International Accounting Standards

14 Questions

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Accounting Quizzes & Trivia

Test your knowledge of: IAS 16, Property Plant & Equipment IAS 38, Intangible Fixed AssetsIAS 36, Impairment of Assets IAS 40, Investment Property IAS 17, LeasesIAS 2, Inventories


Questions and Answers
  • 1. 
    • A. 

      When it can be reliably measured

    • B. 

      When it is controlled by the entity

    • C. 

      When it is probable that economic benefits will flow to the entity from the asset

    • D. 

      When it has a residual value

  • 2. 
    • A. 

      All assets having a known useful life should be depreciated

    • B. 

      Assets should be recognised in the balance sheet at their carrying amount

    • C. 

      Assets should be depreciated by systematically allocating their depreciable amount over their useful life

    • D. 

      The carrying amount of an asset is the value recognised in the accounts after deducting depreciation and impairment losses

  • 3. 
    • A. 

      Always use 25% diminishing balance unless there is a good reason not to

    • B. 

      The method which best reflects way we use up the value of the asset over its expected useful life

    • C. 

      If the residual value is negligible you can ignore it when calculating the depreciable amount

    • D. 

      Useful life and and residual value should be reviewed annually and any changes reported according to IAS 8

    • E. 

      When determining useful life, expected usage and expected physical wear and tear must be considered

  • 4. 
    • A. 

      Control, marketability, materiality

    • B. 

      Completion of development, control, identifiability

    • C. 

      Control, identifiability, economic benefits

    • D. 

      Intention to complete development, economic benefits, identifiability

  • 5. 
    • A. 

      All research costs should be written off at the time they are incurred in line with the Prudence Concept.

    • B. 

      Revenue costs are treated as expenses on the Income Statement whereas Capital costs are treated as Non-current Assets

  • 6. 
    • A. 

      Intention to complete, technically feasible, usefulness or marketability

    • B. 

      Control, technically feasible, usefulness

    • C. 

      Sufficient resources to enable completion, cost can be reliably measured, how economic benefits will be achieved

    • D. 

      Identifiability, cost can be reliably measured, control

  • 7. 
    IAS 36 Impairment of fixed assets - The present value of future net cash inflows to the entity from a Cash Generating Unit is the definition of which value?
    • A. 

      Value in use

    • B. 

      Recoverable amount

    • C. 

      Carrying amount

  • 8. 
    What does the following definition describe? “the higher of the fair value, less costs to sell, and the value in use of an asset or cash generating unit” (IAS 36)
    • A. 

      Carrying amount

    • B. 

      Recoverable amount

    • C. 

      Market value in an arm's length transaction

  • 9. 
    Why would we need to consider a Cash generating unit (group of assets) rather than an individual  non-current asset when determining recoverable amount? (IAS36)
    • A. 

      It is not economically viable to work out the future cash inflows from an individual asset

    • B. 

      Materiality

    • C. 

      Because individual assets often don't create cash inflows on their own

  • 10. 
    If the carrying amount (net book value) of an asset is below the recoverable amount, what is the name we give to the difference between the two values? (IAS 36)
    • A. 

      Revaluation loss

    • B. 

      Impairment loss

    • C. 

      Notional loss on sale

  • 11. 
    IAS 40, Investment property What types of property are considered to be investment property?
    • A. 

      Land held for capital appreciation

    • B. 

      Vacant land

    • C. 

      Empty warehouse

    • D. 

      Property to let

  • 12. 
    IAS17 - LeasesWhich type of lease is normally long term and transfers all the risks and rewards of ownership?
    • A. 

      Finance lease

    • B. 

      Operating lease

  • 13. 
    IAS17 allows us to capitalise an asset on a finance lease, this increases our Net AssetsWhich of the following criteria in our contract would indicate that we should NOT capitalise the leased asset? (IAS 17)
    • A. 

      Term of the lease is major part of the asset's useful life

    • B. 

      At inception, PV of minimum lease payments is substantially all of the FV of the asset

    • C. 

      Lessor is responsible for repairs

    • D. 

      Ownership transferred at end of lease

    • E. 

      Lessee has option to purchase at end of lease at price so much lower than Fair Value it is almost certain they will exercise the option

  • 14. 
    • A. 

      Matching

    • B. 

      Business Entity

    • C. 

      Reliability

    • D. 

      Prudence

    • E. 

      Historical Cost