fr Flashcards
1
Q
regulations
what is the structure of an IFRS Standard (which of the following areas are included)?
Select one or more alternatives:
- objectives
- definitions
- conceptual framework
introduction
A
objectives
defintions
2
Q
IFRS foundation
what is the aim for the IFRS foundation?
Select one alternative:
- to supervise the development within the global standard setting bodies in each country
-to develop globally generally accepted accounting standards and enforce them globally
-To develop high-quality ESG standards
-To develop high-quality accounting standards
A
To develop high-quality accounting standards
3
Q
qualitative characteristics
Which are included in the four enhancing qualitative characteristics?
Select one or more alternatives:
-Comparability
-Neutrality
-Stability
-Verifiability
A
comparability
verifiability
4
Q
P&L and OCI
What is the difference between the “profit and loss statement” (P&L) and “other
comprehensive income” (OCI)?
Select one alternative:
- OCI includes discontinued operations, write downs and gains/losses
- Certain standards require the company to present items in Other Comprehensive Income
and not in the P&L
- OCI includes revaluation of property in line with IAS40 and revaluation of biological assets in
line with IAS41
-OCI includes all revaluations a company perform over a period
A
Certain standards require the company to present items in Other Comprehensive Income
and not in the P&L
5
Q
Voluntary changes
If a company voluntarily change an accounting policy, what information must the company
present?
Select one alternative:
- They are not allowed to
- Recalculation of the previous year in both the income statement and balance sheet
- The reason why the new policy will provide more reliable and reliant information
- Recalculation of the previous year in a note
A
The reason why the new policy will provide more reliable and reliant information
6
Q
carrying amount
What is a carrying amount?
Select one alternative:
-The market value of the asset
- The historical cost for the asset
-The amount that is shown in the financial statements
- The current cost for the asset
A
The amount that is shown in the financial statements
7
Q
Capital costs on construction
If a company takes up a loan in a bank to use for construction of its own building - how will
the interest cost on the loan and the cost for equity be accounted for?
Select one or more alternatives:
-The cost for equity cannot be capitalized and included in the cost of the building.
-The interest cost should be included as a financial item in the P/L
-The cost for equity should be included in a revaluation reserv in equity and matched against
future depreciations.
-The interest cost should be capitalised and included in the cost of the building
A
-The cost for equity cannot be capitalized and included in the cost of the building.
-The interest cost should be capitalised and included in the cost of the building
8
Q
Intangible assets
Which of the following activities arises in the development phase and are possible to
capitalize?
Select one or more alternatives:
-Development of new original medicines.
-Research for new fuel for diesel engines.
-Design of a prototype
-Construction of a pilot plant
A
-Design of a prototype
-Construction of a pilot plant
9
Q
goodwill
Why is internally generated goodwill not accepted as an asset?
Select one alternative:
-It is generally related to customers and they cannot be separated from the company
without negative consequenses
-It consist mainly of long-term research and marketing expenses
-It is impossible to determine the cost
-It is not separable
A
It is impossible to determine the cost
10
Q
Impairment test
There are several examples of indication of an impairment that arises from an external
source of information. Which of the following are included?
Select one or more alternatives:
-Observable indications on a decline in asset value
-Significant changes have occurred in the market, to which the asset is dedicated
-A decline in the share price of the company
-An increase in the credit risk premium for the compamy
A
-Observable indications on a decline in asset value
-Significant changes have occurred in the market, to which the asset is dedicated
11
Q
Impairment test
What is a CGU?
Select one alternative:
-Corporate governance unit and refers to the board of directors responsibility for the asset
values in the balance sheet.
-Cash generating unit and is used in the valuation of goodwill
-Current generating unit of account and refers to the most recent development on the
market in which an asset operates.
-Closed government unit and refers to the calculation the management does to establish the
fair value of the intangible asset.
A
-Cash generating unit and is used in the valuation of goodwill
12
Q
leasing and rents
Throughout the period of use, the customer in a lease transaction must have two
requirements fulfilled - which?
Select one or more alternatives:
-It must be a registered contract between the owner and the user
-The user must have the right to obtain almost all the economic benefits from the use
-The user has the right to direct the use of the asset
-The user can not have a bargain purchase option after the lease period has expired
A
-The user must have the right to obtain almost all the economic benefits from the use
-The user has the right to direct the use of the asset
13
Q
leasing and rents
What is the incremental borrowing rate?
Select one alternative:
-The government bond rate for bonds with the same maturity as the lease-term, plus a
riskpremium for the company.
-The short-term government bond rate, plus a risk premium for the company.
-The interest rate the lessee would have to pay to borrow money
-A benchmark interest rate (like LIBOR or similar) plus a risk premium for the company.
A
The interest rate the lessee would have to pay to borrow money
14
Q
financial instrument
Define a financial asset.
Select one or more alternatives:
-A right to receive cash
-Equity instruments
-Advances from customer
-Inventory
A
-A right to receive cash
-Equity instruments
15
Q
financial instruments
How is the liability part in a compound financial instrument calculated (for example a loan
that is convertible to ordinary shares)?
Select one alternative:
-It should be presented as a liability until the conversion date, when it becomes equity.
-It should be presented as equity, since the holder can convert to ordinary share.
-It should be presented on a separate line, between liabilities and equity as hybrid capital.
-It should be separated in a liability part and an equity part, based on a calculation
A
It should be separated in a liability part and an equity part, based on a calculation.
16
Q
financial instrument
There are three classes of subsequent measures of financial assets. Which of the
following are included?
Select one or more alternatives:
-Measured at fair value through OCI
-Measured at at value in use through P&L
-Measured at fair value through statement of changes in equity
-Measured at amortised cost
A
-Measured at fair value through OCI
-Measured at at value in use through P&L
-Measured at amortised cost
17
Q
Financial instruments
What is the effective interest method?
Select one alternative:
-The companies borrowing rate
-The interest rate that equals the discounted future cash receipts to the initial carrying
amount of the asset.
-The government bond rate for the same maturity as the financial instrument, and add to
that a company risk premium.
-The average interest rate on all financial instruments, both assets and liabilities
A
The interest rate that equals the discounted future cash receipts to the initial carrying amount of the asset.
18
Q
Provisions
How is a provision defined?
Select one alternative:
-A liability with a specified payment date
-A liability with a certain timing and amount
-A liability of uncertain timing and amount
-A liability without any specified repayment date
A
A liability of uncertain timing and amount
19
Q
Provisions
What should a provision for restructuring costs include?
Select one alternative:
-The direct costs arising from the restructuring
-A separation in impairments and cash flow affecting costs
-The direct costs arising from the restructuring, plus a calculated amount of indirects costs,
but not the cost of capital.
-A separation in cost of material, employee costs and depreciations
A
The direct costs arising from the restructuring
20
Q
Contingent liabilities
Where is the contingent liability presented in the financial reports?
Select one alternative:
-As a liability in the statement of financial position
-As a provision
-In the notes
-On a separate line between equity and liabilities, labelled hybrid liability
A
In the notes
21
Q
Revenue
Define a contract liability.
Select one alternative:
-If payments is made by the customer at the time when the delivering company transfers
the goods/services.
-If payments is made by the customer before the delivering company has transferred
goods/services.
-If shipments is made by the delivering company before the customer has signed the
contract.
-If payments is made by the customer after the delivering company has transferred
goods/services.
A
If payments is made by the customer before the delivering company has transferred
goods/services.
22
Q
Revenue
Which of the following items are included in the five-step model?
Select one or more alternatives:
-Determine the transaction price
-Calculate a possible credit loss in the contract
-Identify a performance obligation
-Allocate the price to performance obligations
A
-Determine the transaction price
-Identify a performance obligation
-Allocate the price to performance obligations
23
Q
Revenue
If the transaction includes a warranty, how should that be accounted for?
Select one alternative:
-As a simultaneous cost in accordance with IAS 37/Provision
-As a deduction of revenue when the warranty is executed in accordance with IAS37/Provision
-As a simultaneous reduction of revenue in accordance with IAS37/Provision
-As a cost when the warranty is executed in accordance with IAS37/Provision
A
As a simultaneous cost in accordance with IAS 37/Provision
24
Q
Pensions
Which are the two types of pension plans and who bears the risk?
Select one alternative:
-Defined contribution and the company bears the risk
-Defined benefit and the employee bears the risk
-Defined contribution and the government bears the risk
-Defined benefit and the company bears the risk
A
Defined benefit and the company bears the risk
25
Pensions
Name two factors that are important in calculating the defined benefit obligation.
Select one alternative:
-Expected return from equity and bonds, expected risk free rate
-Future salary increases, expected return from equity and bonds
-Employee mortality, future salary increases
-Employee mortality, future inflation rate
Employee mortality, future salary increases
26
Share based payments
There are two objectives for IFRS2 Share based payments - which?
Select one alternative:
-To prescribe the accounting when the company issues new shares or issues stock options
-To prescribe the accounting when payments are made, either in the form of shares/options,or cash dependent on the company share price
-To prescribe the accounting for employee stock option plans
-To prescribe the accounting when payments are made, either in the form of shares/options,
or assets other than cash
-To prescribe the accounting when payments are made, either in the form of shares/options,
or cash dependent on the company share price
27
Share based payments
What is the grant date and why is it important for the accounting when equity instruments
are involved?
Select one alternative:
-The date when the fair value of equity instruments are measured and the change in the
value is accounted for as a cost (or reduced cost).
-The date when the fair value of equity instruments are performed, normally once a year.
-The date when the fair value of equity instruments are exchanged into share or other
assets (normally cash)
-The date when the fair value of equity instruments are measured and the value is fixed
from that date
The date when the fair value of equity instruments are measured and the value is fixed
from that date
28
Earnings per share
If the company presents discontinued operations, how does it affect the calculation?
Select one alternative:
-The companny can chose to present EPS either including or excluding discontinued
operations.
-Two EPS must be calculated, including and excluding discontinued operations
-The EPS only includes earnings after discontinued operations
-The EPS excludes discontinued operations
Two EPS must be calculated, including and excluding discontinued operations
29
Earnings per share
What is the number of shares used in the diluted EPS for 20x1? .
A company has 100.000 outstanding shares at the end of year 20x1 and 50.000 potential shares
at the end of year 20x3 via 50.000 share options which can be converted to shares at a share
price of 30 SEK. The average share price on the market in 20x1 for the company is 50 SEK.
50 000 * 30 = 1 500 000
1500000/50 = 30 000
50 000 - 30 000= 20 000
100 000 + 20 000= 120 000
30
Leasing and rents
What is the incremental borrowing rate in a leasing contract?
Select one alternative:
- The short-term government bond rate, plus a risk premium for the company.
- The government bond rate for bonds with the same maturity as the lease-term, plus a
riskpremium for the company.
- The interest rate the lessee would have to pay to borrow money
-A benchmark interest rate (like LIBOR or similar) plus a risk premium for the company.
The interest rate the lessee would have to pay to borrow money
31
28. Cash flow calculation
A company presents the following. Profit before tax 100. Depreciations 40. Ingoing
balance for inventory 500 and outgoing 600. Ingoing balance for machinery 1000 and
outgoing 1200. Calculate the effect in the cash flow statement from investments.
The investment is 240 (cash outflow of 240)
32
If a company has 1000 shares at the 1 January 20X1 and issues 500 shares at the 30th of
June and consequently has 1500 share at 31st of December 20X1 - what is the weighted
average number of shares for 20x1?
1250
33
If a company has 1000 shares at the 1 January and the 31st of December 20X0 and issues
500 bonus shares at the 30th of June 20x1 and consequently has 1500 share at 31st of
December 20x1 - what is the weighted average number of shares in the EPS calculation for
20x0 and 20x1?
○ a) 1500 for both years
○ b) 1000 for year 20x0 and 1250 for year 20x1
○ c) 1000 for year 20x0 and 1500 for year 20x1
○ d) 1250 for both years
1500 for both years
bonus issues are usually treated as if they had occurred at the BEGINNING of the PREVIOUS period.
It is necessary in these circumstances to recalculate and restate EPS for
the previous period as well as to calculate EPS for the current period
34
Basis for conclusion
What is “basis for conclusion”?
○ a) It sets out considerations which were taken into account when the standard was
devised
○ b) The minutes from each board meeting leading up to a standard being accepted
○ c) Illustrative examples discussed in meetings with country specific standard setting
bodies
○ d) The introduction to the standard, that sets out the objective and the estimated timeframe for the work.
○ a) It sets out considerations which were taken into account when the standard was
devised
35
Countries
How many countries today are compliant with IFRS?
○ a) 140
○ b) Accepted within the EU, Canada and Australia
○ c) All countries except the US, China and Japan
○ d) 185
○ a) 140
36
Liability
How is a liability defined?
○ a) A present obligation to transfer economic resources
○ b) A future obligation as a result of past events
○ c) An option for the company to transfer economic resources
○ d) A transfer of an economic resource as a result of future events
a) A present obligation to transfer economic resources
37
. Assets
How is an asset defined in the conceptual framework?
○ a) A present economic resource controlled by the entity
○ b) A future economic resource controlled by the entity
○ c) Controlled by the entity as a result of future events
○ d) Has the potential to produce financial benefits
a) A present economic resource controlled by the entity
38
P&L and OCI
What is the difference between the “profit and loss statement” (P&L) and “other
comprehensive income” (OCI)?
○ a) Certain standards require the company to present items in Other Comprehensive
Income and not in the P&L
○ b) OCI includes revaluation of property in line with IAS40 and revaluation of biological
assets in line with IAS41.
○ c) OCI includes all revaluations a company perform over a period
○ d) OCI includes discontinued operations, write downs and gains/losses
a) Certain standards require the company to present items in Other Comprehensive
Income and not in the P&L
39
EPS Calculation
How is basic EPS calculated?
○ a) The profit/loss divided by the average number of shares
○ b) The profit/loss divided by the outgoing number of shares
○ c) The profit/loss less dividends distributed to shareholders, divided by the average
number of shares
○ d) The operating profit divided by the average number of shares
a) The profit/loss divided by the average number of shares
40
Accounting estimates
Changes in accounting estimates can only be accounted for prospectively. What does that
mean?
○ a) It will affect the current and future periods
○ b) It will affect future and past periods
○ c) It will affect future an past periods for the income statement but only future periods
for the balance sheet and cash flow statement.
○ d) The change will affect the changes in equity, not income statement or other part of
the balance sheet than equity.
a) It will affect the current and future periods
41
Definition PPE
How does IAS 16 defines property, plant and equipment? Which one is not correct.
○ a) Held for sale
○ b) Held for more than one period
○ c) Held for rental to others
○ d) Held for use in the production
a) Held for sale
42
Revaluation
If a PPE is revalued according to IAS16 and a year later is sold, how will a revaluation gain
(relating to the previous year) be recognized?
○ a) Directly in retained earnings in equity
○ b) In profit and loss (P/L)
○ c) In Other comprehensive income
○ d) As discontinued operations
a) Directly in retained earnings in equity
43
Intangibles
Explain the term “separable” in relation to intangible assets.
○ a) It can be separated from the entity and sold
○ b) It can be separated in the accounting of expenses
c) The cash flow from the intangible asset can be separated
○ d) It is presented on a separate line in the balance sheet
a) It can be separated from the entity and sold
44
Key-ratio 8
This assignment is NOT related to the uploaded PDF.
Which of the following key-ratios does not include the balance sheet?
○ a) EBITDA-margin
○ b) Capital turnover
○ c) Return on capital employed
○ d) The debt to equity ratio
a) EBITDA-margin
45
f revenue is 100, total operating costs are 85, salaries to employees are 30, depreciations
on PPE 10, interest costs 5, tax expenses 4, interest bearing debt 50 and equity 50.
What is the EBITDA-margin?
○ a) 25%
○ b) 20%
○ c) 10%
d) 11%
ebitda margin = ebitda/revenue
operating income= revenue - operating cost
100-85=15
ebitda= operating income + depreciation expense
15+10=25
ebitda margin= 25/100=25%
46
Key-ratios 10
This assignment is NOT related to the uploaded PDF.
If revenue is 100, total operating costs are 75, production costs are 35, depreciations 10,
interest costs 5, tax expenses 4, interest bearing debt 50 and equity 50.
What is the return on equity (on the outgoing balance)?
○ a) 32%
○ b) 22%
○ c) 1,0x
○ d) 12%
net income =
100-75-5-4=16
ROE= 16/50 = 0,32 =32%
note it is assumed that the production costs and depreciation are already included in the total operating costs both being operating expenses.
Interest is a non-operating expense hence it is considered separately.
47
What is the structure of an IFRS Standard (which of the following are included)?
a)
Definitions, effective date, enforcement, general acceptance
b)
Introduction, conceptual framework, time-frame, effective date
c)
Objectives, definitions, body of the standard, transitional provisions
d)
Enforcement, framework, body of the standard, approval by the IASB
c)
Objectives, definitions, body of the standard, transitional provisions
48
Which are the three bodies included in the IFRS Foundation?
a)
IASB, ESG Committee, GAAP Interpretations committee
b)
Advisory council, EU GAAP, Capital Markets Advisory Committee
c)
Advisory council, IASB, IFRS Interpretations committee
d)
Advisory board, Accounting board, Interpretations Board
c)
Advisory council, IASB, IFRS Interpretations committee
49
Which are the three main sources of regulation?
a)
Accounting standards, industry regulation, tax regulation
b)
Accounting legislation, tax regulation, stock exchange standards
c)
Accounting standards, stock exchange regulation, industry regulation
d)
Legislation, accounting standards, stock exchange regulation
d)
Legislation, accounting standards, stock exchange regulation
50
Which are the four enhancing qualitative characteristics? Which of the following is not one of them.
a)
Neutrality
b)
Comparability
c)
Timeliness
d)
Verifiability
a)
Neutrality
51
How is equity defined?
a)
The number of shares multiplied by the nominal price of the share
b)
The residual interest in equity after deducting non-controlling interest
c)
The residual interest in the assets of the entity after deducting all liabilities
d)
Paid-in equity capital and retained earnings
c)
The residual interest in the assets of the entity after deducting all liabilities
52
How is a liability defined?
a)
A future obligation as a result of past events
b)
An option for the company to transfer economic resources
c)
A transfer of an economic resource as a result of future events
d)
A present obligation to transfer economic resources
d)
A present obligation to transfer economic resources
53
What other users, than the primary users, rely in financial information and the IFRS? Which group is NOT included?
a)
Governments
b)
Customers
c)
Employees
d)
Management
d)
Management
54
Explain "relevance"
a)
It has explicit forecasts included
b)
Also immaterial information can be relevant if it shows up frequently
c)
The financial information has predictive and confirmative value
d)
Items that are equal to one percent of ingoing equity is considered relevant
c)
The financial information has predictive and confirmative value
55
There are three ways to measure current value. Which of the following is not included?
a)
The amount that would have to be paid to acquire an equivalent asset...
b)
The price to be received to sell an asset... between market participants..
c)
The present value of the net cash flows that the entity expects from the use...
d)
The amount paid to acquire an asset
d)
The amount paid to acquire an asset
56
Which of the following is NOT included in the objective for the IASB Conceptual framework?
a)
Without a conceptual framework accounting standards are more difficult to develop
b)
Objective, elements, recognised, presented
c)
The first accounting standard issued, IFRS1, relates to the conceptual framework
d)
A set of fundamental principles which underpin financial accounting
c)
The first accounting standard issued, IFRS1, relates to the conceptual framework
57
Which are the important users of financial information according to the framework? Which of the following are NOT included?
a)
Creditors
b)
Lenders
c)
General public
d)
Investors
c)
General public
58
What is a perfectly “faithful representation”?
a)
Specific, biased, subjective
b)
certainty, unbiased, complete
c)
Complete, neutral, free from error
d)
All-inclusive, prudent, objective
c)
Complete, neutral, free from error
59
Give an example of criteria that satisfies the classification as a current asset. Which one is NOT correct.
a)
The purpose is to be traded
b)
It is intended for sale within the operating cycle
c)
It is intended to be realised within the operating cycle
d)
It is expected to be revalued at fair value
d)
It is expected to be revalued at fair value
60
If an interim report only presents the statements of comprehensive income and earnings per share it does not comply with IAS 34. What is missing?
a)
Balance sheet, cash flow statement, changes in equity
b)
Management commentary, financial key-ratios
c)
Balance sheet, cash flow statement, management commentary
d)
Balance sheet, notes, key-ratios, sustainability commentary
a)
Balance sheet, cash flow statement, changes in equity
61
How is “material” information defined in IAS 1? Which of the following is NOT correct
a)
If mis-stating the information could influence decisions users make on the basis of those financial statements
b)
If obscuring the information could influence decisions users make on the basis of those financial statements
c)
If omitting the information could influence decisions users make on the basis of those financial statements
d)
If presenting the information could influence decisions users make on the basis of those financial statements
d)
If presenting the information could influence decisions users make on the basis of those financial statements
62
What is the difference between the “profit and loss statement” (P&L) and “other comprehensive income” (OCI)?
a)
OCI includes discontinued operations, write downs and gains/losses
b)
Certain standards require the company to present items in Other Comprehensive Income and not in the P&L
c)
OCI includes revaluation of property in line with IAS40 and revaluation of biological assets in line with IAS41.
d)
OCI includes all revaluations a company perform over a period
b)
Certain standards require the company to present items in Other Comprehensive Income and not in the P&L
63
What is the definition of a non-current asset?
a)
If it is not current, it is non-current
b)
It is depreciated or amortized on
c)
It is non-financial
d)
It is held in the balance sheet for a longer period than twelve months
a)
If it is not current, it is non-current
64
What is the objective for the financial statements presented in IAS1?
a)
To provide information about the financial position
b)
To provide information that is useful to a wide range of users in nmakinng economic decisions
c)
To provide information about the financial performance
d)
To provide information about cash flows
b)
To provide information that is useful to a wide range of users in nmakinng economic decisions
65
What does a complete set of financial statements comprise?
a)
Corporate governance report, sustainability report, notes, management comment
b)
Profit/Loss, Other comprehensive income, cash flow, financial key-ratios
c)
Financial position, other comprehensive income, changes in equity, notes
d)
Notes, comparative information, corporate governance report, financial key-ratios
c)
Financial position, other comprehensive income, changes in equity, notes
66
Which main items are presented in the statement of comprehensive income? Which of the following are NOT included
a)
Discontinued operations
b)
Profit/loss from the equity method
c)
Extraordinary items
d)
Revenue
c)
Extraordinary items
67
Describe the format for the balance sheet that IAS 1 prescribes.
a)
Debit: Long-term and short term assets, Credit: Long-term and short-term liabilities, Credit: Equity
b)
Debit: Operating and financial assets, Credit: Operating and financial liabilities, Credit: Equity
c)
Debit: Current and non-current assets, Credit: current and non-current liabilities, Credit: Equity
d)
It does not specify any particular format
d)
It does not specify any particular format
68
What accounting standard does include a “management commentary”?
a)
The conceptual framework
b)
None, it is voluntary
c)
IAS 1
d)
None, it is in an IFRS Practice statement
d)
None, it is in an IFRS Practice statement
69
How will the accounting be affected if the company needs to apply a change in accounting policy retrospectively?
a)
The present and the previous year will be changed
b)
The present year will change and an adjustment of equity will take place to handle the residual that arises from the policy change
c)
The present year will change. No other effects on the accounts or the notes.
d)
The present year will be changed and information relating to the previous year will be included in a foot note
a)
The present and the previous year will be changed
70
There are three accounting standards that permits no choice for accounting policy treatments in the standard. Which of the following is not included.
a)
Intangible assets
b)
Inventory
c)
Provisions, contingent liabilities, contingent assets
d)
Property, plant, equipment
d)
Property, plant, equipment
71
Which are the situations where a company can chose to change an accounting policy?
a)
If the tax authority issues new standards
b)
If other legislation (than IFRS) changes and affects the accounting
c)
A new standard is issued or an IFRIC Interpretation
d)
If the management belives the previous accounting was not beneficiary for the company shareholders
c)
A new standard is issued or an IFRIC Interpretation
72
If a company voluntarily change an accounting policy, what information must the company present?
a)
The reason why the new policy will provide more reliable and reliant information.
b)
They are not allowed to
c)
Recalculation of the previous year in both the income statement and balance sheet
d)
Recalculation of the previous year in a note
a)
The reason why the new policy will provide more reliable and reliant information.
73
Repair, maintenance, replacement of major parts and major inspections - which could be treated as a capital expenditure?
a)
Major replacements
b)
All of the suggested can be treated as an asset, as long as it is a substantial amount
c)
Major repairs
d)
Major maintenance
a)
Major replacements
74
Describe the cost model for PPE.
a)
The initial recognized cost, less depreciations and impairments, plus dismantling costs at the end
b)
The current cost, less depreciations and impairments.
c)
The initial recognized cost, less depreciations and impairments. Dismantling costs must not be included.
d)
To fair value, with periodical adjustment of the value
a)
The initial recognized cost, less depreciations and impairments, plus dismantling costs at the end
75
What is a carrying amount?
a)
The current cost for the asset
b)
The market value of the asset
c)
The historical cost for the asset
d)
The amount that is shown in the financial statements
d)
The amount that is shown in the financial statements
76
IFRS 13 defines three levels of inputs in its fair value hierarchy. Describe a valuation using “Level 3 inputs”.
a)
To current cost using a calculation built on indexation
b)
Using unobservable inputs, meaning inputs for which market data is not available, for example estimates of future cash flows.
c)
To market value using quoted prices on an active market
d)
To historical cost less depreciations
b)
Using unobservable inputs, meaning inputs for which market data is not available, for example estimates of future cash flows.
77
If the revalued PPE a year later is sold, how will a revaluation gain (relating to the previous year) be recognized?
a)
As discontinued operations
b)
Directly in retained earnings in equity
c)
In Other comprehensive income
d)
In profit and loss (P/L)
b)
Directly in retained earnings in equity
78
How is a gain or loss on a fair value revaluation of investment property presented in the financial reports?
a)
On a separate line in the statement of changes in equity
b)
On a separate line in the P/L
c)
On a separate line in Other comprehensive income
d)
Included in revenue
b)
On a separate line in the P/L
79
Define depreciations
a)
A systematic allocation aiming at presenting a prudent value of the assets
b)
A systematic allocation aiming at keeping finds in the company, to be able to replace the assets
c)
A systematic allocation aiming at allocating expenses
d)
A systematic allocation aiming at presenting the replacement costs of the assets
c)
A systematic allocation aiming at allocating expenses
80
How should the initial recognition be measured?
a)
To the purchase price, less discounts and rebates
b)
To replacement cost, less discounts and rebates
c)
To the fair value, less discounts and rebates
d)
To the lower of cost or market value
a)
To the purchase price, less discounts and rebates
81
Define level 2 inputs.
a)
Current costs calculated using an index, less depreciations
b)
Quoted prices for a similar asset in an active market
c)
A calculated value using for example discounted future cash flows
d)
Historical costs, less depreciations
b)
Quoted prices for a similar asset in an active market
82
If the depreciation method is changed, how will this be dealt with according to IAS?
a)
It is a change in accounting estimate and will be changed retrospectively.
b)
It is a change in accounting policy and will be changed prospectively.
c)
It is a change in accounting estimate and will be changed prospectively.
d)
It is a change in accounting policy and will be changed retrospectively
c)
It is a change in accounting estimate and will be changed prospectively.
83
f it is probable that future economic benefits from an asset will flow to the company, what other requirement must be fulfilled to be able to recognize PPE?
a)
There is physical proof the asset exists
b)
The cost can be measured reliably
c)
The historical cost can be measured reliably
d)
The current cost can be measured reliably
b)
The cost can be measured reliably
84
If a PPE is revalued and the value increases, how will the gain be recognized? Which of the following is correct?
a)
An increase is presented in Other comprehensive income
b)
A decrease is presented in Other Comprehensive income
c)
An increase is presented in Profit/loss
d)
An increase is presented directly in equity, without having to pass through Comprehensive Income.
a)
An increase is presented in Other comprehensive income
85
Which are the two criteria which must be fulfilled to be able to recognize an (intangible) asset?
a)
It must be a future economic benefit and the company must have control
b)
It must be a measurable economic benefit and the asse must be able to separate as an accounting unit.
c)
It must be a historical economic benefit and the asset must be able to use
d)
It must be physical and monetary
a)
It must be a future economic benefit and the company must have control
86
Why is internally generated goodwill not accepted as an asset?
a)
It is generally related to customers and they cannot be separated from the company without negative consequenses
b)
It is impossible to determine the cost
c)
It is not separable
d)
It consist mainly of long-term research expenses
b)
It is impossible to determine the cost
87
Explain the term “separable” in relation to intangible assets.
a)
The cash flow from the intangible asset can be separated
b)
It can be separated from the entity and sold
c)
It is presented on a separate line in the balance sheet.
d)
It can be separated in the accounting of expenses
b)
It can be separated from the entity and sold
88
Which of the following is an expenditure that can be included in intangibles.
a)
Training
b)
Design of tools involving new technology
c)
Start-up costs
d)
Advertising
b)
Design of tools involving new technology
89
Which of the following is NOT activities that arises in the development phase?
a)
Design and construction of a pilot plant
b)
Research of new deceases
c)
Testing of new materials
d)
Design and construction of a prototype
b)
Research of new deceases
90
How is IAS36 applied on intangible assets with indefinite useful lives?
a)
Should be revalued, up or down
b)
Should be amortized
c)
Should be reviewed for impairment
d)
If consolidated goodwill - be amortized over 20 years
c)
Should be reviewed for impairment
91
How is goodwill in a business combination (IFRS3) calculated?
a)
The price paid for the business, less the value of identifiable assets
b)
The price paid for the business, less the net asset value of identifiable assets/liabilities
c)
The price paid for the business, less the net asset value of identifiable assets/liabilities, less internally generated goodwill
d)
The price paid for the business, less the value of the shares in the subsidiary
b)
The price paid for the business, less the net asset value of identifiable assets/liabilities
92
Why is it difficult to recognize internally generated intangible assets?
a)
It is difficult to isolate future cash flow from the asset
b)
It is problematic to establish if it will generate future economic benefits
c)
It is difficult to value the asset
d)
It is difficult to calculate the expected life of the asset
b)
It is problematic to establish if it will generate future economic benefits
93
For which assets must the recoverable amount be determined every year?
a)
Inventory
b)
Customer receivables
c)
Goodwill
d)
Property
c)
Goodwill
94
There are several examples of indication of an impairment that arises from an external source of information. Which of the following is NOT one of them?
a)
A decline in the share price of the company
b)
Significant changes have occurred in the market, to which the asset is dedicated
c)
Observable indications on a decline in asset value
d)
Increase in the discount rate used in calculating the value in use
a)
A decline in the share price of the company
95
Can an asset be impaired if there is evidence that the economic performance of an asset will be worse than expected?
a)
Yes, but only together with changes in observable data from the market
b)
Yes, but only together with changes in the business cycle
c)
Yes, but only together with a substantial decline in profitability
d)
Yes
d)
Yes
96
How is value in use calculated?
a)
The sum of the discounted future cash flows from an asset
b)
The replacement cost for an asset
c)
The historical cost increased by a relevant index
d)
The observable market value of an asset
a)
The sum of the discounted future cash flows from an asset
97
How is “highly probable” defined, regarding to when the sale has to be completed? Which of the factors are NOT included in the standard?
a)
A completed sale is expected within a year
b)
The asset is actively marketed at a reasonable sale price
c)
The assets to be sold are equal to at least a segment in the company
d)
Management is committed to a plan to sell the asset
c)
The assets to be sold are equal to at least a segment in the company
98
How is an asset “held for sale” defined?
a)
Inventory is an example of an asset "held for sale".
b)
If the asset will be sold using an organized market
c)
If the value will be realised through a sale rather than through continuing use
d)
If the asset will be traded regularly
c)
If the value will be realised through a sale rather than through continuing use
99
What is a disposal group?
a)
Any tangible or intangible non-current asset
b)
A subsidiary
c)
A segment
d)
A CGU
d)
A CGU
100
How is assets held for sale measured?
a)
To fair value
b)
The lower of the carrying amount and fair value
c)
To value in use
d)
To the historical cost, less likely impairments
b)
The lower of the carrying amount and fair value
101
How is discontinued operations presented in the statement of comprehensive income?
a)
On a separate line after tax, including any gain/loss
b)
In other comprehensive income, including any gain/loss
c)
On a separate line before tax, including any gain/loss before tax
d)
On a separate line in operating earnings, including any gain/loss
a)
On a separate line after tax, including any gain/loss
102
How is assets and liabilities held for sale presented in the statement of financial position?
a)
Separately from other assets, but included in similar sub-groups as other assets (for example "inventory" and "inventory in group held for sale")
b)
Included in other assets, until the sale is completed
c)
Separately from other assets in the balance sheet, on one line
d)
As a separate column in the balance sheet
c)
Separately from other assets in the balance sheet, on one line
103
What is, in general, discontinued operations? Give an example.
a)
Property that will be disposed of
b)
A line of business that will be closed down
c)
A segment, at a minimum
d)
A separate line of business
d)
A separate line of business
104
Throughout the period of use, the customer in a lease transaction must have two requirements fulfilled - describe one of them?
a)
It must be a registered contract between the owner and the user
b)
The owner has the right to direct the use of the asset
c)
The user can not have a bargain purchase option after the lease period has expired
d)
The user must have the right to obtain almost all the economic benefits from the use
d)
The user must have the right to obtain almost all the economic benefits from the use
105
How is the lease-term defined?
a)
As a period covered by an option to extend the lease
b)
As for the life of the underlying asset
c)
As a period covered by an option to terminate the lease
d)
As the non-cancellable period of the lease
d)
As the non-cancellable period of the lease
106
How is a lease defined in IFRS16?
a)
A transaction between an owner of an asset and a user of the same asset in exchange for money
b)
Leases are non-current assets that are used a party that is not the owner, but controls them over the leasing period.
c)
A contract that gives the holder the right to use an asset for a period of time and pays for it
d)
Leases are long-term rents paid for cars, trucks, land, property and similar, and used by a party that do not own them.
c)
A contract that gives the holder the right to use an asset for a period of time and pays for it
107
When can a user chose not to apply a lease accounting treatment?
a)
On intangible assets
b)
When the value of the underlying asset is highly uncertain
c)
If the value of the asset is below 100.000 US dollars
d)
Short-term leases
d)
Short-term leases
108
How is the right of use asset initially measured?
a)
At replacement cost for the underlying value
b)
At fair value for the underlying asset
c)
At current value for the underlying asset
d)
At cost (present value of the sum of future rents)
d)
At cost (present value of the sum of future rents)
109
How is the reduction of the liability to the lessor calculated?
a)
It is lowered by the lease payment, less the interest rate on government bonds with the same maturity as the contract.
b)
It is lowered by the lease payment
c)
It is lowered using the same amount as the depreciation on the asset
d)
It is lowered with the lease payment, less calculated interest costs presented in the income statement.
d)
It is lowered with the lease payment, less calculated interest costs presented in the income statement.
110
What is the incremental borrowing rate?
a)
A benchmark interest rate (like LIBOR or similar) plus a risk premium for the company.
b)
The government bond rate for bonds with the same maturity as the lease-term, plus a riskpremium for the company.
c)
The interest rate the lessee would have to pay to borrow money
d)
The short-term government bond rate, plus a risk premium for the company.
c)
The interest rate the lessee would have to pay to borrow money
111
How is the right of use asset measured subsequently?
a)
Cost less depreciations and impairments
b)
At cost (discounted future rents), but revalued using the present incremental borrowing rate
c)
At fair value
d)
Current cost, less depreciations and impairments
a)
Cost less depreciations and impairments
112
How must the initial measurement of financial instruments be performed?
a)
At fair value
b)
At historical costs
c)
At current costs
d)
At the value in use
a)
At fair value
113
What is the effective interest method?
a)
The government bond rate for the same maturity as the financial instrument, and add to that a company risk premium.
b)
The average interest rate on all financial instruments, both assets and liabilities.
c)
The companies borrowing rate
d)
The interest rate that equals the discounted future cash receipts to the initial carrying amount of the asset.
d)
The interest rate that equals the discounted future cash receipts to the initial carrying amount of the asset.
114
Define a financial liability.
a)
A contractual obligation to deliver cash
b)
A contractual obligation to deliver resources to another party
c)
A most likely payment to another party
d)
A future sacrifice payable in cash or other assets
a)
A contractual obligation to deliver cash
115
When is a financial instrument an equity instrument according to IAS32? Which of the following is correct?
a)
An equity instrument includes no obligation to deliver cash or financial assets.
b)
An equity instrument includes an obligation to deliver cash or financial assets.
c)
An equity instrument includes an obligation to deliver dividends.
d)
An equity instrument has no maturity, it is eternal.
a)
An equity instrument includes no obligation to deliver cash or financial assets.
116
Define a financial asset. Which is NOT included.
a)
A right to receive cash
b)
Monetary assets
c)
Cash
d)
Equity instruments
b)
Monetary assets
117
There are three classes of subsequent measures of financial assets. Which of the following is NOT one of them?
a)
At fair value through OCI
b)
At amortised cost
c)
At fair value through P&L
d)
At value in use through statement of changes in equity
d)
At value in use through statement of changes in equity
118
Define an equity instrument.
a)
A residual interest in assets minus liabilities
b)
Assets less liabilities
c)
The number of shares multiplied by the price paid for the shares
d)
The number of shares multiplied by the face value
a)
A residual interest in assets minus liabilities
119
How is the liability part in a compound financial instrument calculated (for example a loan that is convertible to ordinary shares)?
a)
It should be presented as equity, since the holder can convert to ordinary share.
b)
It should be presented as a liability until the conversion date, when it becomes equity.
c)
It should be presented on a separate line, between liabilities and equity as hybrid capital.
d)
It should be separated in a liability part and an equity part, based on a calculation.
d)
It should be separated in a liability part and an equity part, based on a calculation.
120
There are three classes of risk in IFRS7 that should be considered in the footnotes. Which of the following is NOT one of them?
a)
The risk that the fair value will fluctuate because of changes in market prices
b)
The risk holders of quoted financial instruments will sell at the same time and depress the value of the instrument.
c)
The risk that one party to a financial instrument will cause a loss by failing to honour the obligation
d)
The risk an entity will have difficulties meeting obligations related to financial liabilities
b)
The risk holders of quoted financial instruments will sell at the same time and depress the value of the instrument.
121
How must redeemable preference shares be presented and why?
a)
Equity, since it does not require any collateral.
b)
Equity, since it is shares
c)
Liabilities, because the shareholders has the right to require repayment.
d)
Liabilities, because the dividend is a fixed amount.
c)
Liabilities, because the shareholders has the right to require repayment.
122
How can a contingent liability be defined?
a)
A possible obligation, confirmed by uncertain future events not within control of the company
b)
A certain obligation, confirmed by certain future events within control of the company
c)
A possible obligation, confirmed by uncertain past events not outside control of the company
d)
A possible obligation, confirmed by certain future events within control of the company
a)
A possible obligation, confirmed by uncertain future events not within control of the company
123
What is an obligating event and why is it important in calculating a provision?
a)
When It can be no realistic alternative to settle, and without the event there cannot be a provision
b)
If the other do not accept they have a corresponding receivable, and without the event there cannot be a provision
c)
When the other party accept that they have a corresponding receivable and without the event there cannot be a provision
d)
The date when a loan is signed or bonds have been issued, and without the event there cannot be a provision
a)
When It can be no realistic alternative to settle, and without the event there cannot be a provision
124
How will the accounting be affected if it is no longer probable that an outflow of economic benefits will be required to settle the obligation?
a)
It should be reversed and presented as a financial income
b)
It can be used for other purposes than for which it was originally established
c)
It should be reversed and presented in Other Comprehensive Income
d)
It should be reversed
d)
It should be reversed
125
How will the calculation of the provision be affected, if it is long-term?
a)
It must be discounted with the government bond yield for the same time-frame
b)
It will not be affected
c)
The nominal sum of future expenditure must be summarised.
d)
It should be calculated as the present value of the expenditure
d)
It should be calculated as the present value of the expenditure
126
What is an onerous contract?
a)
A very profitable contract.
b)
A contract in which the cost of meeting the obligation is above the benefits.
c)
A contract in which the profitability is below the required rate of return on capital employed of the company.
d)
A contract in which the benefit of meeting the obligation is above the costs.
b)
A contract in which the cost of meeting the obligation is above the benefits.
127
Is a building contract a performance obligation that is satisfied over time or at a point in time?
a)
If the builder has control over the asset, the revenue at the builder will be recognized over time (when advances from customers are received).
b)
If the builder has control over the asset, the revenue at the builder will be recognized over time (for example using the percentage of completion method)
c)
If the customer has control over the asset, the revenue at the builder will be recognized over time (for example using the percentage of completion method).
d)
If the customer has control over the asset, the revenue at the builder will be recognized at a point i time (when the building is completed).
c)
If the customer has control over the asset, the revenue at the builder will be recognized over time (for example using the percentage of completion method).
128
Why is it important to identify the performance obligation?
a)
It is important, because the revenue arising from each obligation is calculated separately
b)
It is important, because the revenue arising from a group of obligation is calculated separated in groups of similar customers
c)
It is important, because the revenue arising from each obligation is calculated as a group
d)
It is important, because the revenue arising from a group of obligation is calculated as a group
a)
It is important, because the revenue arising from each obligation is calculated separately
129
If the consideration for a contract may vary because of refunds or performance bonuses, how should the revenue be measured?
a)
It must be estimated (and included in cost of sales) when revenue is recognized.
b)
It must be estimated and amortized over the time for the customer receivable.
c)
It must be estimated (and ducted from the revenue) when revenue is recognized
d)
It must reduce the revenue when it is paid
c)
It must be estimated (and ducted from the revenue) when revenue is recognized
130
How should the revenue be calculated if the customer is granted the right to return the products?
a)
The company should recognise the total amount and de-recognise the amount which it expects in return when the return is completed.
b)
The company should recognise the total amount and recognise the amount which it receives in return as cost of sales.
c)
The company should estimate the expected return and only recognise the amount which it expects.
d)
The company should estimate the expected return and recognise the amount as cost of sales.
c)
The company should estimate the expected return and only recognise the amount which it expects.
131
What is a stand-alone selling price and how does it affect the accounting?
a)
If the performance obligations (like product, services) in a contract were to be sold separately, the revenue must be allocated to each performance obligation.
b)
If the performance obligations (like product, services) is sold in combination, the combined revenue must be presented.
c)
If the performance obligations (like product, services) is sold in combination, the revenue must be presented when the shortest serving component is recognised (normally products).
d)
If the performance obligations (like product, services) is sold in combination, the revenue must be amortized over to the longest serving component (normally services).
a)
If the performance obligations (like product, services) in a contract were to be sold separately, the revenue must be allocated to each performance obligation.
132
When identifying the revenue contract, what does the standard say about the payment?
a)
It is of minor importance if the company will collect the cash in the future
b)
It is highly certain the company will collect the cash
c)
It is probable the company will collect the cash
d)
If it is probable the company will collect the cash, the amount must be discounted
c)
It is probable the company will collect the cash
133
Which of the following items are NOT included in the five-step model?
a)
Determine the transaction price
b)
Identify a performance obligation
c)
Allocate the price to performance obligations
d)
Calculate a possible credit loss in the contract
d)
Calculate a possible credit loss in the contract
134
What is a contract asset? What is the difference to a receivable?
a)
The asset presented at the delivering company when the customer has paid advances to the delivering company
b)
Goods/services have been delivered to the customer, but not yet invoiced (and becoming a customer receivable).
c)
The delivering company has paid advances to the customer
d)
Goods/services have been ordered by the customer, but not yet delivered (and becoming a customer receivable).
b)
Goods/services have been delivered to the customer, but not yet invoiced (and becoming a customer receivable).
135
What is a defined benefit obligation and how is it accounted for?
a)
Estimates must be made of the of the assets (normally share and bonds) that re necessary to cover the obligation to the employee.
b)
Estimates must be made of the benefits which employees have earned during the current period that will be paid out to the employee at the end of the year (obligation).
c)
Estimates must be made of the costs which employees have earned during the current period (obligation).
d)
Estimates must be made of the accumulated benefits which employees have earned (obligation) and the extra amount they have earned during the current period.
d)
Estimates must be made of the accumulated benefits which employees have earned (obligation) and the extra amount they have earned during the current period.
136
In what way will the current market interest rate level impact the calculation of the pension obligation?
a)
It will affect the market prices of shares and bonds that the company use to protect the liability.
b)
The estimates of future obligations are discounted using the market interest rate.
c)
There must be an interest cost for the obligation accounted for in the financial net
d)
The difference between the ingoing liability and the outgoing, should equal the market interest rate for the period.
b)
The estimates of future obligations are discounted using the market interest rate.
137
What is a vesting condition and how does it affect the accounting?
a)
The conditions the employee must satisfy to receive the equity instruments.
b)
The period during which the employee can exchenge the stock options into shares.
c)
The number of years the employee have ot work in the company to receive the stock options.
d)
The amount the employee must invest to receive the equity instruments.
a)
The conditions the employee must satisfy to receive the equity instruments.
138
The total cost for pensions during the period consists of two items (unless the employees have contributed) - which?
a)
The nominal value of current services cost for the period and the interest cost
b)
The present value of current services cost for the period and the interest cost
c)
The change in the pension obligation less the change in the pension assets.
d)
The pension cost for the period and the change in the obligation
b)
The present value of current services cost for the period and the interest cost
139
How is the accounting affected if the share-based payments are settled in cash?
a)
The company should measure this liability at fair value, both at the grant date and at each reporting period.
b)
The company should measure this liability at fair value at the grant date and keep that value each reporting period.
c)
The company should measure this liability at cost and when the liability is settled in cash include a loss inn the profit/loss account.
d)
The company should measure this liability at fair value, both at the grant date and at each reporting period. The revaluation must be presented in Other comprehensive income.
a)
The company should measure this liability at fair value, both at the grant date and at each reporting period.
140
Which of the plans will create both a liability in the balance sheet and a cost in the income statement in the company?
a)
Defined benefit plans, where the company bears the risk, will create both
b)
Defined benefit plans, where the employee bears the risk, will create both
c)
Defined contribution, where the employee bears the risk, will create both
d)
Defined contribution, where the company bears the risk, will create both
a)
Defined benefit plans, where the company bears the risk, will create both
141
A company presents the following. Profit before tax 100. Depreciations 40. Ingoing balance for inventory 500 and outgoing 600. Ingoing balance for machinery 1000 and outgoing 1200. Calculate the investments.
a)
60 (cash outflow of 60)
b)
200 (cash outflow of 200)
c)
40 (cash outflow of 40)
d)
240 (cash outflow of 240)
600-500=100
1200-1000= 200
The change in machinery is not part of the working capital, so we only consider the change in inventory : 100+40+100 = 240
142
What is the starting point for the indirect method?
a)
The operating profit, before interest and tax
b)
The change in cash for the period
c)
The profit and loss for the period, before tax
d)
The EBITDA (profit before depreciation/amortization, interest and tax)
c)
The profit and loss for the period, before tax
143
A company presents the following. Profit before tax 100. Depreciations 40. Ingoing balance for inventory 500 and outgoing 580. Ingoing balance for machinery 1000 and outgoing 1200. Calculate operating cash flow.
a)
60
b)
-140
c)
140
d)
-180
Operating cash flow= profit before tax + depreciation - change in working capital
The change in machinery is not part of the working capital, so we only consider the change in inventory
580-500= 80
100+40-80= 60
144
There are five adjustments when calculating cash flow from operations. Which of the following examples is not one of them?
a)
Decrease in the allowance for doubtful receivables
b)
Depreciations
c)
Increase/decrease in inventory
d)
Interest income/expense
d)
Interest income/expense
145
Which are the two methods used for reporting the cash flow statement?
a)
Direct, indirect
b)
Excluding dividends/interest, including dividends/interest
c)
All-inclusive, all-exclusive
d)
Operating, financing
a)
Direct, indirect
146
It is three activities described in a cash flow statement - which of the following is not included?
a)
Change in cash
b)
Investing
c)
Financing
d)
Operating
a)
Change in cash
147
How is the EPS calculation affected by non-controlling interests?
a)
Non-controlling interest is an adjustment only in profit/loss
b)
Non-controlling interest is not deducted from profit/loss
c)
Non-controlling interest is deducted from profit/loss
d)
Non-controlling interest is adjusted for dividends to the minority shareholders and then deducted from profit/loss
c)
Non-controlling interest is deducted from profit/loss
148
How is basic EPS calculated?
a)
The profit/loss divided by the average number of shares
b)
The operating profit divided by the average number of shares
c)
The profit/loss less dividends distributed to shareholders, divided by the average number of shares
d)
The profit/loss divided by the outgoing number of shares
a)
The profit/loss divided by the average number of shares
