PAS 34

Question 1

pertains to the preparation and presentation of interim financial report for an interim period.

Answer 1

Interim financial reporting

Question 2

a financial reporting period shorter than a full financial year or less than one year.

Answer 2

Interim period

Question 3

Interim financial report means a financial report containing either:

Answer 3

a. a complete set of financial statements (PAS 1): or
b. a set of condensed financial statements (PAS 34)
for an interim period.

Question 4

An interim financial report shall include, as a minimum, the following components using PAS 34:

Answer 4

1. Condenses statement of financial position
2. Condensed statement of profit or loss and
   other comprehensive income
3. Condensed statement of changes in equity
4. Condensed statement of cash flows
5. Selected explanatory notes

Question 5

The term “condensed” means

Answer 5

an entity needs only to provide the
minimum information required under PAS 34. However, an entity is not prohibited from publishing a complete set of financial statements in accordance with PAS I in its interim financial
report.

Question 6

in the interest of timeliness and cost considerations, less information may be provided at interim dates.

Answer 6

Relevance over Reliability

Question 7

an entity may rely on estimates to
a greater extent when preparing interim financial reports.

Answer 7

Materiality and Estimates

Question 8

only selected explanatory notes are provided in interim financial reports to avoid repetition.

Answer 8

Note disclosures

Question 9

What are the two views on interim financial reporting?

Answer 9

1. The integral view means each interim period is an integral part of the annual accounting period.
2. The independent or discrete view means each interim period is a basic accounting period and the results of operations shall be determined in essentially the same way as if the interim period were an annual accounting period.

Question 10

Explain the integral view of interim financial reporting

Answer 10

Under the integral view, annual operating expenses are estimated and then allocated to the interim periods based on forecasted revenue or sales volume.

In other words, costs incurred which clearly benefit the entire year are allocated to the interim periods benefited.

Question 11

Explain the independent view of interim reporting.

Answer 11

Under the independent view or discrete view, each interim period is considered a separate accounting period with status equal to a fiscal year.

Thus, no estimations or allocations are made for interim Pour, unless such estimations or allocations are allowed for annual reporting.

The same expense recognition rules shall apply as under annual reporting and no special interim accruals or deferrals are permitted.

Question 12

this are designed to provide an explanation of significant events and transactions arising since the last annual financial statements.

Answer 12

selected explanatory notes

Question 13

Interim financial reports shall be published

Answer 13

a. Once a year at any time during the year.
b. Within a month of the half year-end.
c. On a quarterly basis.
d. Whenever the entity wishes.

Question 14

If an entity does not prepare interim financial reports

Answer 14

a. The year-end financial statements are deemed not to comply with IFRS
b. The year-end financial statements’ compliance with IFRS is not affected..
c. The year-end financial statements shall not be acceptable under local jurisdiction.
d. Interim financial reports shall be included in the year-end financial statements.

Question 15

Interim financial reports shall be published

a. Once a year at any time during the year.
b. Within a month of the half year-end.
c. On a quarterly basis.
d. Whenever the entity wishes.

Answer 15

d. Whenever the entity wishes.

Question 16

If an entity does not prepare interim financial reporta

a. The year-end financial statements are deemed not to comply with IFRS.

b. The year-end financial statements’ compliance with IFRS is not affected.

c. The year-end financial statements shall not be acceptable under local jurisdiction.

d. Interim financial reports shall be included in the year-end financial statements.

Answer 16

b. The year-end financial statements’ compliance with IFRS is not affected.

Question 17

Interim financial reports shall include as a minimum

a. A complete set of financial statements.

b. A condensed set of financial statements and selected notes.

c. A condensed statement of financial position and an income statement.

d. A condensed statement of financial position, income statement and statement of cash flows.

Answer 17

b. A condensed set of financial statements and selected notes

Question 18

An interim financial report shall include as a minimum all of the following components, except

a. Condensed statement of financial position and statement of comprehensive income

b. Condensed statement of cash flow Condensed statement of changes in equity

d. Accounting policies and explanatory notes

Answer 18

d. Accounting policies and explanatory notes

Question 19

There is a presumption that anyone reading interin financial reports shall

a. Understand all International Financial Reporting Standards

b. Have access to the records of the entity.

c. Have access to the most recent annual report

d. Not make decisions based on the report.

Answer 19

c. Have access to the most recent annual report

Question 20

When the business is seasonal, what does IFRS suggest?

a. Additional notes be written in the interim reports about seasonal nature of the business

b. Disclosure of financial information for the latest 12- month period and comparative information for the prior comparable 12-month period in addition to the interim report

c. Additional disclosure in the accounting policy note

d. No additional disclosure

Answer 20

b. Disclosure of financial information for the latest 12- month period and comparative information for the prior comparable 12-month period in addition to the interim report

Question 21

Which basic financial statements are prepared as a minimum for interim financial reporting?

a. Statement of financial position and income statement

b. Statement of financial position, income statement and statement of comprehensive income

c. Statement of financial position, statement of comprehensive income and statement of cash flows

d Statement of financial position, statement of comprehensive income, statement of cash flows and statement of changes in equity

Answer 21

d. Statement of financial position, statement of comprehensive income, statement of cash flows and statement of changes in equity

Question 22

Which statement is true regarding interim reporting?

a. The independent view is required for interim financial statements.

b. Interim reports are required on a quarterly basis.

c. Interim reports are not required.

d. Interim reports require the preparation of only a statement of comprehensive income and a statement of financial position.

Answer 22

c. Interim reports are not required.

Question 23

10. Which statement about an interim report is true?

a. An interim financial report must consist of a complete set of financial statements.

b. An interim financial report must consist of a condensed set of financial statements.

c. An interim financial report may consist of a condensed set or complete set of financial statements.

d. All of these statements are true.

Answer 23

c. An interim financial report may consist of a condensed set or complete set of financial statements.

Question 24

Interim financial statements are usually presented on a

a. Monthly basis

b. Quarterly basis

c. Semiannual basis

d. Nine-month basis

Answer 24

b. Quarterly basis

Question 25

For interim reporting, an inventory loss from a market decline in the second quarter shall be recognized a. In the fourth quarter b. Proportionately in each of the second, third and fourth quarters e. Proportionately in each of the first, second, third and fourth quarters For interim reporting, an inventory loss from a market decline in the second quarter shall be recognized a. In the fourth quarter b. Proportionately in each of the second, third and fourth quarters e. Proportionately in each of the first, second, third and fourth quarters d. In the second quarter

Answer 25

d. In the second quarter

Question 26

It is appropriate to use estimated gross profit rate to determine the cost of goods sold for a. Interim reporting b. Year-end reporting c. Interim reporting and year-end reporting d. Neither interim reporting nor year-end reporting

Answer 26

a. Interim reporting

Question 27

For interim financial reporting, an expropriation gain occurring in the second quarter shall be a. Recognized ratably over the last three quarters b. Recognized ratably over all four quarters with the first quarter being restated c. Recognized in the second quarter d. Disclosed in the second quarter

Answer 27

c. Recognized in the second quarter

Question 28

5. For interim financial reporting, the income tax expete for the second quarter should be computed by using the a. Statutory tax rate for the year. b. Effective tax rate expected or the second quarter. c. Effective tax rate expected for the full year as estimated at the end of the first quarter. d. Effective tax rate expected for the full year as estimated at the end of the second quarter.

Answer 28

a. Statutory tax rate for the year.

Question 29

Interim statements can be described as emphasizing a. Timeliness over reliability b. Reliability over relevance c. Relevance over comparability d. Comparability over neutrality

Answer 29

a. Timeliness over reliability

Question 30

Interim financial reporting should be viewed a. As a type of reporting that need not follow IFRS b. As useful only if activity is evenly spread throughout the year so that estimates are unnecessary. c. As reporting for an integral part of an annual period. d. As reporting for a separate accounting period.

Answer 30

c. As reporting for an integral part of an annual period.

Question 31

Which statement about interim reporting is true? a. All entities that issue an annual report must issue interim financial report. b. The integral view is the appropriate approach in preparing interim financial report. c. A complete set of financial statements must be presented for an interim period. d. The same accounting principles used for the annual report should be employed for interim report.

Answer 31

d. The same accounting principles used for the annual report should be employed for interim report.