IASB AND IFRS

Question 1

According to the IASB Framework, the two criteria required for incorporating items into the income statement or statement of financial position are that

Answer 1

It meets the definition of an element and can be measured reliably.

Question 2

According to the IASB Framework, the financial statement element that is defined as increases in economic benefits during the accounting period in the form of inflows or enhancements of assets or decreases of liabilities that result in increases in equity, other than those relating to contributions from equity participants, is

Answer 2

Income
The IASB Framework has five elements: asset, liability, equity, income, and expense. The definition given is that of income. Note that income includes both revenues and gains.

Question 3

Kelly Corp. barters with Ace Corporation for goods that are similar in nature and value. The value of the goods was $1,000. The cost of the goods was $400. If Kelly uses IFRS to prepare financial statements, what amount should Kelly recognize as income?

Answer 3

$0 This answer is correct because if a barter transaction is for goods that are similar in nature and value, then no income or expense is recognized.

Question 4

Under IFRS, which of the following is the first step within the hierarchy of guidance to which management refers, and whose applicability it considers, when selecting accounting policies?

Answer 4

Apply a standard from IFRS if it specifically relates to the transaction, other event, or condition.

The highest level in the hierarchy is an IFRS standard applicable to the transaction.