Leases, share based payments and operating segments

Question 1

What is IFRS 16

Answer 1

Leases

Question 2

When to no record a lease

Answer 2

Either short term or when it is of minimal value

Question 3

What are the two types Share based payments

Answer 3

equity and cash settled share based payments

Question 4

What is IFRS 8

Answer 4

Operating Segments

Question 5

What are the factors that makes a component an operating segment

Answer 5

The component enganges in an activity that
Generates revenue or incur expense
Operation activity and results are regularly reviewed by the CODM
Separate financial information is available.

Question 6

What are factors considered in the 10 % Test for an operating segment to be considered as reportable segment

Answer 6

Asset
higher of total profits or losses
Revenue

Question 7

What is IFRS 9

Answer 7

Financial Instruments
(make sure to know the definition of all IFRS )

Question 8

What factors determine the method to measure finanical asset

Answer 8

The business model used by the entity

Question 9

Why are profits or losses fromcash flow hedges not immedieately shown in the income statement unlike fair value hedges

Answer 9

beacuse cash flow hedges against a future uncertainity and therefore the profi tand loss is not relaized as of now and therefore cannot be place in the income statement , unlike fair value hedges where profit and losses due to changes in fair value are instantly affect the financne of the firm and is not meant for a future date

Question 10

(Chapter 4 financial instruments )What are the items that are re classified when they are disposed of

Answer 10

Finanacial assets (debt instrument only )are re classfied in the profit and loss accont

Question 11

Are equity instruments that are measured at fair value through other comprehensive income re cycles or re classified in profit and loss account on disposal

Answer 11

No they are not, unlike debt instruments that are re cycles into profit and loss after disposal (page number 60 for further reference.)

Question 12

IFRS 8 is only compulsory for what firms

Answer 12

The firms that trade their equity or debt in instruments in the public market or the ones that are filing their financial statements to the security commission to start trading.

Question 13

What are the criticisms of ifrs 8 operating segments

Answer 13

1) inter segment transactions secpecially that are not at fair vlaue will provide distorted view of the performance of the segments
2) The subjectivity and bias of the management in preparing the reproting segments
3) Common cost allocation
4) Over aggregation of operating segments will provide lower detail information to the shareholder of the firm.