Questions surrounding IAS + IFRS

Question 1

IAS 21 - FX exchange rate - what are the factors to be considered when determining the currency?

Answer 1

The currency which is used by shareholders and currency of debt finance

Question 2

Functional currency definition?

Answer 2

Currency of the primary economic environment in which the entity operates

Question 3

Explain how goodwill is calculated?

Answer 3

Under business combinations, goodwill is calculated by comparing the fair value of the consideration plus the NCI at acqusition and the fair value of the identifiable net assets acquired

Question 4

IFRS 15 - Fair value - what is the standards purpose?

Answer 4

To increase consistency and comparability through the valuation techniques

Question 5

IAS 37 - provisions - what is the purpose of this standard?

Answer 5

To ensure that appropriate recognition critera and measurement have been met

Question 6

IAS 37 - when is a provision recognised?

Answer 6

When present obligation has arose as a result from a past event and is probable

Question 7

IFRS 9 - what is the measurement used?

Answer 7

The equity instruments should be measured at fair value unless irrevocable election is made to recognise changes in fair value through OCI

Question 8

IFRS 15 - Fair value - what other concept is used to measure FV?

Answer 8

The highest and best use which is the use of a non-financial asset by market participants

Question 10

IAS 38 - when shall an intangible have an indefinite useful life ?

Answer 10

When all relevant factors have no foreseeable limit over the period which the asset expects to generate cash net inflow for the entity

Question 11

IAS 37 - if indefinite life what does this mean?

Answer 11

That the entity must test annually impairment annually by comparing recoverable amount with carrying amount to assess for implication of impairment

Question 12

IAS 37 - how to calculate impairment?

Answer 12

Take the carrying value and compare it to the recoverable amount

Question 13

IAS 36 - impairment discount rate - what does the standard say?

Answer 13

That the discount rate should be applied that reflects the current market assessment of time value of money and the risks associated with it

Question 14

IAS 36 - CGU what are these?

Answer 14

Group of assets grouped together

Question 15

IAS 36 - Disclosure?

Answer 15

Must be disposed of the loss and description of the impairment against which class of CGU