Chapters 1-2

Question 1

3 purposes of the financial reporting framework

Answer 1

Assist IASB to develop IFRS’s
Assist accounts preparers to develop accounting policies if IFRS does not aid them
Assist all parties to understand IFRS Standards

Question 2

who are the primary users of financial reporting

Answer 2

existing and potential investors, lendors and other creditors

Question 3

definition of relevance

Answer 3

relevant info is capable of making a difference in the decisions made by users

Question 4

definition of materiality

Answer 4

if ommitting or misstating info could influence decisions of the users

Question 5

definition of faithful representation

Answer 5

complete, neutral, free from error

Question 6

what are the enhancing qualitative characteristics

Answer 6

comparability
verifiability
timeliness
understandability

Question 7

what is IAS 1

Answer 7

If there is an option to roll forward a loan it must always be considered a NCA even if the entity is likely going to pay it within 12 months

Question 8

definition of an asset

Answer 8

a present economic resource controlled by an entity as a result of past events

Question 9

definition of an economic resource

Answer 9

a right that has the potential to produce economic benefits

Question 10

definition of a liabilty

Answer 10

a present obligation of the entity to transfer an economic resource as a result of past events

Question 11

definition of equity

Answer 11

the residual interest in the assets of the entity after deducting all of its liabilities

Question 12

definition of income

Answer 12

increases in assets, or decreases in liabilities that result in an increase in equity

Question 13

definition of expenses

Answer 13

decreases in assets, or increases in liabilities that result in an decrease in equity

Question 14

when does recognition occur

Answer 14

when an item meets the definition of an element and is helpful to the users of FS

Question 15

when does derecognition occur

Answer 15

for an asset - when control is lost

for a liability - when there is no longer a present obligation

Question 16

2 main measurement bases

Answer 16

historical cost

current value

Question 17

what is fair value

Answer 17

the price that would be receieved to sell an asset or paid to trf a liability

Question 18

what is value in use

Answer 18

PV of cash flows that an entity expects to derive from an asset

Question 19

what is fulfillment value

Answer 19

PV of cash that entity expects to be obliged to trf a liability

Question 20

what are the 5 fundamental principles

Answer 20

integrity
objectivity
professional competence and due care
confidentiality
professional behaviour

Question 21

5 threats to fundamental principles

Answer 21

self interest
self review
intimidation 
advocacy 
familiarity

Question 22

what does IAS 1 say in regards to fair presentation

Answer 22

compliance with IFRS must be disclosed and can only be described as complying if they comply with ALL IFRS Requirements

Question 23

what is a related party

Answer 23

a person or entity that is related to the entity that is preparing its FS

Question 24

what is considered close members of family

Answer 24

children, spouse, partner, step children

Question 25

what is ias 24

Answer 25

related party disclosures

Question 26

what does ias 24 mean

Answer 26

you must disclose name of parent and if different, the UCP
key management personnel compensation
if the entity has related party transactions

Question 27

what exemptions do government related entitys get

Answer 27

dont need to disclose every transaction, but do need to disclose individual significant transactions

Question 28

definition of accounting policies

Answer 28

the specific principles, bases conventions, rules and practices applied by an entity in preparing and presenting FS

Question 29

how should management use judgement to develop an accounting policy?

Answer 29

giving consideration to :
IFRS standards dealing with similair issues

the conceptual framework definitions of elements and the recognition criteria

pronouncements of other nations GAAP and accepted industry practice

Question 30

when is a change in accounting policy permitted

Answer 30

its required by IFRS

results in FS providing more reliable and relevant info

Question 31

how should a change to accounting policy for estimates be applied

Answer 31

prospectively

Question 32

examples of accounting estimates

Answer 32

depreciation, fair value, warrantys

Question 33

how should prior period errors be corrected

Answer 33

retrospectively, by restating comparatives and opening balances

Question 34

criteria to be an asset

Answer 34

a present economic resource controlled by the entity as a result of past events

Question 35

criteria to be a liability

Answer 35

a present obligation of the entity to transfer an economic resource as a result of past events