OPC-TRAINING

IFRS 1: FIRST TIME ADOPTION IFRS

PRACTICE QUESTIONS
QUESTION ONE
Entity B’s previous financial statements contained an explicit statement of compliance with
some, but not all, IFRSs. The financial statements of entity B for the year contain an explicit and
unreserved statement of compliance with all IFRSs.?
a) The financial statements for the year are the entity’s first IFRS financial statements and entity
B applies IFRS 1. Sl 4 §1 IFRS 1 in French 2.0 dernier §
b) The financial statements of entity B for this year are not the entity’s first IFRS financial
statements, and IFRS 1 does not apply

QUESTION TWO
The objective of IFRS1 is to ensure that an entity’s first IFRS financial statements, and its
interim financial reports for part of the period covered by those financial statements, contain high
quality information that:
a) Is transparent for users and comparable over all periods presented IFRS 1 in French 1.0
b) Provides a suitable starting point for accounting in accordance with Indian Accounting
Standards (IFRSs)
c) Can be generated at a cost that does not exceed the benefits
d) Only a and b
e) All the above

QUESTION THREE
ABC Ltd. wants to assess its functional currency. From which date should company ABC Ltd.
assess its functional currency:
a) from date of transition IFRS 1 in french 3.1
b) retrospectively as per paragraph 10 of IFRS1, First-time Adoption of IFRS sl6 groupe

QUESTION FOUR
When a first-time adopter restates assets, liabilities and equity in its opening statement of
financial position a difference between the carrying amounts under previous GAAP and those
under IFRSs will arise. For example, a first-time adopter may remeasure investment properties to
fair value under IFRSs or restate some of its financial assets. Where should the adjustment entry
be recorded?
a) a first-time adopter should recognise those adjustments directly in retained earnings or, if
appropriate, another category of equity. Sl 11 § 2 or IFRS 1→3.1 in French §3
b) a first-time adopter should recognise those adjustments in Profit and Loss account or other
comprehensive income for the reporting period.
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IFRS 2: SHARE BASED PAYMENTS STANDARDS
PRACTICE QUESTIONS
QUESTION ONE
Which of the following transactions involving the issuance of shares does not come within the
definition of a “share-based” payment under IFRS 2?
a) Employee share purchase plans.sl5
b) Employee share option plans.sl5
c) Share-based payment relating to an acquisition of a subsidiary.
d) Share appreciation rights. Sl 18 erreur avec leon

QUESTION TWO
Which of the following is true regarding the requirements of IFRS 2?
a) Private companies are exempt.
b) “Small” companies are exempt.
c) Subsidiaries using their parent entity’s shares as consideration for goods and services are
exempt.
d) There are no exemptions from IFRS 2. Sl 11

QUESTION THREE
Equity is increased by $3 million; inventory is increased by $3 million; the inventory value is
expensed on sale on December 31, 2015.Which of the following is true regarding the
requirements of IFRS2?
a) Equity is increased by $3 million; inventory is increased by $3 million; the inventory value is
expensed on sale on December 31, 2015.
b) Equity is increased by $3.2 million; inventory is increased by $3.2 million; the inventory
value is expensed on sale on December 31, 2015.
c) Equity is increased by $3 million; inventory is increased by $3 million; the inventory value is
expensed over the two years to December 31, 2015.
d) Equity is increased by $3.2 million; inventory is increased by $3.2 million; the inventory
value is expensed over the two years to December 31, 2015.

QUESTION FOUR
An entity issues fully paid shares to 200 employees on December 31, 20X4. Normally shares
issued to employees vest over a two-year period, but these shares have been given as a bonus to
the employees because of their exceptional performance during the year. The shares have a
market value of $500,000 on December 31, 20X4, and an average fair value for the year of
$600,000. What amount would be expensed in the income statement for the above share-based
payment transaction?
a) $600,000 sl13§ 1
b) $500,000
c) $300,000
d) $250,000
QUESTION FIVE
An entity grants 1,000 share options to each of its five directors on July 1, 20X4. The options
vest on June 30, 20X8. The fair value of each option on July 1, 2004, is $5, and it is anticipated
that all of the share options will vest on June 30, 20X8. What will be the accounting entry in the
financial statements for the year ended June 30, 20X5?
a) Increase equity $25,000, increase in expense income statement $25,000. Sl 13 dernier §
(5dollar*100*5) sl11
b) Increase equity $5,000, increase in expense income statement $5,000.
c) Increase equity $6,250, increase in expense income statement $6,250.
d) Increase equity zero, increase in expense income statement zero.

QUESTION FIVE
Entity A will prepare its first IFRS financial statements for the year ended 31 December 2019. Its
date of transition to IFRSs is 1 January 2018. Entity A operates a fleet of ships. The ships
engines are replaced every 10 years and, under previous GAAP, the cost of renewal is charged to
the profit or loss statement at the time of replacement. The ships original cost is depreciated over
their estimated overall useful life of 30 years. Entity A’s accounting records do not contain the
information needed to identify the cost of engine replacements that would have met the grounds
for capitalisation under IAS 16 before transition to IFRSs
(a) Where an asset has separately identifiable components that have a shorter useful life than the
overall asset and replacement of the component represents a significant cost in comparison to the
asset as a whole, the identifiable component should be accounted for as a separate asset for
calculating depreciation. If entity A does not use the deemed cost exemption under IFRS 1 for
the ships, the component approach required by IAS 16 should be applied retrospectively.
(b) Entity A should apply the fair value as deemed cost exemption to restate the ships to fair
value at 1 January 2018. The fair value should be analysed into the different significant
components (e.g. engines, hulls and other fit-out costs). The component approach should then be
applied prospectively from 1 January 2018 with each component being depreciated over its
remaining useful life. IFRS 1 in French 3.2 §3

OPC-TRAINING
IFRS 3: BUSINESS COMBINATIONS
PRACTICE QUESTIONS
QUESTION ONE
A business is an
a) Integrated set of activities and assets
b) Conducted and managed for the purpose of providing a return
c) Both a and b sl 17

QUESTION TWO
International standard IFRS3 states that goodwill acquired in a business combination is:
a) An asset which arises from assets acquired in the business combination that are not
individually identified → sl 21(business combination),sl 37(good will)
b) An asset which arises from assets acquired in the business combination that are
individually identified
c) An asset which arises from the acquired entity's good reputation
d) An asset which arises from the acquired entity's strong customer relationships

QUESTION THREE
Negative goodwill arising on a business combination should be shown as a negative asset in the
statement of financial position. True or False?
a) True
b) False sl 37

QUESTION FOUR
Goodwill acquired in a business combination should subsequently be measured:
a) At cost less accumulated amortization and less accumulated impairment losses
b) At cost less accumulated impairment losses sl 37
c) At cost less accumulated amortization
d) At cost

QUESTION FIVE
During the year to 31 March 2016, a company spent £120,000 on research and £80,000 on
development. The development costs meet the criteria for recognition as an intangible asset and
are to be amortized over five years on the straight-line basis. Their residual value is estimated to
be £nil. A full year's amortization charge is made in the year of the expenditure.The total
research and development costs recognized as an expense in the year to 31 March 2016 are:
a) £200,000 → (120 000+80 000)
b) £16,000
c) £40,000
d) £136,000

QUESTION SIX
A company acquires all the assets and liabilities of an unincorporated business for £1m. The net
fair value of the identifiable assets and liabilities acquired is £1.2m. The assets acquired include
patents with a fair value of £300,000.How should this acquisition be accounted for in the
company's financial statements?
a) Recognize the identifiable assets and liabilities at their fair values and recognize revenue
of £200,000. → (1 200 000- 1000 0000)
b) Recognize the identifiable assets and liabilities at their fair values and recognize goodwill
of £200,000. (googwill=val d’acquisition - juste valeur de la sté acquise)si c’est + = actif
à diminuer les pertes de valeur si c’est= résultat
 c) Recognize the identifiable assets and liabilities at their fair values and recognize a
negative asset of £200,000 in relation to goodwill.
d) Recognize the patents at £100,000 and recognize all of the other assets and liabilities at
their fair values.

QUESTION SEVEN
Where a transaction or other event does not meet the definition of a business combination due to
the acquiree not meeting the definition of a business, it is termed an ‘asset acquisition’. From
the given situation you need to identify the correct accounting treatment under ‘asset
acquisition’ and ‘Business combination’: Recognition of identifiable assets and liabilities-
a) Business combination: Measured at fair value
b) Asset acquisition: Total cost is allocated to individual items based on relative fair values gpe
c) Asset acquisition: Measured at fair value
d) Business combination: Total cost is allocated to individual items based on relative fair values
e) a and b erreur avec léon
f) c and d

QUESTION EIGHT
CompanyA purchased 100% interest of Company B. Company B is being sued over a personal
injury allegedly caused by a faulty product. The claimant is suing for CU1 million in damages.
The acquiree’s management acknowledge that the product was faulty and may have caused
injury. However, they strongly dispute the level of damages being claimed. The acquiree’s legal
advisers estimate such claims are usually settled for between 100,000 and 250,000.
a) the obligation need not be recognized
b) company A will need to estimate the fair value of the liability which may involve weighting
possible outcomes within the expected range using their associated probabilities.

QUESTION NINE
According to IFRS 3, Business Combinations, in case of common control business combinations,
the assets and liabilities of the combining entities are reflected at their carrying amounts. A Ltd.
has two subsidiaries B Ltd. and C Ltd. One fine morning B Ltd merges with C Ltd. How will
the assets and liabilities will appear in the separate financial statements of C Ltd:
a) the carrying values of the assets and liabilities as appearing in the standalone financial
statements of the entities being combined i.e., B Ltd. &C Ltd. in this case shall be recognized.

b) it would be appropriate to recognize the carrying value of the assets, liabilities and reserves
pertaining to B & C Ltd as appearing in the consolidated financial statements of A Ltd.
(consolidation)
 OPC-TRAINING
IFRS 5: NONCURRENT ASSETS HELD FOR SALE AND DISCONTINUED
OPERATIONS
PRACTICE QUESTIONS

QUESTION ONE
A non-current asset should be classified as held for sale only if:
a) Its carrying amount will be recovered principally through a sale transaction rather than
through continuing use →sl 6
b) Its carrying amount will be recovered wholly through continuing use rather than through a
sale transaction
c) Its carrying amount will be recovered wholly through a sale transaction rather than
through continuing use
d) Its carrying amount will be recovered principally through continuing use rather than
through a sale transaction

QUESTION TWO
A discontinued operation is defined as a component of an entity which:
a) Has been disposed of or is classified as held for sale →sl 11
b) Has been disposed of
c) Is classified as held for sale
d) Is expected to be disposed of within the next 12 months

QUESTION THREE
A non-current asset held for sale should be measured at:
a) Fair value less costs to sell
b) The higher of the asset's carrying amount when originally classified as held for sale and its
fair value less costs to sell
c) The asset's carrying amount when originally classified as held for sale, less any
accumulated depreciation since that date.
d) The lower of the asset's carrying amount when originally classified as held for sale and its
fair value less costs to sell p21

QUESTION FOUR
An entity shall classify a non-current asset (or disposal group) as held for sale if:
a) it carrying amount will be recovered principally through a sale transaction rather than through
continuing use. →sl 6
b) it carrying amount will be recovered principally through continuing use rather than through a
sale transaction.

QUESTION FIVE
The conditions which must be satisfied in order for the sale of an asset to be deemed
"highly probable" include:
a) Management is considering a plan to sell the asset
b) The asset is being marketed at a price which greatly exceeds its fair value
c) A completed sale is expected within five years
 d) None of the above →sl 14

QUESTION SIX
A disposal group always consists of a number of cash-generating units. True or False?
a) True
b) False →sl 7

QUESTION SEVEN
On 30 April 2016, a company classified a freehold building as held for sale. The building
had a carrying amount on that date of £5m. The building has been valued by an estate
agent at £6m and selling costs are expected to absorb 5% of this amount.
In the company's statement of financial position at 30 April 2016, the building should be
shown at:
£5m
£6m
£5.7m
£4.75m

QUESTION EIGHT
If certain types of asset are classified as held for sale, they should continue to be measured
in accordance with the standard that normally applies to that type of asset rather than
being measured in accordance with the requirements of standard IFRS5. True or False?
a) True →N.B
b) False

QUESTION NINE
On 1 November 2015, a company which prepares financial statements to 31 March each
year classifies a non-current asset as held for sale. The asset's carrying amount on 1
November 2015 is £40,000 and its fair value less costs to sell is £35,000. The asset is still
held on 31 March 2016, when its fair value less costs to sell is £27,500. The impairment
losses that should be recognised are:
a) 1 November 2015 £nil
31 March 2016 £nil
b) 1 November 2015 £5,000
31 March 2016 £12,500
c) 1 November 2015 £nil
31 March 2016 £12,500
d) 1 November 2015 £5,000
31 March 2016 £7,500

QUESTION TEN
Non-current assets held for sale should be presented separately from other assets in the
statement of financial position. True or False?
a) True cf.sl 2
b) False
c) OPC-TRAINING
d) IFRS 6: EXPLORATION FOR AND EVALUATION OF MINERAL RESOURCES
e) PRACTICE QUESTIONS
f) QUESTION ONE
g) An entity applies IFRS 6 to:
h) a) exploration and evaluation expenditures that it incurs cf.sl 3
i) b) expenditures that it incurs before the exploration for and evaluation of mineral
resources, such as expenditures incurred before the entity has obtained the legal rights to
explore a specific area
j) c) expenditures that it incurs after the technical feasibility and commercial viability of
extracting a mineral resource are demonstrable
k)
l) QUESTION TWO
m) Exploration for and evaluation of mineral resources means:
n) a) The search for mineral resources, including minerals, oil, natural gas and similar non-
regenerative resources after the entity has obtained legal rights to explore in a specific
area, as well as the determination of the technical feasibility and commercial viability of
extracting the mineral resource. Cf.sl 5
o) b) The search for mineral resources, including minerals, oil, natural gas and similar non-
regenerative resources before the entity has obtained legal rights to explore in a specific
area, but after the determination of the technical feasibility and commercial viability of
extracting the mineral resource.
p)
q) QUESTION THREE
r) An entity classifies exploration and evaluation assets as:
s) a) tangible
t) b) intangible
u) c) tangible or intangible according to the nature of the assets acquired and applies the
classification consistently cf. sl 13
v)
w) QUESTION FOUR
x) An entity determines an accounting policy specifying which expenditures are
recognized as exploration and evaluation assets. Which of the following are
examples of expenditures that might be included in the initial measurement of
exploration and evaluation assets:
y) a) Acquisition of rights to explore
z) b) Topographical, geological, geochemical and geophysical studies
aa) c) Exploratory drilling
bb) d) Trenching
cc) e) Sampling
dd) f) Activities in relation to evaluating the technical feasibility and commercial viability of
extracting a mineral resource
ee) g) Only a to e
ff) h) All the above sl 9
gg)
hh)
ii)
 OPC-TRAINING
IFRS 7: FINANCIAL INSTRUMENTS: DISCLOSURES
PRACTICE QUESTIONS
QUESTION ONE
What are the principal objectives of IFRS 7?
a) To provide presentation and disclosure requirements for financial instruments.
b) To require disclosures about the significance of financial instruments for an entity’s financial
position and financial performance and qualitative and quantitative information about exposure
to risks arising from financial instruments. Sl 2
c)To set out specified balance sheet and income statement formats for financial entities.
d) To require disclosures about an entity’s exposure to off–balance-sheet instruments and other
complex transactions.

QUESTION TWO
Which of the following types of information does IFRS 7 not require to be disclosed about
exposure to risks arising from financial instruments?
a) Qualitative and quantitative information about market risk.
b) Qualitative and quantitative information about credit risk.
c) Qualitative and quantitative information about operational risk. Sl4,5,6
d) Qualitative and quantitative information about liquidity risk.

QUESTION THREE
How does IFRS 7 define “liquidity risk”?
a) The risk that an entity will encounter difficulty in meeting obligations associated with
financial liabilities. Sl5
b) The risk that an entity will encounter difficulty in disposing a financial asset due to lack of
market liquidity.
c) The risk that an entity will encounter difficulty in meeting cash flow needs due to cash flow
problems.
d) The risk that an entity’s cash inflows will not be sufficient to meet the entity’s cash outflows.

QUESTION FOUR
Which of the following types of information does IFRS 7 not require to be disclosed about
the significance of financial instruments?
a) Carrying amounts of categories of financial instruments.
b) Fair values of financial instruments.
c) Information about the use of hedge accounting. sl 10
b) Information about financial instruments, contracts, and obligations under share-based payment
transactions.
 OPC-TRAINING
IFRS 8: OPERATING A SEGMENT
PRACTICE QUESTIONS

QUESTION ONE
Which of the following is a characteristic of an operating segment, as defined by
international standard IFRS 8?
a) It engages in business activities from which it may earn revenues and incur expenses
b) Its operating results are regularly reviewed by the chief operating decision maker
c) Discrete financial information is available
d) All of the above cf.sl5

QUESTION TWO
IFRS8 specifically identifies certain similarities which must exist between operating
segments in order for them to be combined into one segment for financial reporting
purposes. These similarities do not include:
a) Similar products and services
b) Similar types of customers
c) Similar types of suppliers cf.sl 12,13
d) A similar regulatory environment

QUESTION THREE
A reportable segment is an operating segment which meets any of several 10% thresholds.
Which of the following is not one of these thresholds?
a) Segment assets are at least 10% of the total assets of all operating segments
b) Segment liabilities are at least 10% of the total liabilities of all operating segments sl 14
c) Segment revenue is at least 10% of the total revenue of all operating segments
d) Segment profit or loss is at least 10% of the greater of the total profit of all profitable
operating segments and the total loss of all loss-making operating segments

QUESTION FOUR
A company's total external revenue for an accounting period is £15m. There is no inter-
segment revenue. The company's total assets are £43m. The total profit or all profitable
segments for the period is £2.6m and the total losses of all loss-making segments are £1.9m.
Operating segment X has external revenue of £1.3m, total assets of £3.7m and a loss of
£220,000. Which of the following statements is true?
a) Segment X is a reportable segment because it has revenue of £1.3m IFRS8 in french 5
b) Segment X is a reportable segment because it has assets of £3.7m IFRS 8 in french 2 a.ii
c) Segment X is a reportable segment because it has a loss of £220,000
d) Segment X is not a reportable segment IFRS 8 sl11,14,20
QUESTION FIVE
IFRS8 requires that entities should disclose certain information about reportable segments
(if regularly provided to the chief operating decision maker). This information
does not include:
a) Segment revenue
b) Segment cost of sales cf.sl 32-33
c) Segment depreciation
d) Segment interest expense

QUESTION SIX
The classes of "entity-wide" disclosures required by IFRS8 do not include information
about:
a) The entity's management structure sl 32 and 33
b) The entity's products and services
c) The geographical areas in which the entity operates
d) The entity's major customers

QUESTION SEVEN
In general, a major customer is one that accounts for at least 5% of an entity's external
revenues. True or False?
a) True
b) False IFRS 8 PGE7→34
QUESTION EIGHT
IFRS8 requires an entity to disclose the identity of its major customers. True or False?
a) True sl 40
b) False sl 42
QUESTION NINE
Every operating segment of an entity is also a reportable segment. True or False?
a) True
b) False IFRS 8pge 3 point 13 cf seuil
QUESTION TEN
An entity must provide a reconciliation between the total revenue of reportable segments
and the entity's total revenue. True or False?
a. True sl 36-37
b. False
 OPC-TRAINING
IFRS9: FINANCIAL INSTRUMENTS
PRACTICE QUESTIONS
QUESTION ONE
A financial instrument is:
a) A type of asset
b) A type of asset or liability
c) A type of contract sl 6
d) A type of liability

QUESTIONTWO
Credit risk is the risk that:
a) The fair value of a financial asset or liability will fluctuate because of changes in interest
rates.
b) The fair value of a financial asset or liability will fluctuate because of changes in
exchange rates
c) An entity will encounter difficulty in meeting its obligations associated with financial
liabilities
d) One party to a financial instrument will cause a financial loss for the other party by
failing to discharge an obligation IFRS 9 full pge 3

QUESTIONTHREE
A company which complies with IFRS9 holds a financial asset which gives rise on specified
dates to cash flows that are solely payments of principal and interest. The company's only
objective in holding this asset is to collect these cash flows.
This financial asset should be measured at:
a) Fair value
b) Fair value or amortised cost
c) Original cost
d) Amortised cost →sl5, sl35 ,sl 6 (very clear)financial instruments –implementation
examples

QUESTIONFOUR
The amortised cost of a financial asset is equal ( = ) to:
a) The amount at which the asset was originally recognised, plus interest earned to date, less
repayments received to date cf. defined terms IFRS 9 full pge 3
b) The amount at which the asset was originally recognised, plus interest earned to date
c) The amount at which the asset was originally recognised
d) The fair value of the asset

QUESTION FIVE à commencer par ici

As per IFRS 9 to qualify for hedge accounting, hedge qualification will be based on qualitative,
forward-looking hedge effectiveness assessments. State whether True or False.
a) True sl55
b) False
QUESTION SIX
As per IFRS 9 hedging of group of items that constitute a net position and layer components in
fair value hedge are prohibited. State whether True or False.
a) True
b) False →IFRS9 in French 6.6 - 6.6.6 b

QUESTION SEVEN
Which of the following statement is true as per IFRS 9
a) Combination of a non-derivative exposure and a derivative may be a hedged item.
b) Derivative cannot be a hedged item sl54 annexe A,BA
c) Derivative is always a hedge item
d) Derivative cannot be a hedge item when combined with non-derivative exposure

QUESTION EIGHT
Trade payables must always be measured at amortised cost using the effective interest
method. True or False?
a) True
b) False sl 36 (2)

QUESTION NINE
The accounting principle applied when distinguishing between liabilities and equity is:
a) Prudence or
b) Consistency
c) Substance over form
d) Neutrality

QUESTIONTEN
An impairment loss should be recognised if a trade receivable becomes wholly or partly
uncollectible. True or False?
a) True
b) False sl 40 §1

OPC-TRAINING
IFRS 10: CONSOLIDATED FINANCIAL STATEMENTS
PRACTICE QUESTIONS
QUESTION ONE
A single set of financial statements that combines the separate sets of financial statements
of a parent and its subsidiaries is known as:
a) Equity financial statements;
b) Condensed financial statements;
c) Consolidated financial statements; sl2
d) Interim financial statements.

QUESTION TWO
The notional entity purportedly represented by a set of consolidated financial statements is
the:
a) Dual-listed entity;
b) Economic entity;
c) Parent entity;
d) Subsidiary entity.

QUESTION THREE
The key criterion for the consolidation of the separate financial statements of entities is:
a) Substance over form;
b) The existence of contracts for the supply of goods between the entities;
c) Capacity of the accounting systems to facilitate the necessary combination process;
d) Control. sl3

QUESTION FOUR
Lucerne Limited acquired 70% of the shares of Hayfields Limited directly from the owners
of those shares. The shares were purchased on the market for $400 000 in total. Hayfields
Limited must:
a) Recognise the inflow of cash of $400 000 and an increase in issued capital of $400 000;
b) Recognise an investment of $400 000 and an increase in equity of $400 000;
c) De-recognise share capital amounting to $400 000;
d) Not make an accounting entry as the transaction is between Lucerne Limited and the
individual shareholders of Hayfields Limited. (les transactions sont entre actionnaires)

QUESTION FIVE
When one entity controls the business operations of another entity, the business
combination results in the following type of relationship:
a) Parent-subsidiary; sl2 and sl 22
b) Partnership;
c) Amerger;
d) Dual-listed.

QUESTION SIX
For the purposes of consolidated financial reporting, a group is:
a) An entity that has no subsidiaries;
b) A parent entity and all its subsidiaries; sl 5
c) An entity that has one or more subsidiaries;
d) A subsidiary entity of another entity.

QUESTION SEVEN
The process of preparing the combined financial statements of a group of entities is known
as:
a) Accrual accounting;
b) Condensation;
c) Accumulation;
d) Consolidation. sl 6
QUESTION EIGHT
The method adopted in combining the separate sets of financial statements of entities in a
group to form a set of consolidated financial statements is:
a) Set-off all assets and liabilities and recognise a single net investment;
b) Line-by-line recognition of the elements of financial statements;
c) Combine the cash balances of the separate entities into one-line and aggregate the
remaining net assets into one item;
d) Combine all assets and liabilities into one net assets item and combine all profits and
losses into one profit or loss item. sl21

QUESTION NINE
A group of entities comprised of All Limited, Night Limited and Long Limited have the
following cash balances: All Limited $2 000, Night Limited $5 000, Long Limited $10 000.
All Limited is the parent entity. The consolidated financial statements show the following
amount as the consolidated cash balance:
a) $2 000
b) $7 000.
c) $15 000;
d) $17 000. (10000+5000+2000)

QUESTION TEN
The process of consolidation involves:
a) Balance date adjusting journal entries to the ledger accounts of the subsidiaries;
b) Balance date adjusting entries to the ledger accounts of the parent entity; ;
c) No adjustments to the individual ledger accounts of entities in the group
d) Accruals directly to the balance of the retained earnings account of the parent entity.

QUESTION 11
A full set of consolidated financial statements comprises a consolidated:
(i) Statement of financial position
(ii) Statement of comprehensive income
(iii) Statement of changes in equity
(iv)Statement of cash flows
(v) Condensed interim statement
a) I, II and IV only;
b) I, II, III and IV only; → sl21 (presentaion of financial statements)
c) III, and IV only;
d) IV and V only.

QUESTION 12
If consolidated financial statements are required to be prepared: cf P22
a) They are additional to the separate financial statements of the entities in the group; sl8
b) There is no need to prepare separate financial statements for the entities in the group;
b) The need to prepare separate financial statements for the parent entity is redundant;
 c) It is not necessary to prepare separate financial statements for the subsidiary entities of
the group.

QUESTION 13
A subsidiary is an entity that:
a) Controls the parent entity in a group of entities;
b) Exercises control over a parent entity
c) Has the power to control a parent entity;
d) Is controlled by a parent entity. Sl 2

QUESTION 14
Control is the power to govern the:
a) Operating, investing and financing cash flows of another entity;
b) Financial and operating policies of an entity so as to benefit from that entity's activities; sl
10
c) Market prices of another entity's principal goods and/or services;
d) Share price of another entity.

QUESTION 15
When deciding whether or not control exists over one entity by another entity:
a) The controlling entity must have exercised its power to control;
b) It is sufficient that the controlling entity has the capacity to control;
c) The controlling entity must be actively involved in governing the operations of the other
entity;→ ifrs 10 in French B14
d) It is necessary that the controlling entity has exerted its control over the financing policies
of the other entity.

QUESTION 16
In a situation where a controlling entity has delegated control to another entity, the parent
is presumed to be:
a) The delegated party who is actively exercising control;
b) Both the delegating party and the party to whom control has been delegated; IFRS 10 in
French
c) The first entity who delegated the control; B58
d) Neither entity as actual control has been lost; gpe

QUESTION 17
Control is automatically presumed to exist where the parent either directly or indirectly
through subsidiaries owns:
a) More than 25% but less than 50% of the voting power of an entity;
b) More than 10% but less than25% of the voting power of an entity;
c) Not more than 49% of the voting power of an entity;
d) More than 50% of the voting power of an entity.sl7
QUESTION 18
At balance date Company A has 40% of the voting rights in Company B. In addition
Company A hold potential voting rights in Company B amounting to 6% that are currently
exercisable, and a further 9% of voting rights in Company B that can be exercised in two
years’ time. Which of the following statements is correct? Consolidated financial
statements:
a) Must be prepared for Company A and B;
b) Need not be prepared for Company A and B;
c) Must be prepared as Company A controls Company B at balance date; sl 2
d) Must be prepared as Company A has more than half of the voting rights in Company B at
balance date. La stéA n’a pas la capacité de controller à la date du bilan

QUESTION 19
Unicorn Trustees has a fiduciary relationship with Amble Limited enabling it to direct
certain activities of Amble Limited. As a result of this relationship:
a) Unicorn Trustees is regarded as a parent entity of Amble Limited;
b) Amble Limited is regarded as a subsidiary of Unicorn Trustees;
c) A parent-subsidiary relationship is not regarded as existing between these two parties;
d) A parent-subsidiary relationship is regarded as existing between these two parties as
Unicorn is able direct the activities of Amble Limited

QUESTION 20
In which of the following situations is an entity not required to prepare consolidated
financial statements:
a) The entity prepares separate financial statements that comply with IFRS
b) The entity is a partly owned subsidiary of another entity and the other owners have
consented to the non-participation sl 24
c) Where it is likely that there are external users dependant on the information
d) The parent of the entity prepares consolidated financial statements available for public
use.

QUESTION 21
The only way in which a parent-subsidiary relationship can be established is for the parent
company to acquire more than 50% of the ordinary shares of the subsidiary company.
True or False?
a) True sl 7
b) False

QUESTION 22
A company's preference shareholders are not entitled to a share of the company's reserves.
True or false?
a) True
b) False

QUESTION 23
The difference between the end of the reporting period of a subsidiary and that of its
parent should not exceed six months. True or False? ( the same date of reporting)
a) True
b) False sl 23

QUESTION 24
When a parent company acquires a subsidiary, the amount paid for goodwill is equal to the
amount paid by the parent company for its shares in the subsidiary company, less:
a) The nominal value of those shares
b) The market value of those shares plus the parent's stake in the subsidiary's reserves
b) The nominal value of those shares plus the parent's stake in the subsidiary's reserves
c) The market value of those shares

QUESTION 25
Which of the following is not an example of an intra-group balance?
a) A trade payable owing to a subsidiary by its parent company
b) A loan made by one subsidiary to another
c) A trade receivable owing to a subsidiary by an individual who is one of its customers
d) A loan made by a parent company to a subsidiary

QUESTION 26
Company H Ltd is required to consolidate its subsidiary which is a
(i) Limited Liability Partnership (LLP) or
(ii) Partnership firm or
(iii) Associate or
(iv) Joint venture of H Ltd
a) For i and iii consolidation is required
b) For i, ii and iv consolidation is required
c) For all consolidation is required
d) For none consolidation is required

QUESTION 27
A parent is required to present consolidated financial statements, except if it meets certain
conditions such as:
i) It is a subsidiary of another entity and all its other owners, including those not otherwise
entitled to vote, have been informed about, and do not object to, the parent not presenting
consolidated financial statements
ii) Its debt or equity instruments are not traded in a public market
iii) It did not, nor is in the process of filing, financial statements for the purpose of issuing
instruments to the public
iv) Its ultimate or any intermediate parent produces IFRS compliant consolidated financial
statements available for public use
Identify those conditions from the above:
a) Only i & iv
b) Only ii & iii
c) Only i & iii
d) All the above → sl 24

QUESTION 28
On 1 July 2016, A Ltd pay £870,000 to acquire the entire share capital of B Ltd. The equity
of B Ltd on that date consists of ordinary share capital of £400,000 and retained earnings
of £210,000. The fair value of the non-current assets of B Ltd on 1 July 2016 exceeds their
carrying amount by £35,000. The amount paid for goodwill by A Ltd is:
a) £470,000
b) £225,000 →Valeur cpble =400000+210000=610000;juste valeur
=610000+35000=645000;goodwill =870 000-645000 = 225000
c) £260,000
d) £295,000

QUESTION 29
On 1 May 2014, C Ltd paid £430,000 to acquire the entire share capital of D Ltd. The
equity of D Ltd on that date consisted of ordinary share capital of £200,000 and retained
earnings of £90,000. All of its assets and liabilities were carried at fair value.
On 30 April 2016, the retained earnings of C Ltd and D Ltd are £970,000 and £115,000
respectively. Goodwill arising on consolidation has suffered an impairment loss of 25%
since 1 May 2014.Group retained earnings at 30 April 2016 are:
a) £980,000
b) £960,000
c) £1,050,000 → CA prore de D= 200 000+90 000;goodwill =430 000-
290 000=140 000 ;perte de valeur/goodwill =140 000*25%=35000 ;reserves consolidés
=970 000+115000= 1 085 000 ; bfce du group = 1085000-35000=1 050 000
d) £1,085,000

QUESTION 30
On 1 January 2009, P Ltd paid £480,000 to acquire 65% of the ordinary share capital of Q
Ltd. The equity of Q Ltd on that date consisted of ordinary share capital of £200,000 and
retained earnings of £150,000.The fair value of the non-current assets of Q Ltd on 1
January 2009 exceeded their carrying amount by £250,000.Goodwill arising on
consolidation has suffered an impairment loss of 40% between 1 January 2009 and 31
December 2016.The goodwill figure which should be shown in the consolidated statement
of financial position at 31 December 2016 is:
a) £54,000→ ca propres =200 000+150 000=350 000;juste valeur =
350 000+250 000=600 000; juste val de la sté acquise =
600 000*65/100=390 000 ;goodwill=480 000-390 000=90 000 ; goodwillau
31/12/2016=90000-(40%*90000) =54 000
b) £151,500
c) £36,000
d) £78,000

QUESTION 31
On 1 January 2013, E Ltd paid £560,000 to acquire 80% of the ordinary share capital of F
Ltd. The equity of F Ltd on that date consisted of ordinary share capital of £300,000 and
retained earnings of £150,000. All of its assets and liabilities were carried at fair value.
On 31 December 2016, the retained earnings of E Ltd and F Ltd are £1,870,000 and
£65,000 respectively. Goodwill arising on consolidation has suffered an impairment loss of
70% since 1 January 2013.The retained earnings figure which should be shown in the
consolidated statement of financial position at 31 December 2016 is:
a) £1,645,000
b) £1,662,000
c) £1,725,000
d) £1,708,000
valeur d’acquisition de E= 560 000, juste valeur de F=300 000+150 000=450 000 ;
80%*450000=360 000 ;goodwill =560 000-360 000=200 000 ;perte =200000*70/100=
140 000 ;retained earnings =1 870 000+65000 =1 935 000,earnings shown in the consolited
statement = 1 935 000-140000= 1 79 5000

QUESTION 32
G Ltd owns 90% of the ordinary share capital of H Ltd. The inventories of H Ltd on 30
November 2015 include goods purchased from G Ltd for £300,000. These goods had been
sold to H Ltd by G Ltd at a markup (majoration) of 50%. The amount of unrealised profit
which should be subtracted from group inventories and from group retained earnings is:
a) £150,000
b) £135,000
c) £90,000 →valeur de stock de H=300 000 ; G à vendu x (stock)*150/100=300 000 ;
valeur du stock vendu/G =300 000*100/150 =200 000 ; valeur du stok non vendu
=300 000-200 000 =100 000(est la valeur du stock non vendu) ; capital social =
apport+bfice non distribué ; unrealised profit= 90%*100 000(capital social or
apport=0+bfice non réalisé)= 90 000
d) £100,000
 OPC-TRAINING
IFRS 11: JOINT ARRANGEMENTS
PRACTICE QUESTIONS

QUESTION ONE
Three investors, A, B and C, invest in company Z. Ownership interests are 50%, 25%, and 25%
respectively. All operating decisions require a 75% majority. This arrangement is outside the
scope of IFRS 11 as joint control does not exist.
a) Yes sl 22 dernier par
b) No

QUESTION TWO
Two investors, A and B, subscribe to invest in company Z, a producing mine. Each party owns
50% of the issued share capital of Z and appoint 2 members each to the board of directors. All
mining operations are managed by the ‘operator’, party A. The terms of the operating agreement
state that the operator can only be replaced by the unanimous consent of the investors.The
operating agreement also states that unanimous approval is required for: – Cessation of mining –
Any disposal of the mine – The acquisition of any capital equipment above CU X million.The
relevant activity of the arrangement is the rate at which mining activities are carried out, as the
amount of ore extracted in a given period will affect the amount of profit or loss generated by
company Z.Above is an example of Joint Arrangement:
a) Yes sl7 § 1
b) No

QUESTION THREE
Parties A and B provide many types of construction services, and jointly enter into a contractual
arrangement to design/ build a road. The parties set up a separate vehicle (entity Z) to facilitate
this arrangement.Entity Z enters into a contract with the government for the road, and holds the
assets and liabilities relating to the road contract, as well as invoicing the government for the
construction services.The main feature of entity Z’s legal form is that the parties (not entity Z in
its own right) have rights to the assets, and obligations for the liabilities, of the entity.Entities A
and B appoint an operator, who will be an employee of one of the parties.The arrangement is
classified as-
a) A joint operation sl7, 8
b) A joint venture.

QUESTION FOUR
A joint operator recognizes in its Consolidated / Individual Financial Statements in relation to
interest in a joint operation:
a) Its assets, including its share of any assets held jointly
b) Its liabilities, including its share of any liabilities incurred jointly
c) Its revenue from the sale of its share of the output arising from the joint operation
d) Its expenses, including its share of any expenses incurred jointly.
e) All the above sl 15
 OPC-TRAINING
IFRS 12: DISCLOSURE OF INTERESTS IN OTHER ENTITIES
PRACTICE QUESTIONS
QUESTION ONE
What is a ‘structured entity’? an entity that has been designed so that:
a) Voting or similar rights are not the dominant factor in deciding who controls the entity,
such as when any voting rights relate to the administrative tasks only and the relevant
activities are directed by means of contractual arrangements. IFRS 12 A650 APPENDIX
A Definiton 3
b) voting & similar rights are the dominant factor in deciding who controls the entity, such
as when any voting rights relate to the relevant activities.

QUESTION TWO
The entity is required to disclose the following aspect(s) to meet the objective of this standard:
i. The major assumptions and judgments made by the reporting entity
ii. Information about the interests in other entities held by the reporting entity
iii. Both the above sl3

QUESTION THREE
The reporting entity is required to disclose major assumptions and judgments used by the entity
along with any changes in such assumptions it had made in identifying:
a) Its control over another entity as defined in IFRS 10 Consolidated Financial Statements
b) Its joint control of an arrangement
c) Its significant influence over another entity
d) The nature of joint arrangement (i.e. joint venture or joint operation)
e) All the above→ sl8,9
f) All except ii and iii
g) All except i and ii

OPC-TRAINING
IFRS 13: FAIR VALUE MEASUREMENT
PRACTICE QUESTIONS
QUESTION ONE
The measurement and disclosure requirements of IFRS 13 do not apply (IFRS 13.6) to:
a) Share-based payment transactions within the scope of IFRS 2 Share-based Payment
b) Leasing transactions within the scope of IAS 17 Leases
c) Measurements that appear similar to fair value, but which are not the same, such as:
d) Net realizable value in IAS 2 Inventories
e) Value in use in IAS 36 Impairment of Assets.
f) All the above cf.sl7or scope de 5 à 8

QUESTION TWO
‘Principal market’ (IFRS 13 Appendix A) is defined as:
a) ‘The market with the greatest profitability and level of activity for the asset or liability.’
b) ‘The market with the greatest volume and level of activity for the asset or liability. Sl 10’

QUESTION THREE
‘Most advantageous market’ (IFRS 13 Appendix A) is defined as:
a) ‘The market that maximizes the amount that would be received to sell the asset or
minimizes the amount that would be paid to transfer the liability, after taking into account
transaction costs and transport costs. Sl10
b) ‘The market that maximizes the amount that would be received to sell the asset or
minimizes the amount that would be paid to transfer the liability, before taking into
account transaction costs and transport costs.

QUESTION FOUR
IFRS 13 Appendix A notes that highest and best use (HBU) is:
a) ‘The use of a non-financial asset by market participants that would maximize the value of
the asset or the group of assets and liabilities (e.g., a business) within which the asset
would be used.’sl9
b) ‘The use of a financial asset by market participants that would maximize the value of the
financial asset or the group of financial assets and liabilities within which the financial
asset would be used.’

QUESTION FIVE
IFRS 13 Appendix A notes that transport costs are:
a) ‘the costs that would be incurred to transport an asset from its current location to its
principal (or most advantageous) market.’ Cf Appendix A
b) ‘the costs that would be incurred to transport an asset from its current location to its
market whether principal or minor.’

OPC-TRAINING
IFRS 14: REGULATORY DEFERRAL ACCOUNTS
PRACTICE QUESTIONS
QUESTION ONE
The objective of IFRS 14 is to specify the financial reporting requirements for
regulatory deferral account balances that arise when an entity provides goods or
services to customers at a price or rate that is subject to rate regulation. In meeting
this objective, the Standard requires:
a) limited changes to the accounting policies that were applied in accordance with
previous generally accepted accounting principles (previous GAAP) for regulatory
deferral account balances, which are primarily related to the presentation of these
accounts.
b) disclosures that: (i) identify and explain the amounts recognised in the entity’s
financial statements that arise from rate regulation; and (ii) help users of the
financial statements to understand the amount, timing and uncertainty of future
cash flows from any regulatory deferral account balances that are recognised.
c) Both a and b cf.sl 6

QUESTION TWO
An entity shall present separate line items in the balance sheet for:
a) the total of all regulatory deferral account debit balances;
b) the total of all regulatory deferral account credit balances.
c) the net amount of all regulatory deferral account debit balances and credit
balances.
d) Both a and b cf.sl 19

QUESTION THREE
When an entity presents current and non-current assets, and current and non-
current liabilities, as separate classifications in its balance sheet, it shall not
classify the totals of regulatory deferral account balances as current or non-current.
a) True cf sl20
b) False

QUESTION FOUR
A rate-regulated entity shall apply IAS 12 to its rate regulated activities, to identify
the amount of income tax that is to be recognized.
a) True
b) False sl 23-24

OPC-TRAINING
IFRS 15: REVENUE FROM CONTRACTS WITH CUSTOMERS
PRACTICE QUESTIONS
. QUESTION ONE
If the agreed date of payment by a customer is later than the date on which goods or
services are transferred to that customer, part of the consideration should always be
treated as finance income (not revenue). True or False?
a) True
b) False sl 2

QUESTION TWO
A contract modification is always treated as a separate contract for the purposes of
IFRS15. True or False?
a) True
b) False cf.§20
QUESTION THREE
A single contract with a customer could include more than one performance obligation and
it is necessary to identify each performance obligation in the contract. True or False?
a) True groupe sl15
b) False
QUESTION FOUR
If a contract with a customer provides a warranty, then the warranty always represents a
separate performance obligation and part of the transaction price must be allocated to it.
True or False?
a) True groupe
b) False

QUESTION FIVE
With regard to the definition of revenue given by IFRS15, which of the following
statements is true?
a) Revenue arises from ordinary activities only cf.IFRS summury defined terms appendix A
norme full
b) Revenue includes cash received from share issues
c) Revenue includes cash received from borrowings
d) Revenue may arise from either ordinary activities or extraordinary activities

QUESTION SIX
Step 1 of the "five-step model" states that certain conditions must be satisfied before an
entity can account for a contract with a customer. Which of the following is not one of these
conditions?
a) The entity and the customer have approved the contract and are committed to perform
their contractual obligations
b) It is certain that the entity will collect the consideration to which it is entitled sl 6
c) Each party's rights with regard to the goods or services concerned can be identified
d) The payment terms can be identified

QUESTION SEVEN
The accounting principle applied by IFRS15 when determining whether or not revenue
should be recognised in respect of a repurchase agreement is:
a) Verifiability
b) Substance over form
c) Prudence
d) Relevance

QUESTION EIGHT
A performance obligation is satisfied over time if:
a) The entity does not have an enforceable right to payment for the performance that has
been completed to date
b) The entity's performance creates an asset that the customer controls as it is created
 c) The customer does not receive or consume the benefits provided by the entity's
performance until the obligation is completely satisfied
d) The entity's performance creates an asset which has an alternative use to the entity

QUESTION NINE
Stand-alone selling price means:
a) The price at which a good or service would be sold jointly to a customer.
b) The price at which a good or service would be sold separately to a customer.sl45 par 1

QUESTION TEN
If each party to the contract has a unilateral enforceable right to terminate a wholly unperformed
contract without compensating the other party (or parties):
a) No contract exists under IFRS 15. IFRS in French point 12
b) Non compensatory contract exists under IFRS 15

QUESTION 11
In general, contract costs incurred in relation to a contract with a customer must be:
a) Recognized as an expense when incurred
b) Recognized as an asset if they are not expected to be recovered
c) Recognized as an asset if they relate to a performance obligation which has been satisfied
d) Recognized as an asset if they relate to a performance obligation which has not yet been
satisfied

QUESTION 12
The carrying amount of contract costs relating to a performance obligation and recognized
as an asset is £120,000. Further costs required in order to satisfy the obligation are
estimated to be £30,000. The consideration receivable by the company when the obligation
is satisfied is £132,000.Calculate the amount of the impairment loss (if any) which should
be deducted from the contract asset and recognized as an expense.
a) £30,000
b) £nil →to determine if there is an impairment loss,we need to compare the total amount of
estimated costs to complete the performance obligation to the total amount of
consideration receivable.if the estimated costs (30 000) to complete exceed the
consideration receivable,an impairment loss should be recognized.in this case,the
estimated costs do not exceed the consideration receivable (euro 132 000).so threre is no
impairment loss to recognize.
c) £18,000
d) £42,000

QUESTION 13
A company enters into a contract to build a factory for a customer. The agreed price is £2m
and the specified completion date is 31 October 2016. However, the contract provides that
the company should receive an incentive payment of a further £250,000 if the factory is
completed by 30 September 2016. Similarly, the price will be reduced by £250,000 if the
factory is not completed until after 30 November 2016.The company estimates that there is
a 15% probability that the factory will be completed by 30 September 2016, an 80%
probability that it will be completed in October 2016 or November 2016 and a 5%
probability that it will not be completed until after 30 November 2016.
a) £1.975m
b) £2.125m
c) £2m
d)£2.025m ( 15%*250000) –(5%*250000)=25 000; 2000 000+25000 =2 025 000

QUESTION 14
A company enters into a contract to supply three distinct products to a customer. The
promise to supply each of these products is regarded as a separate performance obligation.
The stand-alone prices of the three products (if sold singly) are:
Product X £12,500
Product Y £24,000
Product Z £27,500
The agreed contract price is £57,600. How should this price be allocated to performance
obligations? (règle de trois. 1. Somme de x+y+z = 64000 donne la reparation ci-
dessus.calculer la répartition de 57.600))
a) Product X £19,200
Product Y £19,200
Product Z £19,200
b) Product X £11,250→ (57 600*12 500)/64000 =11 250
Product Y £21,600→(57600*24 000)/64000 =21600
Product Z £24,750→(57600 * 27 500)/64000=247500; calculer aussi le total
11 250+21600+24750 =57600
c) Product X £12,500
Product Y £24,000
Product Z £27,500
d) Product X £10,367
Product Y £21,867
Product Z £25,366

QUESTION 15
A telecommunication company T enters into a contract with customer R that includes the
delivery of a handset and 24 months of voice and data services for a monthly consideration of
$5,000. The contract does not require any payment of consideration upfront as long as the
customer commits to a 24 months contract. Customer R obtains title to the handset. The handset
can be used by customer R to perform certain functions – e.g. calendar, contacts list, email,
internet access, accessing applications via Wi-Fi, and to play music or games.Company T
concludes that the handset and the wireless services are two separate performance obligations
based on the evaluation that the customer can benefit from the handset on its own and both
handset and wireless services are also separate in the context of the contract as a whole.
a) companies should not recognise handset revenue when handsets are given free along with
the wireless plan
b) companies should allocate revenue to both components using the residual approach
c) companies should do accounting at the performance obligation level based on their
respective stand-alone selling prices
QUESTION 16
Telecommunication company A contracts with customer C to provide cable television, internet
and landline voice services for a fixed monthly fee for 24 months. Customer C can benefit from
each of the three services on their own (i.e.customer C can benefit from cable television without
either of the other contracted services). None of the three contracted services are highly
interrelated or interdependent because customer C is able to purchase any of the three services
separately. Furthermore, company A does not provide a significant integration service in the
contract as these services are not inputs to a combined service offering that significantly modifies
or customizes any of the other stand-alone service offerings.
a) Each of the three services is a distinct good or service. However, as a practical matter,
because the three services are provided concurrently, company A may conclude that it is
acceptable to account for the bundle as a single performance obligation, if they have the
same pattern of transfer. (Zifise Meme schema)
b) As the classification of the revenues received should be considered, for disaggregated
revenue disclosure or segment reporting requirements, as well as management, regulatory
or tax reporting. It is not acceptable to account for the bundle as a single performance
obligation, if they have the same pattern of transfer
 OPC-TRAINING
IFRS 16: LEASES
PRACTICE QUESTIONS
QUESTION ONE
In the case of a finance lease, the statement of financial position of the lessor(bailleur)
shows the leased item as an asset so long as legal title to the item is not transferred to the
lessee(preneur). True or False?
a) True
b) False

QUESTION TWO
A lease of land which does not transfer legal title to the lessee by the end of the lease term
cannot be a finance lease. True or False?
a) True
b) False

QUESTION THREE
Which of the following situations would normally lead to a lease being classified as a
finance lease?
a) At the inception of the lease, the present value of the minimum lease payments does not
amount to substantially all of the fair value of the asset.
b) The lease does not transfer ownership of the leased asset to the lessee by the end of the
lease term
c) The lease term is not for the major part of the asset's economic life
d) The lessee has the option to purchase the asset at a price which makes it reasonably
certain that this option will be exercised

QUESTION FOUR
In relation to operating leases, which of the following statements is not true?
a) The leased item is not shown as an asset in the lessee's financial statements
b) The lessee has not taken on the risks and rewards incidental to ownership
c) The leased item is not shown as an asset in the lessor's financial statements ifrs 16 in
French point 61 et 62
d) The lease payments are recognised as an expense in the lessee's financial statements

QUESTION FIVE
At the commencement of a finance lease, IAS17 requires that the lessee should recognize
both an asset and a liability to the lessor. These should be measured at:
a) The lower of the fair value of the leased item and the present value of the minimum lease
payments
b) The present value of the minimum lease payments
c) The higher of the fair value of the leased item and the present value of the minimum lease
payments
 d) The fair value of the leased item
QUESTION SIX
The total finance charge arising in relation to a finance lease is equal to:
a) The initial liability to the lessor
b) The total of the minimum lease payments
c) The excess of the initial liability to the lessor over the total of the minimum lease
payments
d) The excess of the total of the minimum lease payments over the initial liability to the
lessor ( if lease paiements excess the initial liability =finance charge ) charge fianciere
=paiements-mtt initial
QUESTION SEVEN
On 1 January 2015, a company which prepares financial statements to 31 December each
year acquires a machine on a finance lease. The fair value of the machine on 1 January
2015 is £50,000 and the company is required to make three lease payments of £19,753 each.
These payments fall due on 31 December 2015, 2016 and 2017. The rate of interest implicit
in the lease is 9% per annum.
Calculate the finance charge which should be shown in the company's financial statements
for the year to 31 December 2015 if the total finance charge is allocated to accounting
periods using the level spread method.
a) £19,753
b) £3,086 →total lease payment=19 753 *3=59.259;so the total charge finance of thre years
=59 259-50 000=9 259; annual charge finance =9259/3 =3 086
c) £9,259
d) £4,500

QUESTION EIGHT
On 1 January 2015, a company which prepares financial statements to 31 December each
year acquires a machine on a finance lease. The fair value of the machine on 1 January
2015 is £50,000 and the company is required to make three lease payments of £19,753 each.
These payments fall due on 31 December 2015, 2016 and 2017. The rate of interest implicit
in the lease is 9% per annum.
Calculate the finance charge which should be shown in the company's financial statements
for the year to 31 December 2015 if the total finance charge is allocated to accounting
periods using the sum of digits method.
a) £9,259
b) £4,500
c) £3,086
d) £4,629

QUESTION NINE
On 1 January 2015, a company which prepares financial statements to 31 December each
year acquires a machine on a finance lease. The fair value of the machine on 1 January
2015 is £50,000 and the company is required to make three lease payments of £19,753 each.
These payments fall due on 31 December 2015, 2016 and 2017. The rate of interest implicit
in the lease is 9% per annum.
Calculate the finance charge which should be shown in the company's financial statements
for the year to 31 December 2015 if the total finance charge is allocated to accounting
periods using the actuarial method.
a) £3,086
b) £9,259
c) £4,629
d) £4,500

QUESTION TEN
On 1 January 2015, a company which prepares financial statements to 31 December each
year acquires a machine on a finance lease. The fair value of the machine on 1 January
2015 is £50,000 and the company is required to make three lease payments of £19,753 each.
These payments fall due on 31 December 2015, 2016 and 2017. The rate of interest implicit
in the lease is 9% per annum.
Assuming that the total finance charge is allocated to accounting periods using the
actuarial method, calculate the liability to the lessor at 31 December 2015 and show how
this should be split between current and non-current liabilities.
a) Total £34,747, Non-current £16,626, Current £18,121
b) Total £34,747, Non-current £14,994, Current £19,753
c) Total £32,970, Non-current £16,485, Current £16,485
d) Total £34,747, Non-current £18,121, Current £16,626

QUESTION 11
On 1 January 2016, a company entered into a finance lease to acquire an item of equipment
and made its first annual payment of £50,000. The fair value of the item on 1 January 2016
was £215,000 and the interest rate implicit in the lease was 8% per annum.
On 1 July 2016, the company also made a payment of £12,000 for a one-year lease of a
machine, starting on that date. This lease is an operating lease.
Ignoring depreciation, calculate the amount that should be recognised as an expense in the
year to 31 December 2016 in relation to these two leases.
a) £29,200
b) £10,000
c) £19,200
d) £23,200

QUESTION 12
On 1 November 2015, a company entered into a finance lease to acquire a machine and
made its first annual payment of £30,000. Three further payments of £30,000 are due on 1
November 2016, 2017 and 2018.
The fair value of the machine on 1 November 2015 was £110,000 and the interest rate
implicit in the lease is 6% per annum.
Calculate the current liability relating to this lease that should be recognised in the
company's financial statements for the year to 31 October 2016.
a) £30,000
b) £26,712
c) £54,800
d) £84,800