IAS

Question 1

IAS 2 inventories

Answer 1

Inventories

• difference between historical cost and current value
• Lower of NRV and original cost
• NRV is estimated selling cost less cost of sale at measurement date

Question 2

IAS 7 cash flow

Answer 2

Cash flow
Direct is separate cash in and out flows
Indirect is reconciliation of PBT including on cash items
Limits comparibibilty
Majority use indirect as easier/less costly
Direct is more transparent

Question 3

IAS 12 income tax

Answer 3

IAS 12 income tax

• deffered tax asset can be carried forward
• however tax assets indicate no future profit
• amount and nature with evidence must be disclosed

Question 4

IAS 19 employee benefits

Answer 4

• acturial gain or loss goes to OCI

- if terminated recognise costs on announcement

Question 5

IAS 21 changes in foreign currnecy

Answer 5

IAS 21 Changes in foreign currency
-present individual accounts in any currency
Determining functional currency
-Primary economic environment
(i) the currency which mainly influences sales prices for goods and services
(ii) the currency of the country whose competitive forces and regulations determine the sales prices of goods and services
(iii) the currency which mainly influences labour, material and other costs of providing goods and services.
-Also secondary such as
-currency of financing activities
(a) the autonomy of a foreign operation from the reporting entity (
b) the level of transactions between the two
d) whether its cash flows directly affect those of the reporting entity.

What to retranslate at the start of every year
goodwill is retranslated every year at the closing rate
• the opening net assets are retranslated every year at the closing rate
• profit for the year is translated in the statement of profit or loss at the average rate but net assets in the statement of financial position are translated at the closing rate

Question 6

IAS 28 investment in associates

Answer 6

IAS 28 Investments in Associates and Joint Ventures
-what is significant influence
Influence from investor shown through
-being board member
-policy process
-material transactions
-Provision of essential information

Question 7

IAS 32 financial instrument

Answer 7

IAS 32 Presentation of financial instruments

• (recognise as equity or liability)
• liability is an obligation to give cash/financial asset
• equity is residual interest in asset minus liabilities
• there is no obligation to send cash to others with equity
• if variability in payment it will be a liability

Question 8

IAS 36 imPairment of assets

Answer 8

IAS 36 Impairement of assets

• asess assets at every reporting period
• calculate recoverable amount
• must have backing for estimation

Question 9

IAS 37 Provisions, Contingent Liabilities and Contingent Assets

Answer 9

IAS 37 
Definition and criteria
Timing or future of outflow uncertain
Must be all criteria
 • obligation from a past event 
• paying the obligation is probable
 • payment measured reliably
Innacuracies
Discount to PV
More info on NCLS
Deter investors as unreliable
Doubt accountant skills if innacurate

Question 10

IAS 38

Answer 10

IAS 38 Intangible Assets
Only indefinite life if there is no foreseeable limit
-difficulties estimating does not mean no amortisation
-reviewed annually