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
Which body issues International Financial Reporting Standards (IFRS)?
Answer: International Accounting Standards Board (IASB)
The IASB, operating under the IFRS Foundation, is the independent standard-setting body responsible for developing and issuing IFRS used in over 140 countries.
Under IAS 1, the statement of financial position (balance sheet) must present current and non-current assets and liabilities separately unless:
Answer: A liquidity-based presentation provides more reliable information
IAS 1 generally requires current/non-current distinction, but permits a liquidity-based presentation when this provides more relevant information (e.g., banks and financial institutions).
Under IFRS 5, a non-current asset classified as held for sale must be measured at:
Answer: The lower of carrying amount and fair value less costs to sell
IFRS 5 requires non-current assets held for sale to be measured at the lower of carrying amount and fair value less costs to sell; depreciation ceases on reclassification.
Consolidated financial statements are required when a parent entity has:
Answer: Control over one or more subsidiaries
IFRS 10 defines control as having power over the investee, exposure to variable returns, and ability to use power to affect returns. A parent must consolidate all subsidiaries it controls.
Under IFRS, how is a gain on bargain purchase (negative goodwill) treated?
Answer: Recognised immediately in profit or loss
IFRS 3 requires that after reassessment, any remaining excess of fair value of net assets acquired over consideration paid (negative goodwill/bargain purchase gain) is recognised immediately in profit or loss.
Under IAS 38, which of the following is an internally generated intangible that CAN be recognised?
Answer: Development costs meeting the six criteria
IAS 38 prohibits recognition of internally generated goodwill, brands, and customer lists. Development costs can be capitalised only when all six specific criteria (including technical feasibility and intention to complete) are satisfied.