IASB Treatment of Items

Question 1

How are equity shares treated (in terms of costs of issues)?

Answer 1

The costs of issue statements are charged directly to equity rather than the income statement and are reflected under the ‘Statement of Changes in Equity’

Question 2

At what value should inventories be valued?

Answer 2

The lower of cost and net realisable value

Question 3

Why is LIFO not permitted for inventory valuation?

Answer 3

The balance sheet amounts would “bear little relationship to recent cost levels of inventory

Question 4

If there is to be an overall loss on a construction contract when is the loss recognised?

Answer 4

Immediately

Question 5

What are the ways in which the percentage of completion of a contract can be assessed?

Answer 5

1) The proportion that contract costs incurred for work performed to date bear to the estimated total contract costs
2) Surveys of work performed
3) Completion of a physical proportion of the contract work