International Financial Reporting Standards Flashcards

Under IAS 12, a deferred tax asset is recognized for deductible temporary differences only when:

Answer: It is probable that sufficient future taxable profits will be available against which the deductible temporary difference can be utilized

IAS 12 requires a deferred tax asset to be recognized only to the extent it is probable that future taxable profits will be available for utilization.

Under IFRS 13, the 'principal market' for measuring fair value is:

Answer: The market with the highest volume and level of activity for the asset or liability

IFRS 13 defines the principal market as the market with the greatest volume and level of activity, and fair value is measured using the price in that market.

IAS 19 requires the net interest on the net defined benefit liability to be calculated using which rate?

Answer: Discount rate used to measure the defined benefit obligation (high-quality corporate bond rate)

IAS 19 requires both the unwinding of the obligation and the return on plan assets to be calculated using the same discount rate applied to the DBO.

Under IAS 28, the equity method requires the investor to recognize its share of the associate's profit or loss:

Answer: In the investor's profit or loss in the period earned by the associate

The equity method records the investor's share of the associate's post-acquisition profit or loss in the investor's income statement each reporting period.

Under IFRS 2, share-based payment transactions with employees are measured at:

Answer: Fair value of the equity instruments granted at grant date

For employee share-based payments, IFRS 2 uses the grant-date fair value of the equity instruments because the fair value of services cannot usually be estimated reliably.

Which of the following would trigger reclassification of a financial asset under IFRS 9?

Answer: A change in the entity's business model for managing financial assets

IFRS 9 permits reclassification only when an entity changes its business model for managing financial assets, which is expected to be very infrequent.

Under IAS 10, which of the following is an adjusting event after the reporting period?

Answer: Discovery of fraud or errors that show financial statements were incorrect at year-end

Adjusting events provide evidence of conditions existing at the reporting date, such as discovering errors or fraud that existed before year-end.