IAS

Question 1

IAS 1 - Presentation

Answer 1

Sets the overall framework for presentation of financial statements

Ensures comparability over time and between entities

Question 2

IAS 2 - Inventories (Objectives)

Answer 2

Prescribes treatment for inventories regarding cost, measurement, expense and recognition

Question 3

IAS 2 Inventories - Key Points

Answer 3

• Inventories are measured at the lower of cost and net realisable value
• Cost includes purchase costs, conversion costs, and other costs to bring inventories to their present condition.
• Write-downs to NRV are recognized as an expense.
• Reversals of write-downs are allowed if NRV increases.

Question 3

IAS 7 - Statement of Cash Flows

Answer 3

Requires presentation of changes in cash and cash equivalents over the period.

Divides cash flows into operating, investing, and financing activities.

Question 4

IAS 8 - Accounting Policies, Changes in Accounting Estimates, and Errors - Objective

Answer 4

Sets criteria for selecting and changing accounting policies and correcting errors.

Question 5

IAS 8 - Prior Period Errors: Key Points

Answer 5

Apply changes in accounting policy retrospectively, unless impractical.

Changes in accounting estimates are applied prospectively.

Material errors are corrected retrospectively.

Question 6

IAS 10 - Events After the Reporting Period - Objective

Answer 6

Distinguish between adjusting and non-adjusting events.

Question 7

IAS 10 - Events After the Reporting Period: Operation

Answer 7

Adjusting Events: Provide evidence of conditions at the reporting date → Adjust financial statements.

Non-Adjusting Events: Occur after reporting date → Disclose in notes if material.

Question 8

IAS 16 - Property, Plant & Equipment - Objective

Answer 8

Prescribes accounting treatment for tangible non-current assets.

Question 9

IAS 16 - Property, Plant & Equipment: Recognition

Answer 9

• Measured at cost, or cash equivalent
• Includes inspection or major replacement costs if they meet the asset recognition criteria
• Ongoing repairs are expensed

Question 10

IAS 16 - Property, Plant & Equipment: Subsequent Measurement

Answer 10

Either:
Cost Model: Carrying amount = cost – accumulated depreciation/impairment
OR
- Revaluation Model: Fair value (revalued amount) – subsequent depreciation/impairment.

Question 11

IAS 16 - PPE: Depreciation Methods

Answer 11

EITHER straight line depreciation spreads an asset’s cost evenly over its useful life, resulting in an equal amount of depreciation expense each year

OR reducing balance allocates a larger portion of an asset’s cost to the early years of its useful life. It does this by applying a fixed percentage to the asset’s book value each year, resulting in a smaller depreciation expense as the asset ages.

Question 12

IAS 16 PPE: Impairment

Answer 12

Test PPE to see if there’s indication of impairment.

Recoverable amount = higher of fair value less costs to sell or value in use.

Linked to IAS 36

Question 13

IAS 16 PPE - Derecogniton

Answer 13

Remove asset upon disposal or retirement.

Record gain/loss in profit or loss.

Question 14

IAS 37 - Provisions, Contingent Liabilities, and Contingent Assets: Objective

Answer 14

To ensure appropriate recognition of contingent liabilities and contingent assets

Potential incomes/obligations that may arise from uncertain future events outside the company’s control

Question 15

IAS 37 - Provisions, Contingent Liabilites & Contingent Assets: Recognition

Answer 15

• Present obligation from past events
• Probable outflow of resources
• Amount can be estimated reliably
• Liabilities only disclosed, not recognised (unless the possibility is remote)
• Assets recognised only when virtually certain, disclosed when probable

Question 16

IAS 37 - Provisions, Contingent Liabilities & Contingent Assets: Measurement

Answer 16

• Measured using best estimate
• Discounted if material
• Reviewed and adjusted at each reporting date
• Reversals treated as changes in estimates (IAS 8)