FR- Ch-6 ( A Conceptual and regulatory feamework )

The process for developing an IFRS Accounting Standard involves a number of stages. Following receipt and review of comments on a Discussion Paper, what will be the next step undertaken by the International Accounting Standards Board (the Board)?

• Publication of an Exposure Draft

• Establishment of an Advisory Committee

• Consultation with the Advisory Committee

• Issue of a final IFRS Accounting Standard

Which TWO of the following statements would be an advantage of adopting IFRS Accounting Standards?

• It would be easier for investors to compare the financial statements of companies with those of foreign competitors

• Cross-border listing would be facilitated

• Accountants and auditors would have more defence in case of litigation

• The IFRS Accounting Standards can be more easily tailored to reflect the industries of the territory adopting them

Which TWO of the following statements regarding systems of regulation of accounting are true?

• A principles-based system will require more detailed regulations than a rules-based System

• A rules-based system will tend to give rise to a larger number of IFRS Accounting Standards than a principles-based system

• A principles-based system Seeks to cover every eventuality

• A principles-based system requires the exercise of more judgement in application than o rules-based system

The process for developing an IFRS Accounting Standard involves a number of stages. During the early stages of a project, the International Accounting Standards Board (the Board) will undertake consultation on the key issues.

Which of the following is correct regarding the early stages of the process:

• In the early stages of the project, the Board will issue a Discussion Paper to obtain views from the public

• In the early stages of the project, the Board will consult with the Advisory Committee and IFRS Advisory Council to seek out the key issues

• In the early stages of the project, the Board will issue a Discussion Paper then consult with the Advisory Committee

• In the early stages of the project, the Board will issue an Exposure Draft to obtain views from the public

Historical cost accounting remains in use because of its practical advantages.

Which of the following is NOT an advantage of historical cost accounting?

• Amounts of transactions are reliable and can be verified

• Amounts in the statement of financial position can be matched to amounts in the

  statement of cash flows

• It avoids the overstatement of profit which can arise during periods of inflation

• It provides fewer opportunities for creative accounting than systems of current value accounting

Which of the following statements about the International Sustainability Standards Board (SSB) is correct?

• The ISSB will issue mandatory laws that companies complying with IFRS Accounting Standards will be required to apply.

• The ISSB will initially focus on climate-related disclosures

• The standards issued by the ISSB will replace those issued by the International Accounting Standards Board (the Board).

• There has been no previous guidance for preparers of financial information in respect of sustainability disclosures

Drexler acquired an item of plant on 1 October 20X2 at a cost of $500,000. It has a useful life of five years (straight-line depreciation) and an estimated residual value of 10% of its historical cost or current cost as appropriate. As at 30 September 20X4, the manufacturer of the plant still makes the some item of plant and its current price is $600,000.

What is the correct carrying amount to be shown in the statement of financial position of Drexler os at 30 September 20X4 under the historical cost and current cost measurement bases?

Historical cost (S) (1)

Current cost (S) (2)

• Historical cost- 320.000

  2. Current cost -384,000

• Historical cost-300,000

  2. Current cost -600,000

Under the current value measurement basis, what is the definition of fulfilment value?

• The amount of consideration received to Incur the liability, less transaction costs

• The price that would be paid to settle the liability at the measurement date

• The consideration that would be received for incurring an equivalent liability at the measurement date

• The present value of the estimated cash flows needed to fulfil a liability

Which of the following statements is an advantage of using the value in use measurement basis?

• It assists a user to assess the future prospects of the business

• Amounts used are objective and free from bias

• It is an easily understood system of valuation

• Amounts are reliable and con be verified to invoices and documents

Under the current cost measurement basis, what is the definition of the value in use measurement method?

• Costs incurred at the time of acquisition

• Present value of future cash flows, less costs of disposal

• Open market value of the asset

• Open market value of the asset, less the present value of the future cash outflows