statement(s) is/(are) true about retirements and disposals?
A. An intangible asset is derecognized on disposal or when no future economic benefits are expected from its use and subsequent disposal.
B. Gains and losses on derecognition must be taken on the income statement.
C. The gain or loss is the asset’s carrying value minus the net disposal proceeds (if any).
D. All of the above
19. True or false: The residual value of an intangible asset is assumed to be zero. An exception would be if a third party commits to purchase the asset at the end
of its useful life.
A. True
B. False
20. Which of the following factors affect the useful life of an intangible asset?
A. Typical product life cycles for the asset
B. Stability of the industry and changes in market demand for the product
C. Expected actions by competitors
D. Level of maintenance expenditure required to sustain the asset
E. All of the above
21. Which of the following factors affect the useful life of an intangible asset?
A. Expected usage of the asset
B. Legal limits on the period of control over the asset
C. Technical/technological and other obsolescence
E. All of the above
22. Which of the following statements about residual value are true?
A. The residual value of an intangible asset is assumed to be zero.
B. An exception to the residual value being zero would be if there is an active market for the asset, that that market is expected to exist at the end of the
asset’s useful life, and that the residual value can be determined by reference to that market.
C. An exception would be if a third party commits to purchase the asset at the end of its useful life.
D. All the statements above are true.
E. All of the statements are false.
23. Which of the following statements is true about reviewing useful lives and depreciation methods?
A. Useful lives are reviewed semiannually and revised if expectations are significantly changed.
B. Amortization methods should be reviewed at least annually and changed if they no longer reflect the expected pattern of benefits from the assets.
C. Only changes to amortization methods and not changes in useful lives should be accounted for prospectively.
D. These requirements are different than the requirements for tangible assets.
24. When disclosing revaluations for a class of intangible assets, what of the following information must be disclosed?
A. The effective date of the revaluation
B. The carrying amount of revalued intangible assets
C. The carrying amount that would have been recognized had the revalued intangible asset been measured using the cost model
D. A and B
E. A, B and C
25. True or false: IAS 38 requires that R&D expenses be disclosed at the completion of each R&D project.
A. True
B. False
26. For first-time adoption, the opening IFRS balance sheet should be restated to do which of the following?
A. Exclude existing intangible assets that do not qualify for capitalization under IAS 38
B. Include all intangible assets that do qualify for capitalization under IAS 38
C. Neither A nor B are correct
D. Both A and B are correct
27. When disclosing the reconciliation of the carrying amount at the beginning and end of period for a class of intangible assets, which of the following
information needs not to be disclosed?
A. Additions, indicating separately those from internal development, those acquired separately, and those from business combinations.
B. Impairment losses, net of reversals during the period
C. Amortization recognized during the period
D. Assets classified as held for sale and other disposals
E. Net exchange differences arising on the transaction to presentation currency
28. An entity is required to disclose the aggregate amount of research and development costs it has expensed during the period.
A. True
B. False
29. For any individual intangible asset that is material to the entity’s financial statements, the entity has to disclose which of the following?
A. Description of the asset
B. Carrying amount of the asset
C. Remaining amortization period of the asset
D. All of the above
30. When an entity uses the revaluation model, carries its assets at a valuation, and discloses a revaluation, which of the following items must it disclose?
A. Effective date of the revaluation
B. Revaluation surplus at the beginning and end of the period, indicating the changes during the period (with restrictions) in the surplus during the period
C. Original value of the asset
D. A and B
E. A and C
31. True or false: When disclosing the information such as amortization methods and gross carrying amounts on the assets, there is no need to break down the
list of assets by class.
A. True
B. False
32. Which of the following factors affect the useful life of an asset?
A. Expected use of the asset
B. Stability of the industry
C. Value of the asset
D. A and B
E. B and C
33. Which of the following costs can be directly attributable to the cost of an internally generated intangible asset?
A. Legal and secretarial costs of establishing a new entity
B. Materials used and services consumed
C. Advertising and promotional costs relating to the introduction of a new product
D. Relocation or reorganisation costs
E. Selling, administration and general overhead expenditure
34. Matching
A. Intangible Asset
B. Asset
C. Research
D. Amortization
E. Carrying Amount
1. An identifiable nonmonetary asset without physical substance
2. A resource that is controlled by an entity as a result of past events, and
from which future economic benefits are expected to flow to the entity
3. The systematic allocation of the depreciable amount of an intangible
asset over its useful life
4. The amount at which an asset is recognized in the balance sheet after
deducting any accumulated amortization and accumulated impairment
losses thereon
5. Original and planned investigation undertaken with the prospect of gaining
new scientific or technical knowledge and understanding
35. An asset meets the identifiably criterion in the definition of intangible assets when it:
A. is separable and arises from contractual or other legal rights.
B. is separable and arises from contractual and other legal rights.
36. At first-time adoption, if an internally generated intangible asset qualifies for recognition at the date of transition, the entity recognizes the asset in its
opening IFRS balance sheet even if it had recognized the related expenditure as an expense under previous GAAP.
A. True
B. False
37. When bringing an asset into use, what costs can be capitalized?
A. Costs of introducing a new product or service (including costs of advertising and promotional activities)
B. Costs of conducting business in a new location or with a new class of customer (including costs of staff training)
C. Import duties
D. Administration and other general overhead costs
E. Costs incurred while an asset capable of operating in the manner intended by management has yet to be brought into use
38. When a government gives an entity airport-landing rights, how is this asset measured?
A. At either a nominal amount or at its fair value at the time of the grant
B. As a portion of total revenues received by the entity
C. It is never measured
D. At its fair value at the time of implementation
E. By determining the percentage of time the entity uses the landing rights as compared with other entities’ use of the same landing rights
39. How often should the entity review useful lives of intangible assets?
A. At least monthly
B. At least quarterly
C. At least semiannually
D. At least annually
E. On an as-needed basis
40. Below is a list of possible exceptions to setting the residual value of an intangible asset to zero.
A. When a third party commits to purchase the asset at the end of its useful life
B. When there is an active market for the asset, that market is expected to exist at the end of the asset’s useful life, and the residual value can be
determined by reference to that market
C. When there is an ongoing R&D effort indirectly related to the intangible asset and there is hope that a new development will reinstate its market value
D. A and B are correct
E. B and C are correct
41. True or false: Mineral rights and expenditures on the exploration for, or development and extraction of, minerals, oil, natural gas, and similar nonregenerative
resources are within the scope of IAS 38.
A. True
B. False
INTRODUCTION TO FINANCIAL INSTRUMENTS
1. Which of the following is not a financial instrument?

A. Finance leases
B. Trade receivables
C. Derivatives
D. Tax liabilities
2. In what IFRS standard would you find the rules for recognition and derecognition of financial instruments?
A. IAS 21 (effects of foreign exchange)
B. IAS 29 (hyperinflationary)
C. IAS 32 (presentation)
D. IAS 39 (recognition and measurement)
3. True or false: The revised versions of IAS 32 and 39 released in December 2003 included an amendment covering Fair Value Macro Hedge Accounting.
A. True
B. False
4. What rule(s) is/are covered within the scope of IAS 32?

A. Classification of financial instruments
B. Presentation of financial instruments
C. Disclosure of financial instruments
D. B and C are correct
E. A, B, and C are correct
5. A financial instrument is a _________ that gives rise to both a financial _________ in one entity and a financial _________ or equity instrument in another
entity.
A. liability, contract, asset
B. debt, contract, asset
C. contract, asset, liability
D. gain, asset, liability
E. debt, accounting, disclosure
6. True or false: IAS 39 has two sets of rules for the measurement of financial instruments. One set applies to derivatives (and in some cases non-derivatives) that
qualify as hedges and the related hedge item and the other set applies to all other financial instruments.
A. True
B. False (there are three sets of measurement: cost, amortized cost using EIR and fair value)
7. Within the definition of the standards for financial instruments, which of the following is not a financial instrument?
A. Tax liabilities
B. Trade receivables
C. Derivatives
D. Finance leases
8. Within the scope of IAS 32 and IAS 39, which of the following facts is true for insurance contracts?
A. Insurance contracts within the scope of IFRS 4 are included.
B. Insurance contracts that provide for reimbursement of an incurred loss specific to the insured party are included.
C. Types of derivative contracts embedded in insurance contracts are included if the derivative is not itself a contract within the scope of IFRS 4.
9. True or false: As a general rule, the scope of IAS 32 and 39 includes all types of financial instruments that are not covered by other standards.
A. True
B. False
10. True or false. An entity has a past history of settling a contract to sell a non-financial item net in cash. The entity is required to account for the contract as a
derivative.
A. True
B. False
11. In which standard would you find guidelines related to subsidiaries, associates, and joint ventures?
A. IAS 27
B. IAS 28
C. IAS 31
12. Which of the following statements concerning insurance contracts is/are true?
A. Insurance contracts within the definition of IFRS 4 are excluded from IAS 39.
B. Contracts that reimburse for a loss actually incurred are outside the scope of IAS 39.
C. IAS 39 applies to those insurance contracts that are financial guarantee contracts entered into, or retained, on transferring to another party financial
assets or financial liabilities.
D. IAS 39 applies to derivative contracts embedded in insurance contracts if the derivative is not itself a contract within the scope of IFRS 4.
E. All of the above
13. What standard(s) might apply to a loan commitment that does not fall under IAS 39?
A. IAS 18
B. IAS 32
C. IAS 37
E. A and C are correct
14. To be within scope of IAS 39, which of the following conditions apply/applies to an entity regarding a contract to buy or sell a non-financial item?
A. The contract must be settled in cash or with an item that is readily convertible to cash.
B. The contract may be with an entity that has a history of taking delivery of the commodity and shortly thereafter selling the commodity.
C. The contract may be with an entity that has a past practice of settling in cash or entering into offsetting contracts with the counterparty.
D. All of these
E. None of these
15. Which of the following factors do/does not apply to a derivative?

A. Its value changes in response to changes in its underlying’s variable, like a specified interest rate.
B. It requires no, or a comparatively smaller, initial net investment.
C. It is settled on the current or a future date. (It must be future only)
E. All of the above
16. An embedded derivative is a ___________ of a ___________ (combined) instrument that also includes a non-derivative host ________. Choose a response to
complete the sentence.
A. gain, contract, component
B. component, hybrid, contract
C. hybrid, contract, liability
D. component, gain, liability
E. debt, hybrid, disclosure
17. For valuation purposes, embedded derivatives must sometimes be separated from their host contract. Which of the following statements is/are false about
the requirements for separation of embedded derivatives from host contracts?
A. The economic characteristics and risks of the embedded derivative are not closely related to those of the host.
B. A separate instrument with the same terms as the embedded satisfies the definition of a derivative.
C. The hybrid instrument is not already measured at fair value with changes taken to the income statement.
D. All of the above
18. Which of the following embedded instruments would not be considered closely related to a host contract?
A. Zero coupon bond with a rate of return based on the share price of a specific equity instrument
B. Bond with a coupon of LIBOR + 2 basis points
C. Deposit with an extension option exercisable in 6 months for a market rate
D. Lease contract for a European entity that is denominated in Euros
19. Relative to other types of contracts that have a similar response to changes in market conditions, what kind of net investment does a derivative require?
A. None
B. Little
C. Much greater
20. Which of the following embedded instruments would not be considered closely related to a host contract?
A. Deposit with an extension option exercisable in 6 months for a market rate
B. Lease contract for a European entity that is denominated in Euros
C. Zero coupon bond with a rate of return based on the share price of a specific equity instrument
D. Bond with a coupon of LIBOR + 2 basis points
21. True or false: The general rule for treating multiple embedded derivatives is to treat them as a single compound embedded derivative and value it
accordingly.
A. True
B. False
22. A leveraged gold note is a bond in which the coupon rate is zero and the principal varies based on the London Gold Index. The embedded derivative (gold
commodity contract) is considered closely related to the host contract (debt instrument). Is this statement true or false?
A. True
B. False
23. Which of the following is not a debt instrument?

A. A contractual obligation for the issuer to settle a non-derivative contract via delivery of a variable number of its own equity instruments
B. A contractual obligation either to deliver cash or another financial asset, or to exchange financial instruments with another entity under conditions that
are potentially unfavourable to the issuer
C. Shares in open-ended mutual funds and co-operatives
D. Preferred shares where redemption or payment of dividends is at the discretion of the issuer
24. True or false: Financial instruments that contain both a liability and equity component (compound instruments) must be split and accounted for separately.
A. True
B. False
25. An entity can own instruments in itself. Some are considered assets, and some are considered debts. Which of the following instruments that an entity can
own in itself is/are considered an asset(s)?
A. Market-making activity instruments
B. Hedges of derivative trading activities
C. Hedges of employee share-based awards
D. All of the above
26. When considering compound instruments such as convertible debt, how is the liability component determined?
A. By a fixed value of the expected cash flows (excluding the equity component), and with the residual allocated to the equity component
B. By a fixed value of the current cash flows (excluding the equity component), and with the residual allocated to the equity component
C. By the fair value of the expected cash flows (excluding the equity component), and with the residual allocated to the equity component
D. By the fair value of the expected cash flows (excluding the equity component), when the residual is taken from the liability component
27. Which of the following is/are a debt instrument(s)?

A. A perpetual bond with a 7 percent interest rate.
B. A redeemable convertible share, which allows the holder to convert it on the basis of a ratio. It will be redeemed at a premium in 10 years unless
conversion has taken place.
C. A preference share that is redeemable at the option of the issuer, and that must be redeemed in the event of the Dow index falling below 6,000 points.
D. All of the above
28. What is the first step in completing first-time adoption procedures regarding debt vs. equity?
A. Determine the fair value of the contract at each balance sheet presented.
B. Adjust the net income and retained earnings for any changes in the fair value of the contracts for the relevant reporting periods.
C. Identify its own share contracts that do not qualify for classification in equity.
D. Adjust equity accounts for the premium paid/received against the derivative assets/liabilities, as appropriate.
E. Determine any premium received/paid for the contract.
29. A contractual obligation for the ____________to settle a non-derivative contract via ______of a variable number of its own equity instruments, so that the
value to be delivered is _________ the fixed sum makes an instrument a debt rather than equity.
A. lessee, contract, equal to
B. issuer, delivery, greater than
C. issuer, delivery, less than
D. issuer, delivery, equal to
E. lessee, contract, less than
30. Matching
A. Equity instrument 4
B. Financial asset 2
C. Fair value 5
D. Financial liability 3
E. Financial instrument 1
1. A contract that gives rise to both a financial asset in one entity and a financial liability or equity instrument in another entity
2. Cash, equity instrument in another entity, or contractual right to receive cash or another financial asset with another entity under possibly favourable
conditions
3. Contractual obligation to deliver cash or another financial asset, or to exchange financial instruments with another entity under possibly unfavourable
conditions to the entity
4. Any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities
5. The amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an “arm’s length transaction”
31. There are two sets of rules for measurement of financial instruments within IAS 39. True or false?
A. True
B. False
32. Under what condition might a financial guarantee not be considered to be within scope of IAS 32/39?
A. If it is defined as an insurance contract as defined in IFRS 4
B. If it is defined as a business risk
C. If it is considered to be a foreign currency liability
D. If it is considered to be an asset
33. Which of the following is/are excluded when considering an embedded derivative?
A. A derivative that is contractually transferable from the host
B. A derivative with a different counterparty from the host
C. A derivative embedded in another derivative
D. A and B are excluded
E. A, B, and C are excluded
34. When valuing embedded derivatives, a specific process is followed. Number the process steps in the correct order.
A. If the embedded derivative was option based, determine if the fair value can be determined. If it can, determine the fair value of the embedded
derivative and assign the residual value to the host.
B. Check if the embedded derivative is non-option based (for example, a swap or future). If it is, its fair value is zero at initial recognition.
C. If the fair value of the embedded derivative could not be determined, determine if the fair value of the hybrid and the host can be determined. If they
can, the fair value of the embedded derivative is the difference.
D. If the fair value of the hybrid and the host could not be determined, the hybrid contract is treated as held for trading and fair valued as a single
instrument.
35. What standard(s) might apply to a loan commitment that does not fall under IAS 39?
A. IAS 18
B. IAS 37
C. IAS 32
E. A and C are correct
36. How may the premium for the gross amount for a derivative be recorded after determining how it is to be settled?
A. As an asset
B. As an equity
C. As a liability
37. True or False: The IAS 32 and 39 standards Financial Instruments: Disclosure and Presentation and Financial Instruments: Recognition and Measurement while
narrow in scope do cover all financial instruments.
A. True
B. False
38. When are derivatives classified in equity?

A. If the contract was settled by exchanging a fair value amount of an entity’s own equity instruments for a fixed amount of cash or other financial assets
B. If and only if the contract will be settled by exchanging a fixed amount of an entity’s own equity instruments for a fixed amount of cash or other
financial assets
C. If and only if the contract was settled by adding a fixed amount of an entity’s own equity instruments to a fixed amount of cash or other financial
assets
D. If the contract will be settled by subtracting a fair value amount of an entity’s own equity instruments from a fair value amount of cash or other
financial assets
ACCOUNTING FOR FINANCIAL INSTRUMENTS
1. According to IAS 39, which of the following, if any, is not a category of financial assets?
A. Financial assets (or liabilities) at fair value through profit or loss
B. Held-to-maturity investments
C. Loans and receivables
D. Available-for-sale financial assets
E. All are categories
2. Which of the following is an example of a loan and receivable?

A. Assets that are designated as fair value through profit or loss
B. A non-derivative financial asset with fixed or determinable payments that is not quoted in an active market
C. An interest acquired in a pool of assets
D. Assets that the entity intends to sell immediately
3. True or false? Held-to-maturity investments are financial assets with fixed or determinable payments and fixed maturity that an entity has the positive intent
and ability to hold to maturity.
A. True
B. False
4. How are the transaction costs of fair value assets through profit and loss treated?
A. These costs are capitalised.
B. These costs are expensed.
C. These costs are amortised.
D. None of the above are correct
5. What is the rule that guides an entity when classifying assets as held-to-maturity?
A. Maturing
B. Tainting
C. Forecasting
D. Validating
E. Hedging
6. Under what condition(s) can the measurement of derivatives not be measured at fair value on the balance sheet?
A. If fair value cannot be reliably measured
B. B. If it is a derivative liability linked to delivery of an unquoted equity instrument whose
fair value cannot be reliably measured
C. If 50 percent of it is available-for-sale equity security
7. What type of transfer between categories is discussed in the following passage?

“Revalue to fair value and include gain or loss in equity until sold (and then record through P&L). Do not include impairment losses and FX gains and losses -- these
should be recognised directly in P&L.”
A. From available-for-sale to held-to-maturity
B. From fair value through profit or loss
C. To fair value through profit or loss
D. From held-to-maturity to available-for-sale
8. At initial recognition, how are the transaction costs of fair value assets through profit and loss treated?
A. These costs are amortised.
B. These costs are capitalised.
C. These costs are expensed
D. None of the above are correct.
9. Which of the following factors is (are) objective evidence of possible impairment?

A. Financial difficulty of the buyer
B. Stable technology environment
C. High probability of bankruptcy or financial reorganisation
10. Matching
A. Impairment Measurement 1
B. Impairment Assessment 3
C. Impairment Recognition 4
D. Collective Assessment 2
1. Difference between the carrying amount
and present value of estimated future
cash flows
2. Group of assets with similar risk
characteristics
3. The general evidence of impairment applies
4. The carrying amount of an asset must
be reduced to the estimated recoverable
amount
11. For assets carried at cost or amortised cost, when calculating an impairment value, the amount measured is the ____________ the _________________and
the __________________.
A. Difference between, current fair value, anticipated fair value
B. Sum of, anticipated fair value, current fair value
C. Sum of, acquisition cost, current fair value
D. Sum of, current fair value, anticipated fair value
E. Difference between, acquisition cost, present value of estimated future cash flows
12. Which of the following facts are true about impairments?

A. There is no notion of temporary impairment.
B. B. Assessing individual assets for impairment is usually sufficient. Only in rare occasions do you need to perform collective assessments.
C. The subjectivity of provisional amounts is reduced because of estimated cash flows.
D. D. When performing the discounted cash flow calculations, the entity needs to use the current rate, not the original rate.
13. Unquoted _______ instruments whose ________ value cannot be measured are carried at cost. These assets ______ be subject to impairment.
A. Equity, estimated, cannot
B. Equity, fair, can also
C. Debt, estimated, cannot
D. Debt, fair, can also
E. Debt, estimated, can also
14. Which of the following statements about impairments is (are) true?

A. There is a distinction between impairment and non-performing loans.
B. B. There is a distinction between a debt security being revalued downward because of a rise in interest rates and credit problems.
C. There is no distinction between impairment and a temporary decline in market value.
15. Which of the following statements about impairments related to financial assets carried at amortised cost (is) are true?
A. When assessing for impairments, the general objective evidence applies. This evidence is first assessed individually and then collectively.
B. The impairment loss is the difference between the carrying amount and the present value of expected future cash flows discounted at the original
effective rate.
C. In order to recognise the impairment, the carrying amount of the asset must be reduced to its estimated recoverable amount, and the loss must be
included in the profit or loss for the period.
16. For assets carried at cost or amortised cost, when calculating an impairment value, the amount measured is the ____________ the _________________and
the __________________.
A. Sum of, current fair value, anticipated fair value
B. Difference between, acquisition cost, present value of estimated future cash flows
C. Sum of, acquisition cost, current fair value
D. Sum of, anticipated fair value, current fair value
E. Difference between, current fair value, anticipated fair value
17. In a forward contract, an entity should recognise the contract at the ___________ date, not the _________ date when the exchange actually occurs, as the
date when contractual obligations started, because _________________ subject to the contract and exposed to price risk.
A. Trade, settlement, only one party is
B. Trade, settlement, both parties are
C. Settlement, trade, both parties are
D. Settlement, trade, only one party is
18. During derecognition, which of the following financial assets can be derecognised?
A. Part of an asset
B. An entire asset
C. Some specific cash flows
D. All of these
E. None of these
19. True or false? If an entity uses a settlement date for balance sheet purposes, cumulative changes in fair value are still recognised on the trading date and from
then forward.
A. True
B. False
20. True or false? If an entity uses settlement date accounting, cumulative changes in fair value are still recognised on the trading date and from then forward in a
manner consistent with how they will be classified when recognised.
A. True
B. False
21. During derecognition, which of the following financial assets can be derecognised?
A. Part of an asset
B. An entire asset
D. All of these
E. None of these
22. When accounting for an entity’s ownership of equity in itself, which of the following statements is (are) not true?
A. Account for the equity as an asset.
B. Account for the ownership as a reduction of equity.
C. Manner of settlement (gross or net).
D. None of the above.
23. According to IAS 32, what are the two components of a compound instrument?
A. Future liability and equity
B. Future expenditures and equity
C. Assets and equity
D. Liability and equity
E. Assets and liability
24. When splitting the liability and equity components in a compound instrument, how are the transaction costs allocated?
A. 100 percent of the transaction costs are allocated to liability
B. 100 percent of the transaction costs are allocated to equity
C. 75 percent to liability and 25 percent to equity
D. 75 percent to equity and 25 percent to liability
E. Proportionately to liability and equity
25. For what reason(s) does IAS 32 require that an issuer separately recognise the component parts of a financial instrument?
A. For purposes of balance sheet presentation
B. To document the risk management objectives
C. To monitor the effectiveness of the financial instrument
D. A and C are correct.
E. A, B, and C are correct.
26. At 1 January 2003 Company A’s Group Treasurer issues 5 million European style put options to an investment bank. The current price of Company A’s shares
is Euro 10. The put options are issued at the money with a strike price of Euro 10 and an expiration of 30 June 2003 for a premium of Euro 1 per option. Company
A can decide to gross share or net share settle. It has no history with regard to settling these types of contracts.
Should this contract be accounted for as a derivative liability or equity instrument?
A. Derivative liability
B. Equity instrument
27. What is measured first when determining the value of the compound instrument?
A. The transaction costs
B. The fair value of the liability
C. The fair value of the equity
D. The carrying amount of the equity
28. The___________ of the carrying amounts assigned to the liability and equity components on ____________ recognition is always____________ the carrying
amount that would be ascribed to the instrument as a whole.
A. Difference, final, equal to
B. Difference, initial, greater than
C. Sum, initial, equal to
D. Sum, final, less than
E. Difference, initial, less than
29. According to IAS 39, how must derivatives be measured on the balance sheet?
A. At present value
B. At fair value
C. By the nature of the liability
D. Precisely
E. Against future expenditures
30. Which of the following are types of hedging relationship as defined by IAS 39?
A. Fair value hedge
B. Credit Risk hedge
C. Cash Flow hedge
D. Interest risk hedge
31. Which of the following are examples of a hedged item?

A. A recognised asset or liability
B. An unrecognised firm commitment
C. An uncommitted but highly probable forecast transaction
D. A and B are examples
E. A, B, and C are examples
32. Under the Fair Value hedge accounting model, what is the correct accounting for the change in fair value due to a hedged risk of the hedging instrument?
A. The change in fair value due to the hedged risk is recognised immediately in the equity statement.
B. The change in fair value due to the hedged risk is recognised in the equity statement.
C. The change in fair value due to the hedged risk is recognised in the notes of the annual report.
D. The change in fair value due to the hedged risk is recognised immediately in the profit and loss statement.
E. The change in fair value due to the hedged risk is not noted in the profit and loss statement
33. Generally, against what does a cash flow hedge aim to protect?
A. Changes in the fair value arising from market price movements
B. The variability of cash flows arising from market price
C. Past obligations that are a result of contingent liability
E. All are correct
34. What is the difference between hedging and hedge accounting?

A. While hedge accounting is the economic process of entering into a transaction in order to reduce risk, hedging is the application of special rules to
account for the component parts of the hedging relationship.
B. While hedge accounting is the IASB rules-based economic process of entering into a transaction in order to reduce risk, hedging is the use of hedge
accounting to account for the component parts of the hedging relationship.
C. While hedging is the process of entering into a transaction in order to reduce risk, hedge accounting is the application of special governmental rules to
D. While hedging is the economic process of entering into a transaction in order to reduce risk, hedge accounting is the application of special rules to
35. An example of a cash flow hedge by a European functional currency entity is a "forecast USD foreign currency sales of airline seats hedged by a USD/euro
foreign currency forward contract." How might this type of hedge protect a company?
A. By ensuring that a potential lawsuit is won for the company
B. By protecting the lending bank of the company from the changes in exchange rates
C. By protecting the USD from the costs of bringing the company into environmental compliance
D. By protecting the euro cash flows to be received from the sales against changes in exchange rate
E. By ensuring that the exchange rates remain constant throughout September
36. Which of the following is a definition of a net investment hedge?
A. The traditional process of matching foreign currency gains or losses on a derivative or non-derivative liability against the translation of a foreign
operation under IAS 21.
B. Hedging the exposure to changes in the cash flows attributable to a particular risk associated with a recognised asset, liability, or highly probable
forecast transaction that could affect reported profit or loss
C. A recognised asset or liability, an unrecognised firm commitment, or an uncommitted but highly probable forecast transaction
D. Hedging the exposure to changes in the fair value of a recognised asset, liability, or unrecognised firm commitment that is attributable to a particular
risk that could affect reported profit or loss
37. What is a key concept related to hedge effectiveness?

A. Effectiveness is the extent to which the changes in the fair value or cash flows of the hedged item are offset by changes in the fair value or cash
flows of the hedging instrument.
B. Effectiveness is the extent to which the changes in the fair value or cash flows of the hedged item are added to the changes in the fair value or cash
C. Effectiveness is measured by adding the changes in the fair value to the cash flow changes of the hedging instrument.
D. Effectiveness is determined by the frequency of use of the hedging instrument by the team.
38. Which of the following financial instruments are included for discussion in IAS 32?
A. Interests in subsidiaries, associates, and joint ventures PAS 28
B. Employee benefit plans
C. Interest in leases
D. Insurance contracts that principally involve the transfer of financial risks
E. Contracts for contingent consideration in a business combination
39. True or false? A legal right of set-off in default (as in a derivative master netting agreement, for example) is not sufficient for offset.
A. True
B. False
40. For each class of financial assets, disclosures of credit risk should include the significant concentrations of credit risk and the _________ credit risk exposure
at the _________ date, in the event that other parties fail to perform their obligations, ________ taking account of the fair value of any collateral.
A. Specific, closing, without
B. Maximum, balance sheet, without
C. Minimum, opening, by
D. Fair value, balance sheet, without
E. Maximum, balance sheet, by
41. Which of the following are not included within IAS 32’s other disclosure requirements?
A. Derecognition and collateral
B. Significant items and compound financial instruments
C. Foreign currency exchange rates
D. Financial assets/liabilities at fair value through profit and loss
E. Defaults and breaches of loans payable
42. What financial risks does IAS 32 define? Click the correct answer.
A. Market risk and credit risk
B. Liquidity risk and interest rate risk
C. Physical risk and financial risk
E. All are correct.
43. For each class of financial asset, financial liability, and equity instrument, IAS 32 contains a __________ requirement to disclose the ___________ policies
adopted and __________ used to apply those policies.
A. Specific, accounting, methods
B. General, fair value, transactions
C. Specific, financial, accounting
D. General, audit, methods
E. Specific, accounting, transactions
44. In what way does IAS 32 recommend that the usefulness of terms and conditions information for each class of financial asset, financial liability, and equity
instrument be enhanced?
A. By ensuring that a potential lawsuit is won for the company
B. By highlighting any relationship between individual instruments that may affect the amount, timing, or certainty of the cash flow
C. By protecting the financial asset from the costs of bringing the company into environmental compliance
D. By listing the euro cash flows to be received from the sales against changes in exchange rates
E. By ensuring that the nature and extent of the financial liability and equity instrument remains constant
45. What does IAS 32 require as disclosures for interest rate risk?
A. Contractual repricing or maturity dates, whichever are earlier
B. Effective interest rates, when applicable
C. An indication of which instruments are exposed to fair value interest rate risk or to cash flow interest rate risk and not exposed to interest rate risk
E. A, B, and C are correct.
46. True or false? According to IAS 32, the fair value disclosures of recognised financial assets and financial liabilities should be grouped into classes and offset
only to the extent that their related carrying amounts are offset.
A. True
B. False
47. True or false? Available-for-sale financial assets are those financial assets that are not loans and receivables originated by the entity, held-to-maturity
investments, or financial assets held for trading.
A. True
B. False
48. When must the effectiveness of a hedge accounting relationship first be determined and documented?
A. Before the instrument is used
B. Before the adoption date of IAS 39/32
C. While the instrument is being used
D. One year after the transition to IAS 39/32
E. Upon completing the transition to IAS 39/32
49. Breakwake wishes to transfer assets from available-for-sale to held-to-maturity. In the following sentence, select the words that correctly complete the
description of how this transfer is done.
“At the time of the transfer, the asset is revalued and the _______ is taken as the new _______ cost. For an asset with a fixed maturity date, any previous gain or
loss is amortised to P&L over the remaining period to maturity using the effective _______ rate method."
A. Amortized cost, fair value, fixed
B. Fair value, amortised, interest
C. Transaction cost, P&L, interest
D. Amortised, P&L, tangible
E. Fair value, P&L, fixed
50. According to IAS 32, which of the following terms and conditions disclosures are included when financial instruments held or issued create a significant
exposure to financial risks?
A. The date of maturity, expiry, or execution
B. Any collateral held or pledged
C. The currency in which cash flows are denominated, where this is not the entity’s functional currency
D. Early settled options held by either party to the instrument
E. All are included
51. What is done with gains and losses for financial assets and financial liabilities at fair value through profit and loss?
A. They are taken to the income statement.
B. They are carried at amortised cost.
C. They are recognised directly in equity.
D. B and C can be done.
E. A, B, and C can be done.
52. Which of the following facts are not true about the recognition of assets classified as available-for-sale?
A. Changes in fair value are not recorded in equity until the asset is sold.
B. Available-for-sale assets are carried at fair value.
C. Impairment is a concern for this classification.
D. B and C are not true.
E. A, B, and C are not true.
53. Which of the following factor(s) is (are) not objective evidence of possible impairment?
A. Financial difficulty of the buyer
B. Unstable technology or legal environment
C. High probability of bankruptcy or financial reorganisation
54. True or false? IAS 32 prescribes both the format of financial instrument disclosures and their location within the accounts.
A. True
B. False
55. What in particular is not included by IAS 32 as the disclosure requirements for each class of financial asset, financial liability, and equity instrument?
A. The criteria applied in determining when to recognise or derecognise financial assets and liabilities
B. The measurement basis applied on final recognition
C. The basis on which associated income and expenses are recognised and measured
D. Whether to account for both purchases and sales, either on the date the commitment to purchase was made (trade date) or on the date the asset is
delivered (settlement date)
E. The method used
56. During derecognition, which of the following financial assets cannot be derecognised?
A. Part of an asset
B. An entire asset
D. All of these
E. None of these
57. When the _________ presentation of a financial instrument differs from its __________ form, the _________of the instrument should be explained.
A. Balance sheet, actual, nature
B. Actual, derivative, cash flow
C. Fair value, legal, nature
D. Fair value, actual, derivative
E. Balance sheet, legal, nature
58. According to IAS 32, what is the primary reason why credit risk is disclosed?
A. To inform users of the extent to which failures by counterparties to discharge their obligations could reduce the amount of cash flow from financial
assets
B. To provide a consistent measure of the amount exposed to credit risk for financial assets (and other credit exposures)
C. To take into account the possibility that the maximum exposure may differ from an asset’s carrying amount
D. To determine the level of creditworthiness of groups of borrowers
E. To expose a single debtor or groups of debtors whose ability to meet their obligations is expected to be affected by similar changes in economic or
other conditions
59. When a default or breach of loans payable happens to an entity, such as Breakwake, what should be disclosed?
A. Details of the breach
B. Loan amount on which the breach occurred
C. Whether the default has been resolved or the loan terms have been renegotiated before the financial statements were finalised
D. A and B
E. A, B, and C
60. When transitioning to IAS 39/32, which of the following must be done by an entity such as Breakwake?
A. Do not restate earlier periods.
B. Identify and remeasure financial assets and liabilities as required by the Standard.
C. Value all derivatives and record on the balance sheet.
D. Assess whether hedges meet hedge accounting criteria and apply the provisions of the Standard prospectively.
E. All must be done
61. What type of fair value disclosure, if any, is required for financial instruments such as short-term trade receivables and payables?
A. No disclosure of fair value is required when fair value cannot be reliably measured.
B. No disclosure of fair value is required when the carrying value approximates fair value.
C. Partial disclosure of fair value is required when the carrying value approximates fair value.
D. Full disclosure of fair value is required when the carrying value approximates fair value.
62. True or false? A legal right of set-off in default (e.g., as in a derivative master netting agreement) is not sufficient for offset.
A. True
B. False
63. What is a key concept related to hedge effectiveness?

A. Effectiveness is determined by the frequency of use of the hedging instrument by the team.
B. Effectiveness is measured by adding the changes in the fair value to the cash flow changes of the hedging instrument.
C. Effectiveness is the extent to which the changes in the fair value or cash flows of the hedged item are offset by changes in the fair value or cash
D. Effectiveness is the extent to which the changes in the fair value or cash flows of the hedged item are added to the changes in the fair value or cash
64. Generally, against what does a cash flow hedge aim to protect?
A. Past obligations that are a result of contingent liability
B. Changes in the fair value arising from market price movements
C. The variability of cash flows arising from market price movements
E. All are correct
65. Which of the following are examples of a hedged item?

A. An unrecognised firm commitment
B. A recognised asset or liability
C. An uncommitted but highly probable forecast transaction
D. A and B are examples
E. A, B, and C are examples
66. Which of the following is a definition of a net investment hedge?

A. Hedging the exposure to changes in the cash flows attributable to a particular risk associated with a recognised asset, liability, or highly probable
forecast transaction that could affect reported profit or loss
B. The traditional process of matching foreign currency gains or losses on a derivative or liability against the revaluation of a foreign operation
C. Hedging the exposure to changes in the fair value of a recognised asset, liability, or unrecognised firm commitment that is attributable to a particular
risk that could affect reported profit or loss
D. A recognised asset or liability, an unrecognised firm commitment, or an uncommitted but highly probable forecast transaction
SHARE-BASED PAYMENTS
1. What are the three types of share-based transactions?

A. Cash-settled, equity-settled, and research-based
B. Equity-settled, cash-settled, and share-based payment transactions with cash alternatives
C. Equity-settled, check-based, and share-based payment transactions with cash alternatives
D. Check-based, cash-settled, and share-based payment transactions with cash alternatives
E. Check-based, equity-settled, and cash-settled
2. What is an equity-settled transaction?

A. A transaction in which the entity issues its own equity instruments to the other party
B. A transaction in which the entity pays a price to the other party based on the value of its equity instrument
C. A transaction in which the entity offers to share its earnings based on the performance of the other party
D. A transaction in which the entity distributes a percentage of its losses to the other party
3. What is a cash-settled transaction?

A. A transaction where the entity issues its own equity instruments to the other party
B. A transaction where the entity pays a price in cash or other assets to the other party based on the value of its equity instrument
C. A transaction where the entity offers to share its earnings based on the performance of the other party
D. A transaction where the entity distributes a percentage of its losses to the other party
4. Commodity trading and other similar financial transactions are included within IFRS 2, Share-based Payment (Standard).
A. True
B. False
5. What is the difference between the recognition of goods and services related to timing when creating journal entries in order to recognize a share-based
payment transaction?
A. Goods are recognized when they are received.
B. Goods are recognized as they are promised/obligated.
C. Services are recognized as they are delivered.
D. A and C are correct.
E. B and C are correct.
6. What are the three types of share-based transactions?

A. Cash-settled, equity-settled, and research-based
B. Equity-settled, cash-settled, and share-based payment transactions with cash alternatives
C. Equity-settled, check-based, and share-based payment transactions with cash alternatives
D. Check-based, cash-settled, and share-based payment transactions with cash alternatives
E. Check-based, equity-settled, and cash-settled
7. What is a cash-settled transaction?

A. A transaction where the entity issues its own equity instruments to the other party
B. A transaction where the entity pays a price in cash or other assets to the other party based on the value of its equity instrument
C. A transaction where the entity offers to share its earnings based on the performance of the other party
D. A transaction where the entity distributes a percentage of its losses to the other party
8. Matching
1. The amount for which an asset could be exchanged, a liability settled, or an equity instrument granted could be exchanged between
knowledgeable, willing parties in an arm's length transaction.
2. The date at which the entity and another party (including an employee) agree to a share-based payment arrangement, being when the
entity and the counterparty have a shared understanding of the terms and conditions of the arrangement.
3. The conditions that must be satisfied for the counterparty to become entitled to receive cash, other assets, or equity instruments of the
entity under a share-based payment arrangement. Vesting conditions include service conditions, which require the other party to complete
a specified period of service, and performance conditions, which require specified performance targets to be met (such as a specified
increase in the entity's profit over a specified period of time).
A. Grant Date
B. Fair Value
C. Vesting Conditions
9. What is an equity-settled transaction?

A. A transaction in which the entity issues its own equity instruments to the other party
B. A transaction in which the entity pays a price to the other party based on the value of its equity instrument
C. A transaction in which the entity offers to share its earnings based on the performance of the other party
D. A transaction in which the entity distributes a percentage of its losses to the other party
10. What is the difference between the recognition of goods and services related to timing when creating journal entries in order to recognize a share-based
payment transaction?
A. Goods are recognized when they are received.
B. Goods are recognized as they are obtained.
C. Services are recognized as they are obtained.
D. A and C are correct
11. Commodity trading and other similar financial transactions are included within IFRS 2, Share-based Payment (Standard).
A. True
B. False
Accounting Standards Scenario

On 1 January 2004, Tucan granted 200 share options to each of 350 employees, who may exercise them only if they remain in service for three years following the
date of grant. The fair value of each option is assessed as being 10.
The company estimates at the time of granting the option that 50 of the 350 employees will leave before 31 December 2006 and will therefore not become
entitled to exercise the options.
12. Time has passed, and by the end of 2004, only 10 employees have left. Tucan estimates that an additional 40 will have left by 31 December 2006. Calculate
the expense for 2004.
13. During 2005, a further five employees left the company. Tucan now revises its estimate to say that only 20 will have left from grant date to 31 December
2006.
Calculate the cumulative expense for 2004 and 2005.
14. When measuring the value of Stefan’s stock options, which valuation model is required by IFRS 2?
A. Stockyard option formula
B. Lattice option-pricing or binomial
C. Closed form or Black-Scholes-Merton formula
D. None of these
15. In an equity settled transaction, fair value is measured once at measurement date (i.e., grant date for employees), whereas, in a cash-settled transaction, the
measurement basis varies over time (transaction is remeasured at each balance sheet date until settlement).
A. True
B. False
16. For transactions with employees, the measurement date of an equity-settled share-based payment transaction is:
A. Grant date (when the entity and employee enter into an agreement)
B. Service date (when the employee renders service necessary to become entitled to the share option)
C. Vesting date (when the employee has satisfied all conditions necessary to become entitled to the share option)
D. Exercise date (when the share option is exercised)
17. What would be considered in determining the measurement date for a share-based payment?
A. Whether the payment is in exchange for employee services
B. The grant date or the date at which the parties reach a shared understanding of the terms of the arrangement
C. When the goods or services were obtained
D. A and B only
E. A and C only
18. What types of issues might you consider related to share-based payments?
A. If fair value computation is reasonable (appears arm's length)
B. The fair value of equity instruments granted
C. Treatment of vesting conditions (with and without market conditions)
D. All might be considered
Scenario
On 1 January 2004, Tucan granted 10,000 share options to each of their six directors, which they may exercise only if they remain on the board for three years
following the date of grant, and if Tucan's earnings per share in 2006 is 50 percent higher than it was in 2003.
The fair value of each option was assessed as being 30. Tucan estimated at the time of granting the option that one of the six directors will leave before 31
December 2006, and will therefore not become entitled to exercise the option. Tucan also believe that the earnings per share target will be met.
By the end of 2004 all the directors are still there. However, Tucan still estimates that one will have left by 31 December 2006. Earnings per share in 2004 was up
20 percent over 2003, and the directors remain confident that the 2006 earnings per share will reach the 50 percent growth target.
19. After reviewing the facts, calculate Tucan’s expense for 2004
A. 500,000
B. 510,000
C. 520,000
D. 600,000
E. 1,500,000
20. During 2005, two directors left the company. It is now estimated that the remaining four will still be there at 31 December 2006. Earnings per share in 2005
was little different from 2004, but the directors remain confident that the target will be met in 2006.
A. 250,000 for expense in 2005 and 750,000 for cumulative expense
B. 300,000 for expense in 2005 and 800,000 for cumulative expense
C. 350,000 for expense in 2005 and 850,000 for cumulative expense
D. 400,000 for expense in 2005 and 900,000 for cumulative expense
E. 450,000 for expense in 2005 and 950,000 for cumulative expense
21. During 2006, the remaining four directors all stay with Tucan, but its earnings per share declines back to the 2003 level. As a result, the share options do not
become exercisable.
A. (800,000) for expense in 2006 and 0 for cumulative expense
B. (500,000) for expense in 2006 and 5,000 for cumulative expense
C. (400,000) for expense in 2006 and 100,000 for cumulative expense
D. (200,000) for expense in 2006 and 200,000 for cumulative expense
E. (100,000) for expense in 2006 and 400,000 for cumulative expense
22. What must be disclosed when describing the terms and conditions of Stefan Calonius’ share-based payment arrangement?
A. The maximum term of options granted
B. The vesting requirements
C. The method of settlement (e.g., whether in cash or equity)
23. Recall: The 400 employees of Tucan have been granted 200 share options that may be exercised by them only if they remain in service for three years
following the date of grant. The fair value of each option was assessed as being 10 at year-end. Other disclosure requirements relate to the number and weighted
average exercise price of share options by “status” as well as (for share options outstanding at the end of the period) range of exercise price and weighted
average remaining contractual life. In the footnote disclosure to the financial statements, what share price should be disclosed relative to options exercised during
the period?
A. Fair value at grant date
B. Share price at year-end
C. Weighted average price during the period
D. Share price at determination
E. Any of these
24. When disclosing how fair value is determined, Tucan will need to reveal for share options granted in the period the share options’ weighted average fair value
at the measurement date and how it was measured.
A. True
B. False
25. What is specifically included in disclosing how the fair value of share options granted was measured? Note: This assumes that a pricing model has been used,
which may not be the case for goods or services received from other than employees (in that case, disclosure requirements can be found in IFRS 2.48).
A. The option pricing model used and all the key inputs
B. How expected volatility was determined and the extent to which it was based on historical volatility
C. Whether and how any other features, such as a market condition, were taken into account
D. B and C are correct
26. It is better to give too much rather than too little information when disclosing share-based option transactions; the disclosures listed in the standard are the
minimums required.
A. True
B. False
27. When the range of options outstanding at the end of the period is wide, what should be done?
A. The entire range should be calculated using the option pricing model.
B. The range should be divided into smaller ranges to make the information meaningful.
C. The range should be examined to determine what could be eliminated.
D. The range should be listed at the beginning of the next period to give full disclosure.
E. 10 percent of the entire range should be used to determine the option pricing.
28. Exercise price and expected volatility are the only inputs to the option pricing model that need to be disclosed.
A. True
B. False
29. Entities should disclose information that enables users to understand the effect of share-based payment transactions on their profit or loss for the period and
their financial position. If Tucan has liabilities arising from share-based payment transactions, what information must be given to minimally fulfill this principle?
A. The total carrying amount at the beginning of the period and the total intrinsic value of liabilities where the other party’s rights had vested by the
beginning of the period
B. The proportional carrying amount at the end of the period and the total extrinsic value of liabilities where the other party’s rights had vested by the
C. The total carrying amount at the end of the period and the total intrinsic value of liabilities where the other party’s rights had vested by the end of the
period
D. The modified carrying amount at the end of the period and the total extrinsic value of liabilities where the other party’s rights had vested by the end of
the period
E. The reduced carrying amount at the end of the period minus the total intrinsic value of liabilities where the other party’s rights had vested by the end
of the period
30. It would very easy for a client who already uses an option pricing model to use it in the context of valuing a share option that is part of a share-based payment
arrangement.
A. True
B. False
31. Recall: Tucan is a first-time IFRS adapter. On 1 January 2003, Tucan granted 10,000 share options to each of its six directors, which they may exercise only if
(a) they remain on the board for three years following the date of grant and (b) its earnings per share in 2006 is 50 percent higher than it was in 2003. Since Tucan
granted 10,000 share options to each of its six directors on 1 January 2003, is it required to fully apply IFRS 2?
A. Yes, Tucan must fully apply IFRS 2.
B. Tucan must apply IFRS 2 to only those transactions that vested in 2004.
C. No, Tucan must apply IFRS 2 only to transactions occurring after 31 December 2004.
D. No, because Tucan has until 31 December 2004 to apply IFRS 2.
E. No, because the transactions will not vest until 2006.
32. What must Tucan do if it wishes to retrospectively apply IFRS 2 to share-based payment transactions that existed at the effective date of the standard?
A. Publicly disclose the fair value of retained earnings for the earliest period presented, except to the extent that it relates to a period or date before 7
November 2002
B. Restate the comparative information and the opening balance of retained earnings for the earliest period presented, except to the extent that it
relates to a period or date before 7 November 2002
C. Restate the retained earnings for the latest period presented, except to the extent that it relates to a period or date before 31 December 2004
D. Restate the comparative information and the closing balance of retained earnings for the earliest period presented, except to the extent that it relates
to a period or date before 1 January 2005
E. Disclose the transaction description and transitional provisions for the period presented, except to the extent that it relates to a period or date after 7
November 2002
33. Companies such as Tucan need to undertake valuing share option plans with careful consideration and consultation. Select the item(s) below that are
included when valuing share option plans.
A. Determining the appropriate option pricing model
B. Determining the valuation inputs
C. Assessing the sensitivity of the value to changes in key assumptions
E. All are correct
34. What is the date when an existing IFRS preparer must fully apply the standard?
A. 7 November 2002
B. 31 December 2003
C. 19 February 2004
D. 1 January 2005
Scenario
In auditing Tucan, Terri has found the following:
On 1 January 2004, Tucan granted 200 share options to each of 400 employees, which may be exercised by them only if they remain in service for three years
following the date of grant. The fair value of each option is assessed as being 10.
The company estimated at the time of granting the option that 40 of the 400 employees will leave before 31 December 2006, and will therefore not become
entitled to exercise the options.
35. Tucan has an employee share-based payment arrangement that it granted on 1 January 2004.
Time has passed and by the end of 2004, only 10 employees have left. Tucan still estimates that 40 will have left by 31 December 2006.
Calculate the expense that will be shown in the accounts for 2004.
A. 200,000
B. 210,000
C. 220,000
D. 230,000
E. 240,000
36. Tucan has an employee share-based payment arrangement that it granted on 1 January 2004.
During 2005, a further five employees left the company, in addition to the ten that left in 2004. Tucan now revises its estimate to say that only a total of 25 will
have left by 31 December 2006.
Calculate the cumulative expense.

A. 220,000
B. 400,000
C. 500,000
D. 600,000
E. 650,000
37. When measuring the value of stock options, what are the two valuation models that are allowed by IFRS 2?
A. Stockyard option formula
B. Lattice option-pricing or binomial
C. Closed-form or Black-Scholes-Merton formula
D. A and C are correct
38. What is the crucial difference between cash-settled and equity-settled transactions?
A. There is no accounting for error
B. The timing of recognition varies
C. There is no equity component to be accounted for in a cash-settled transaction
D. Revisions are made on a weekly basis
E. All of the above are differences
39. True or False?
We do not account for a debt component and an equity component separately when the choice of the manner of settlement rests with the employee rather than
the company.
A. True
B. False
Scenario
On January 1st of 2004, Tucan granted 10,000 share options to each of their six directors, which they may exercise only if (a) they remain on the board for three
years following the date of grant and (b) their earnings per share in 2006 is 50% higher than it was in 2003.
The fair value of each option was assessed as being 30. Tucan estimated at the time of granting the option that one of the six directors will leave before 31
December 2006, and will therefore not become entitled to exercise the option. They also believe that the earnings per share target will be met.
By the end of 2004, all the directors are still there. However, Tucan still estimates that one will have left by 31 December 2006. Earnings per share in 2004 was up
20 per cent compared to 2003, and the directors remain confident that the 2006 earnings per share will reach the growth target.
Based on the above information, Tucan’s expense for 2004 was 500,000.
During 2005, two directors left the company. It is now estimated that the remaining four will still be there at 31 December 2006. Earnings per share in 2005 was
little different from 2004, but the directors remain confident that the target will be met in 2006.
40. Tucan granted their directors share options on 1 January 2004. What is the expense that will be shown in the accounts for 2005?
A. 250,000
B. 300,000
C. 350,000
D. 400,000
E. 450,000
Scenario
On January 1st of 2004, Tucan granted 10,000 share options to each of their 6 directors, which may be exercised by them only if (a) they remain on the board for
three years following the date of grant and (b) our earnings per share in 2006 is 50% higher than it was in 2003.
The fair value of each option was assessed as being 30. Tucan estimated at the time of granting the option that 1 of the 6 directors will leave before 31 December
2006, and will therefore not become entitled to exercise the option. They also believe that the earnings per share target will be met.
By the end of 2004, all the directors are still there. However, Tucan still estimates that one will have left by 31 December 2006. Earnings per share in 2004 was flat
compared to 2003, but the directors remained confident about their 50% growth target.
Based on the above information, Tucan’s expense for 2004 was 500,000.
During 2005, two directors left the company. It is now estimated that the remaining four will still be there at 31 December 2006. Earnings per share in 2005 was
20% up from 2003, but the directors remain confident that the 2006 earnings per share will reach the 50% growth target.
41. Tucan granted their directors share options on 1 January 2004.

During 2006, the remaining four directors all stay with Tucan, but its earnings per share declines back to the 2003 level. As a result, the share options do not
become exercisable.
A. (500,000) for expense in 2006 and 5,000 for cumulative expense
B. (0) for expense in 2006 and 800,000 for reversal for cumulative expense
C. (200,000) for expense in 2006 and 200,000 for cumulative expense
D. (200,000) for expense in 2006 and 1,300,000 for cumulative expense
42. Entities should disclose information that enables users to understand the effect of share-based payment transactions on their profit or loss for the period and
their financial position.
If Tucan has liabilities arising from share-based payment transactions, what information must be given to minimally fulfill this principle?
A. The total carrying amount at the beginning of the period and the total intrinsic value of liabilities where the other party’s rights had vested by the
B. The proportional carrying amount at the end of the period and the total extrinsic value of liabilities where the other party’s rights had vested by the
C. The total carrying amount at the end of the period and the total intrinsic value of liabilities where the other party’s rights had vested by the end of the
period.
D. The modified carrying amount at the end of the period and the total extrinsic value of liabilities where the other party’s rights had vested by the end of
the period
E. The reduced carrying amount at the end of the period minus the total intrinsic value of liabilities where the other party’s rights had vested by the end
of the period
43. Companies such as Tucan need to undertake valuing share option plans with careful consideration and consultation.
A. Determining the appropriate option pricing model
B. Determining the valuation inputs
C. Assessing the sensitivity of the value to changes in key assumptions
D. A and B only are correct
E. All are correct
44. An entity shall recognize the goods obtained or the services received in exchange for equity instruments of the entity (including shares or share options) or for
amounts of cash or other assets that are based on the price of the entity’s shares or other equity instruments. If goods or services received do not qualify for
recognition as assets, they shall be recognized as expenses.
A. True
B. False

Questions For IFRS Highlighted

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BUSINESS COMBINATION

1. Amortization of goodwill arising from a business combination is permitted.

10. Which of the following statements is/are true?

3. Which of the following statements about control is/are true?

8. Which of the following statements about control is not true?

17. Which of the following statements is false about consolidation principles?

25. Which type of joint venture does this case describe?

27. Which type of joint ventures does this describe?

30. Which of the following statements about control is not true?

39. Which of the following statements is true?

44. Which of the following statements is true about accounting by a venturer?

2. Which of the following are indicators of impairment?

15. What is the final step in the value in use test?

18. How is a cash-generating unit defined?

19. When is goodwill allocated to the cash-generating units?

20. When identifying a cash-generating unit, on what do we base our judgment?

21. Which of the following items is included in a cash flow forecast?

24. How is an impairment loss on an individual asset normally recorded?

34. Which of the following are disclosure requirements of IAS 36?

36. Which of the following are disclosure requirements of IAS 36?

38. Which of the following are disclosure requirements of IAS 36?

39. The elements below are involved in which calculation?

48. When is goodwill allocated to the cash-generating units?

2. Which of the following can not be recognized as an intangible asset?

16. Which of the following statements are correct about amortization?

INTRODUCTION TO FINANCIAL INSTRUMENTS

1. Which of the following is not a financial instrument?

4. What rule(s) is/are covered within the scope of IAS 32?

15. Which of the following factors do/does not apply to a derivative?

23. Which of the following is not a debt instrument?

27. Which of the following is/are a debt instrument(s)?

38. When are derivatives classified in equity?

ACCOUNTING FOR FINANCIAL INSTRUMENTS

2. Which of the following is an example of a loan and receivable?

7. What type of transfer between categories is discussed in the following passage?

9. Which of the following factors is (are) objective evidence of possible impairment?

12. Which of the following facts are true about impairments?

14. Which of the following statements about impairments is (are) true?

31. Which of the following are examples of a hedged item?

34. What is the difference between hedging and hedge accounting?

36. Which of the following is a definition of a net investment hedge?

37. What is a key concept related to hedge effectiveness?

63. What is a key concept related to hedge effectiveness?

65. Which of the following are examples of a hedged item?

66. Which of the following is a definition of a net investment hedge?

1. What are the three types of share-based transactions?

2. What is an equity-settled transaction?

3. What is a cash-settled transaction?

6. What are the three types of share-based transactions?

7. What is a cash-settled transaction?

9. What is an equity-settled transaction?

Accounting Standards Scenario

Calculate the cumulative expense for 2004 and 2005.

Calculate the cumulative expense.

39. True or False?

41. Tucan granted their directors share options on 1 January 2004.

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