IFRS Certificate Mock Exam 3

Article Author: Dr. Hesham Mokhiemer

To learn more about the author’s professional details and experience, you can visit Dr. Hesham’s Personal Profile Page.

Time limit: 0

Quiz Summary

0 of 32 Questions completed

Questions:

Information

from 1-5 write your overall feedback about your learning (required)

You must specify a number.

Tell us about your learning experience How is your journey with The Financeer so far? Are the concep (required)

You must specify a text.

Information

You have already completed the quiz before. Hence you can not start it again.

Quiz is loading…

You must sign in or sign up to start the quiz.

You must first complete the following:

Results

Quiz complete. Results are being recorded.

Results

0 of 32 Questions answered correctly

Your time:

Time has elapsed

You have reached 0 of 0 point(s), (0)

Earned Point(s): 0 of 0, (0)
0 Essay(s) Pending (Possible Point(s): 0)

Average score
Your score

Categories

Not categorized 0%

Would you like to submit your quiz result to the leaderboard?

Name: E-Mail:

Captcha:

maximum of 64 points
Pos.	Name	Entered on	Points	Result
Table is loading
No data available

Review
Answered
Correct
Incorrect

Question 1 of 32
1. Question
Enterprise Co is heavily involved in developing a new production process. In the year to 31 March 20X1 the amount of expenditure incurred on development costs could be analysed as follows:
Euro €
1 April 20X0 to 30 September 20X0 18,400
1 October 20X0 to 31 March 20X1 6,500
24,900
On 1 October 20X0 Enterprise Co demonstrated that the production process met the recognition criteria of IAS 38 Intangible Assets. The amount estimated to be recoverable from the process is €21,000.
At what amount should the production process be recognised as an intangible asset at 31 March 20X1 in accordance with IAS 38?
€6,500
Correct Incorrect Correct answer

€18,400
Correct Incorrect Correct answer

€21,000
Correct Incorrect Correct answer

€24,900
Correct Incorrect Correct answer

Correct
Incorrect
Question 2 of 32
2. Question
IFRS1, First time Adoption of International Financial Reporting Standards, allows certain optional and mandatory exceptions to the rule that all assets and liabilities under previous GAAP should comply with IFRS at the date of transition. Which of the following elements of the financial statements is a mandatory exception?
Business combinations
Correct Incorrect Correct answer

Employee Benefits
Correct Incorrect Correct answer

Foreign translation reserves
Correct Incorrect Correct answer

Hedge Accounting
Correct Incorrect Correct answer

Correct
Incorrect
Question 3 of 32
3. Question
IFRS Standards require certain transactions to be recognised in other comprehensive income.
Which of the following transactions IS NOT recognised in other comprehensive income? Please select the right answer.
Deferred tax insofar as it relates to a transaction which is recognised in other comprehensive income
Correct Incorrect Correct answer

Foreign exchange differences arising on a monetary item that is in substance, part of a net investment in a foreign entity
Correct Incorrect Correct answer

Revaluation surpluses recognised when adopting the revaluation model for the subsequent measurement of non-current assets
Correct Incorrect Correct answer

The impairment losses when writing down a non current asset which was not previously revalued
Correct Incorrect Correct answer

Correct
Incorrect
Question 4 of 32
4. Question
IAS 36 Impairment of Assets requires that an asset is not carried at more than its recoverable amount.
Which of the following best describes recoverable amount?
Please select the right answer.
The higher of the present value of all future cash flows associated with the asset for the rest of its useful life and fair value.
Correct Incorrect Correct answer

The higher of fair value less disposal costs and the present value of cash flows expected to be generated by the asset over a maximum of 5 years.
Correct Incorrect Correct answer

The lower of the present value of all future cash flows associated with the asset for the remainder of its useful life and fair value less selling costs.
Correct Incorrect Correct answer

The higher of fair value and the present value of cash flows expected to be generated by the asset over a maximum of 5 years.
Correct Incorrect Correct answer

Correct
Incorrect
Question 5 of 32
5. Question
Which of the following statements is correct?
Please select the right answer.
All internally developed intangible assets are capitalised at cost
Correct Incorrect Correct answer

All intangible assets are deemed to have an indefinite useful life
Correct Incorrect Correct answer

Intangible assets may be depreciated on a reducing balance basis
Correct Incorrect Correct answer

Intangible assets can never be revalued upwards.
Correct Incorrect Correct answer

Correct
Incorrect
Question 6 of 32
6. Question
A farm acquires lumber trees for $250,000 on 1 March 20X7, which represents their fair value. The fair value of the trees at the reporting date 31 December 20X7 is $280,000. The trees will be grown for 5 years and then felled and sold. Costs to sell are 5% of fair value.
Which of the following statements is true?
Please select the right answer.
The trees are initially measured at $250,000
Correct Incorrect Correct answer

The trees are measured at $208,333 at 31 December 20X7
Correct Incorrect Correct answer

The trees are measured at $280,000 at 31 December 20X7
Correct Incorrect Correct answer

The trees are measured at $266,000 at 31 December 20X7
Correct Incorrect Correct answer

Correct
Incorrect
Question 7 of 32
7. Question
Which of the following statements is correct?
Please select the right answer.
IAS 16 Property, Plant & Equipment forbids the capitalisation of any subsequent expenditure on an asset
Correct Incorrect Correct answer

IAS 36 Impairment of Assets applies to all assets including inventories and receivables
Correct Incorrect Correct answer

IAS 20 Accounting for Government Grants and Disclosure of Government Assistance allows grants related to assets to be presented in the statement of financial position as deferred income or as a deduction from the cost of the related assets
Correct Incorrect Correct answer

IFRS 16 Leases always requires a lessee to recognise a right of use asset in respect of a lease
Correct Incorrect Correct answer

Correct
Incorrect
Question 8 of 32
8. Question
In accordance with IAS 12 Income Taxes, which of the following statements is correct?
Please select the right answer.
Deferred tax amounts should never be discounted
Correct Incorrect Correct answer

Deferred tax amounts should be discounted in a manner consistent with other liabilities
Correct Incorrect Correct answer

Deferred tax amounts should be discounted where the amounts involved are material
Correct Incorrect Correct answer

Deferred tax amounts should be discounted where it is known when the temporary differences will reverse
Correct Incorrect Correct answer

Correct
Incorrect
Question 9 of 32
9. Question
Langer Co acquired the entire share capital of Gruber Co on 31 December 20X0 for 10,000. The fair value of the net assets acquired was 11,000.
In accordance with IFRS3 Business Combinations, what is the carrying amount of goodwill in the Statement of Financial Position at 31 December 20X0?
Please select the right answer.
Nil
Correct Incorrect Correct answer

€ 1,000
Correct Incorrect Correct answer

€ 11,000
Correct Incorrect Correct answer

€ 10,000
Correct Incorrect Correct answer

Correct
Incorrect
Question 10 of 32
10. Question
Mine Co commissioned an opencast mine on 1 April 20X0. The mining operation is expected to be completed on 31 March 20X5. At 31 March 20X1 the following remedial work requirements were identified:
(i)Removal of plant and other site preparation work, which was installed at the time of commissioning. The cost is estimated at $10. million.
(ii) Restoration of site damage which is progressively created as material is extracted from the mine. An independent surveyor has estimated that the total cost for the restoration of the damage at 31 March 20X5 will be $20 million. The restoration cost for the extraction to date is estimated at $3 million.
What provision should Mine Co include in the 31 March 20X1 financial statements? Ignore discounting.
Please select the right answer.
$30,000,000
Correct Incorrect Correct answer

$3,000,000
Correct Incorrect Correct answer

$10,000,000
Correct Incorrect Correct answer

$13,000,000
Correct Incorrect Correct answer

Correct
Incorrect
Question 11 of 32
11. Question
Which of the qualitive characteristics of financial statements requires that the commercial substance of a transaction rather than its legal form should be reflected in the financial statements?
Please select the right answer.
Understandability
Correct Incorrect Correct answer

Verifiability
Correct Incorrect Correct answer

Relevance
Correct Incorrect Correct answer

Faithful representation
Correct Incorrect Correct answer

Correct
Incorrect
Question 12 of 32
12. Question
If a previous impairment of goodwill is determined to have reversed, the investor should:
Please select the right answer.
Recognise the reversal and credit income for the period
Correct Incorrect Correct answer

Recognise the reversal and credit equity
Correct Incorrect Correct answer

Recognise the reversal only if the original circumstances which led to the impairment
Correct Incorrect Correct answer

Not recognize the reversal as it is not allowed
Correct Incorrect Correct answer

Correct
Incorrect
Question 13 of 32
13. Question
The Conceptual Framework for Financial Reporting provides principles that underlie financial reporting.
Which of the following statements are true in accordance with the Conceptual Framework?
1. Relevance and faithful representation are fundamental qualifying characteristics
2. The underlying assumption is accrual accounting
3. A reporting entity must be a single entity
4. Equity is defined as a residual amount.
Please select the right answer.
1 and 2
Correct Incorrect Correct answer

3 and 4
Correct Incorrect Correct answer

1 and 3
Correct Incorrect Correct answer

1 and 4
Correct Incorrect Correct answer
Correct
Incorrect
Question 14 of 32
14. Question
Which of the following criteria does not have to be met in order for an operation to be classified as discontinued under IFRS 5?
The operation represents a separate line of business or geographical area
Correct Incorrect Correct answer

The operation is part of a single plan to dispose of a separate major line of business or geographical area
Correct Incorrect Correct answer

The operation is a subsidiary acquired exclusively with a view to resale
Correct Incorrect Correct answer

The operation is expected to be sold within six months of the year end
Correct Incorrect Correct answer

Correct
Incorrect
Question 15 of 32
15. Question
According to the IASB’s Conceptual Framework for Financial Reporting and IFRS Standards, which of the following should be recognised as an asset?
$10,000 spent to develop a list of customers and their purchase preferences
Correct Incorrect Correct answer

$25,000 spent to test a new production machine
Correct Incorrect Correct answer

$19,000 spent to repair damage to the roof of a building after a storm
Correct Incorrect Correct answer

$22,000 spent on an advertising campaign to launch a new product
Correct Incorrect Correct answer

Correct
Incorrect
Question 16 of 32
16. Question
Which of the following statements is correct?
IAS 16 Property, Plant & Equipment forbids the capitalisation of any subsequent expenditure on an asset
Correct Incorrect Correct answer

IAS 36 Impairment of Assets applies to all assets including inventories and receivables
Correct Incorrect Correct answer

IAS 20 Accounting for Government Grants and Disclosure of Government Assistance allows grants related to assets to be presented in the statement of financial position as deferred income or as a deduction from the cost of the related assets
Correct Incorrect Correct answer

IFRS 16 Leases always requires a lessee to recognise a right of use asset in respect of a lease
Correct Incorrect Correct answer

Correct
Incorrect
Question 17 of 32
17. Question
IAS 27 Separate Financial Statements states that in the separate financial statements (i.e. not the consolidated financial statements) of an investor, an investment in an associate should be:
Held at cost or in accordance with IFRS 9 or equity accounted
Correct Incorrect Correct answer

Valued using the equity method of accounting
Correct Incorrect Correct answer

Held at fair value only
Correct Incorrect Correct answer

Held at cost
Correct Incorrect Correct answer

Correct
Incorrect
Question 18 of 32
18. Question
Enterprise Co is preparing its financial statements for the year ended 31 December 20X0 and has requested your opinion about the following events:
(i) A flood on 9 January 20X1 caused uninsured damage to the company’s main manufacturing facility totalling $200,000.
(ii) The Directors declare a dividend of $1 per ordinary share on 7 January 20X1. The number of ordinary shares in issue is 100,000.
The Directors plan to finalise the financial statements on 10 February 20X0.
What liabilities should be recognised in the 31 December 20X0 financial statements?
Uninsured loss liability = NIL, Dividend liability = NIL
Correct Incorrect Correct answer

Uninsured loss liability = NIL, Dividend liability = $100,000
Correct Incorrect Correct answer

Uninsured loss liability = $200,000, Dividend liability = NIL
Correct Incorrect Correct answer

Uninsured loss liability = $200,000, Dividend liability = $100,000
Correct Incorrect Correct answer

Correct
Incorrect
Question 19 of 32
19. Question
IAS 21 The Effects of Changes in Foreign Exchange Rates requires that any exchange differences on translation of a foreign operation’s financial statements should be accumulated in a separate component of equity. On disposal of such a foreign operation, the cumulative amount of exchange differences held in respect of that operation should be
Reclassified to profit or loss as part of the gain or loss on disposal
Correct Incorrect Correct answer

Left in a separate component of equity
Correct Incorrect Correct answer

Transferred to retained earnings
Correct Incorrect Correct answer

Recognised as an extraordinary item in the statement of profit or loss
Correct Incorrect Correct answer

Correct
Incorrect
Question 20 of 32
20. Question
Emily Co chooses to revalue property in accordance with IAS 16. On 31 December 20X1, its head office building had a fair value of $30m when it is measured in the financial statements at historical cost of $25m with $4.5m of accumulated depreciation charged against it. Which of the following statements is true?
A revaluation gain of $5m should be recorded through other comprehensive income, grouped with other items that will not subsequently be reclassified to profit or loss
Correct Incorrect Correct answer

A revaluation gain of $5m should be recorded through profit or loss
Correct Incorrect Correct answer

A revaluation gain of $9.5m should be recorded through other comprehensive income, grouped with other items that will not subsequently be reclassified to profit or loss
Correct Incorrect Correct answer

A revaluation gain of $9.5m should be recorded
Correct Incorrect Correct answer

Correct
Incorrect
Question 21 of 32
21. Question
thrRed Riding Hood Co acquired a 65% share of Wolf Co on 1 January 20X2 for $3,400k. The fair value of the net assets of Wolf Co on that date was $2,100. The non controlling interest was fair valued at $900k. Calculate goodwill based on the partial goodwill method under IFRS 3.
$1,300k
Correct Incorrect Correct answer

$2,200k
Correct Incorrect Correct answer

$1,365k
Correct Incorrect Correct answer

$2,035k
Correct Incorrect Correct answer

Correct
Incorrect
Question 22 of 32
22. Question
Molde Co acquired 95% of the issued share capital of Blacke Co on 30 June 20X1; both companies have a year end of 31 December .
The profits before tax of the two companies for the year ended 31 December 20X1 as reported in their individual statements of profit or loss are:
Molde Co € 200,000
Blacke Co €150,000
In the consolidated statement of profit or loss for the year ended 31 December 20X1, what is profit before tax?
€ 271,250
Correct Incorrect Correct answer

€ 275,000
Correct Incorrect Correct answer

€ 342,500
Correct Incorrect Correct answer

€ 350,000
Correct Incorrect Correct answer

Correct
Incorrect
Question 23 of 32
23. Question
Which of the following statements is/are true?
1. Where preference shares are classified as a liability, the associated dividends should be recognised directly in equity
2. Redeemable preference shares are usually classified as a liability.
3. If an entity issues convertible bonds, these should always be treated as a liability under IAS 32.
4. Under IAS 32 irredeemable preference shares are always classified in equity on the statement of financial position.
2 and 4
Correct Incorrect Correct answer

1, 3 and 4
Correct Incorrect Correct answer

2 only
Correct Incorrect Correct answer

None of the above
Correct Incorrect Correct answer
Correct
Incorrect
Question 24 of 32
24. Question
IAS 7 explains the movement of cash and cash equivalents from the start to the end of a period. How does IAS 7 define cash equivalents?
Investments that can be converted to cash within 3 months and carry an insignificant risk of changes in value.
Correct Incorrect Correct answer

Investments that can be converted to cash within 3 months and carry a material risk of changes in value
Correct Incorrect Correct answer

Short-term highly liquid investments that are readily convertible to cash and carry a material risk of changes in value.
Correct Incorrect Correct answer

Short-term highly liquid investments that are readily convertible to cash and carry an insignificant risk of changes in value.
Correct Incorrect Correct answer

Correct
Incorrect
Question 25 of 32
25. Question
On 31 December 20X4, Merigo Co sold goods to a customer for $10 million, representing a mark-up on cost of 25%. In order to encourage sales, Merigo Co has given the customer interest free credit with the total amount becoming payable in three years time. Interest rates are currently 4% per annum, meaning that the present value of $10million is $8.9million and the present value of $8million is $7.1million.
What amount should Merigo Co record as revenue in the statement of profit or loss for the year ended 31 December 20X4?
$10 million
Correct Incorrect Correct answer

$8 million
Correct Incorrect Correct answer

$8.9 million
Correct Incorrect Correct answer

$7.1 million
Correct Incorrect Correct answer

Correct
Incorrect
Question 26 of 32
26. Question
Y Co has issued 100 shares to its directors for services rendered during the year ended 31 December 20X5. The value of the shares at the grant date (30 November 20X5) was $5 per share. At 31 December 20X5, the shares were valued at $6 per share. The accounting entry for the issue of the shares would be:
Charge expense of $500, and increase accumulated reserves by $500
Correct Incorrect Correct answer

Charge expense of $600 and increase accumulated reserves by $600
Correct Incorrect Correct answer

Charge expense of $500 and increase equity by $500
Correct Incorrect Correct answer

Charge expense of $600 and increase equity by $600.
Correct Incorrect Correct answer

Correct
Incorrect
Question 27 of 32
27. Question
IAS 1 requires that an entity presents a statement of profit or loss and other comprehensive income. The other comprehensive income section may include
exceptional items of profit or loss
Correct Incorrect Correct answer

dividends declared and paid during the period
Correct Incorrect Correct answer

royalty income
Correct Incorrect Correct answer

remeasurements of a defined benefit plan
Correct Incorrect Correct answer

Correct
Incorrect
Question 28 of 32
28. Question
Bubble Co leased a machine from Balloon Co for 5 years commencing on 1 January 20X1. Bubble Co is required to make annual payments of $500, however as an incentive, Balloon Co has provided an initial six month rent free period. Balloon Co classifies the lease as an operating lease. What lease income should Balloon Co recognise in the year ended 31 December 20X1?
$500
Correct Incorrect Correct answer

$450
Correct Incorrect Correct answer

$250
Correct Incorrect Correct answer

$600
Correct Incorrect Correct answer

Correct
Incorrect
Question 29 of 32
29. Question
Dolphin Co acquired an 80% share of Whale Co on 1 April 20X1 for $5m. The fair value of the net assets of Whale Co on that date were $3m. The non controlling interest was valued at $0.8m, its fair value. Calculate goodwill based on the full goodwill method under IFRS 3.
$2.6m
Correct Incorrect Correct answer

$2.8m
Correct Incorrect Correct answer

$2.0m
Correct Incorrect Correct answer

$2.4m
Correct Incorrect Correct answer

Correct
Incorrect
Question 30 of 32
30. Question
IFRS 9 Financial Instruments allows the use of hedge accounting if certain criteria are met. Which of the following is NOT one of these criteria?
The hedging relationship consists of only eligible hedging instruments and hedged items
Correct Incorrect Correct answer

At the beginning of the hedge there is formal designation of the hedge relationship and the entity's risk management objective
Correct Incorrect Correct answer

The hedge meets certain criteria that make it effective
Correct Incorrect Correct answer

Gains and losses on the hedged item and hedging instrument net off exactly
Correct Incorrect Correct answer

Correct
Incorrect
Question 31 of 32
31. Question
Which body of the IFRS Foundation provides a link between the Foundation and public authorities and also approves the appointment of IFRS Foundation Trustees?
The IFRS Interpretations Committee
Correct Incorrect Correct answer

The Monitoring Board
Correct Incorrect Correct answer

The International Accounting Standards Board
Correct Incorrect Correct answer

The IFRS Advisory Council
Correct Incorrect Correct answer

Correct
Incorrect
Question 32 of 32
32. Question
In accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets, in which of the following circumstances should an expense for $450,000 be recognised?
For damages in a lawsuit that the reporting company has a 75% chance of losing. The damages claim is for $600,000
Correct Incorrect Correct answer

For the expected cost to dismantle an oil platform as required by law. The cost is $700,000, which has a present value of $450,000
Correct Incorrect Correct answer

For the $450,000 cost to make good land contaminated as a result of past years' operations. A law requiring the clear up is virtually certain to be enacted
Correct Incorrect Correct answer

For the $450,000 cost of fitting fire safety equipment to comply with a law coming into effect in the next financial year.
Correct Incorrect Correct answer

Correct
Incorrect

IFRS Certificate Mock Exam 3

Article Author: Dr. Hesham Mokhiemer

Quiz Summary

Information

Information

Results

Results

Categories

1. Question

Enterprise Co is heavily involved in developing a new production process. In the year to 31 March 20X1 the amount of expenditure incurred on development costs could be analysed as follows:

Euro €

1 April 20X0 to 30 September 20X0 18,400

1 October 20X0 to 31 March 20X1 6,500

24,900

On 1 October 20X0 Enterprise Co demonstrated that the production process met the recognition criteria of IAS 38 Intangible Assets. The amount estimated to be recoverable from the process is €21,000.

At what amount should the production process be recognised as an intangible asset at 31 March 20X1 in accordance with IAS 38?

2. Question

3. Question

IFRS Standards require certain transactions to be recognised in other comprehensive income.

Which of the following transactions IS NOT recognised in other comprehensive income? Please select the right answer.

4. Question

IAS 36 Impairment of Assets requires that an asset is not carried at more than its recoverable amount.

Which of the following best describes recoverable amount?

Please select the right answer.

5. Question

Which of the following statements is correct?

Please select the right answer.

6. Question

A farm acquires lumber trees for $250,000 on 1 March 20X7, which represents their fair value. The fair value of the trees at the reporting date 31 December 20X7 is $280,000. The trees will be grown for 5 years and then felled and sold. Costs to sell are 5% of fair value.

Which of the following statements is true?

Please select the right answer.

7. Question

Which of the following statements is correct?

Please select the right answer.

8. Question

In accordance with IAS 12 Income Taxes, which of the following statements is correct?

Please select the right answer.

9. Question

Langer Co acquired the entire share capital of Gruber Co on 31 December 20X0 for 10,000. The fair value of the net assets acquired was 11,000.

In accordance with IFRS3 Business Combinations, what is the carrying amount of goodwill in the Statement of Financial Position at 31 December 20X0?

Please select the right answer.

10. Question

Mine Co commissioned an opencast mine on 1 April 20X0. The mining operation is expected to be completed on 31 March 20X5. At 31 March 20X1 the following remedial work requirements were identified:

(i)Removal of plant and other site preparation work, which was installed at the time of commissioning. The cost is estimated at $10. million.

What provision should Mine Co include in the 31 March 20X1 financial statements? Ignore discounting.

Please select the right answer.

11. Question

Which of the qualitive characteristics of financial statements requires that the commercial substance of a transaction rather than its legal form should be reflected in the financial statements?

Please select the right answer.

12. Question

If a previous impairment of goodwill is determined to have reversed, the investor should:

Please select the right answer.

13. Question

The Conceptual Framework for Financial Reporting provides principles that underlie financial reporting.

Which of the following statements are true in accordance with the Conceptual Framework?

Relevance and faithful representation are fundamental qualifying characteristics

The underlying assumption is accrual accounting

A reporting entity must be a single entity

Equity is defined as a residual amount.

Please select the right answer.

14. Question

Which of the following criteria does not have to be met in order for an operation to be classified as discontinued under IFRS 5?

15. Question

According to the IASB’s Conceptual Framework for Financial Reporting and IFRS Standards, which of the following should be recognised as an asset?

16. Question

Which of the following statements is correct?

17. Question

IAS 27 Separate Financial Statements states that in the separate financial statements (i.e. not the consolidated financial statements) of an investor, an investment in an associate should be:

18. Question

Enterprise Co is preparing its financial statements for the year ended 31 December 20X0 and has requested your opinion about the following events:

(i) A flood on 9 January 20X1 caused uninsured damage to the company’s main manufacturing facility totalling $200,000.

(ii) The Directors declare a dividend of $1 per ordinary share on 7 January 20X1. The number of ordinary shares in issue is 100,000.

The Directors plan to finalise the financial statements on 10 February 20X0.

What liabilities should be recognised in the 31 December 20X0 financial statements?

19. Question

20. Question

21. Question

thrRed Riding Hood Co acquired a 65% share of Wolf Co on 1 January 20X2 for $3,400k. The fair value of the net assets of Wolf Co on that date was $2,100. The non controlling interest was fair valued at $900k. Calculate goodwill based on the partial goodwill method under IFRS 3.

22. Question

Molde Co acquired 95% of the issued share capital of Blacke Co on 30 June 20X1; both companies have a year end of 31 December .