Financial Reporting Flashcards
6 cards from real ACA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Financial Reporting flashcards as text
Under IFRS 8, operating segments are reported based on:
Answer: The management approach — how the chief operating decision maker reviews the business
IFRS 8 uses the management approach: segments are defined the way management internally reviews the business for resource allocation and performance assessment purposes.
Under IAS 24, a key management personnel (KMP) disclosure must include:
Answer: Total compensation of KMP by category (salary, share-based, post-employment, etc.)
IAS 24 requires disclosure of total KMP compensation in aggregate, broken down into categories such as short-term benefits, post-employment benefits, and share-based payments.
Under IAS 7, interest paid by a company can be classified as:
Answer: Either operating or financing cash flow, disclosed consistently
IAS 7 allows interest paid to be classified as either operating or financing cash flow; the classification must be consistent between periods and disclosed. Under FRS 102, interest paid is financing.
Under IFRS 13, fair value is defined as:
Answer: The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date
IFRS 13 defines fair value as an exit price — the price to sell an asset or transfer a liability in an orderly market transaction between market participants at the measurement date.
Under IFRS, a lease incentive received from a landlord (e.g., a rent-free period) is treated by the lessee as:
Answer: A reduction of lease costs spread over the lease term
Under IFRS 16, the lease incentive affects the measurement of the lease liability and right-of-use asset; effectively the benefit is spread over the lease term through the amortisation of the ROU asset.
Under IAS 36, cash-generating units (CGUs) are used for impairment testing when:
Answer: It is not possible to estimate the recoverable amount of an individual asset
When an individual asset does not generate cash inflows that are largely independent of other assets, IAS 36 requires the recoverable amount to be determined at the CGU level — the smallest group of assets generating independent cash flows.