Financial Reporting Flashcards

Under FRS 102 (UK GAAP), an entity that is a micro-entity may apply:

Answer: FRS 105 (the Micro-entities Regime)

FRS 105 is the UK financial reporting standard for micro-entities (meeting two of three thresholds: turnover ≤£632k, balance sheet ≤£316k, employees ≤10), providing a simplified framework.

Under IAS 19, which of the following is recognised in other comprehensive income (OCI) for defined benefit pension schemes?

Answer: Remeasurement gains and losses

IAS 19 requires remeasurement gains and losses (actuarial gains/losses and returns on plan assets excluding interest) to be recognised in OCI and not recycled to profit or loss.

Under IFRS 10, the non-controlling interest (NCI) at acquisition can be measured at:

Answer: Either fair value or proportionate share of net assets

IFRS 3/IFRS 10 allows NCI to be measured at either fair value (full goodwill method) or at the NCI's proportionate share of the acquiree's identifiable net assets (partial goodwill method).

Under IAS 27 / IFRS 10, which method is used in the parent's own (separate) financial statements to account for investments in subsidiaries?

Answer: Cost or fair value model

In separate financial statements, IAS 27 permits investments in subsidiaries to be measured at cost or in accordance with IFRS 9 (fair value). The equity method is not permitted in separate statements.

Which of the following would be classified as an item of other comprehensive income (OCI)?

Answer: Revaluation surplus on PPE

Under IAS 16's revaluation model, increases in the carrying amount of PPE (revaluation surplus) are recognised in OCI and accumulated in the revaluation reserve within equity.

Under IAS 33, diluted EPS includes the effect of:

Answer: All potential ordinary shares that are dilutive

Diluted EPS adjusts both the numerator (for after-tax interest on dilutive debt) and denominator (for all dilutive potential ordinary shares such as convertibles and options) to show the maximum dilution effect.