Question

Question 1. In accordance with IFRS 11 Joint Arrangements, which of the following statements is false?

A joint venture can be accounted using either equity accounting or proportionate consolidation in the consolidated financial statements

Investors A Co, B Co, C Co and D Co each hold 25% of Pilot Co. The shareholder agreement specifies that, for a decision to be passed, 75% of the voting rights must consent. It does not stipulate which parties must agree. A Co, B Co, C Co and D Co have joint control

A joint operator accounts for its share of assets, liabilities, income and expenses of a joint operation in accordance with the relevant IFRS

A joint arrangement that is not in substance a separate entity must be accounted for as a joint operation

Question 2. Station Co holds three types of inventory. The following details are relevant:

Inventory type	Cost	Selling price	Selling costs
A	$250	$275	$40
B	$125	$145	$15
C	$320	$290	$30

What amount should Station Co include in its statement of financial position for inventory in accordance with IAS 2 Inventory?

$695

$620

$625

$700

Question 3. The Conceptual Framework for Financial Reporting defines the elements of the financial statements. Which of the following statements is true?

A liability exists when an transfer of economic resource is certain

The definition of an asset centres on the concept of ownership.

An expense is an increase in an asset or a decrease in a liability.

The Conceptual Framework defines equity as a residual.

Question 4. Which of the following concepts may be the reason why a company chooses not to capitalise small items of equipment held for continuing use in the business, rather than capitalising them?

Completeness and materiality

Faithful representation and understandability

Accruals and relevance

Materiality and comparability

Question 5. Which one of the following statements about IFRS 8 Operating Segments is incorrect:

It requires segments to be determined by reference to information regularly reviewed by the chief operating decision maker

It allows exemption from disclosure on the grounds that it would be seriously prejudicial

An entity must disclose some geographical information

Disclosures are only required for companies with listed securities and those in the process of listing securities

Answer 1

Question 1. In accordance with IFRS 11 Joint Arrangements, which of the following statements is false?

Answer :A joint venture can be accounted using either equity accounting or proportionate consolidation in the consolidated financial statements

Question 2.

Answer : as per IAS 2 the inventory should be recognised at the the lower of cost and net relisable value

cost N R V

A $250 $235

B $ 125 $ 130

c $320 $260

Inventory should be ( $235 + $ 125 + $260) = $ 620

Question 3. The Conceptual Framework for Financial Reporting defines the elements of the financial statements. Which of the following statements is true?

Answer : the Conceptual Framework defines equity as a residual.

Question 4. Which of the following concepts may be the reason why a company chooses not to capitalise small items of equipment held for continuing use in the business, rather than capitalising them?

Answer : Materiality and comparability

Question 5. Which one of the following statements about IFRS 8 Operating Segments is incorrect:

Answer : An entity must disclose some geographical information