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Conceptual Framework and Structural Accounting Relationships

Essay by   •  November 3, 2017  •  Exam  •  5,857 Words (24 Pages)  •  1,024 Views

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NAME, First name: .....................................................................................

Neighbours:......................................................................................

Front: .....................................................................

Rear:.......................................................................

Left: .......................................................................

Right: ....................................................................

VERSION WITH MODEL SOLUTIONS

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Points:

  1. Theory:        /50
  2. Statement of Cash Flows        /100
  3. Consolidation: _        /100 Total:        /250

Total:        /18

Case studies tests: _                /2 Sub - total:        /20

Possible positive assessment from the case studies sessions:

Final mark:        /20


Question 1 – Theory

Please tick off the only one statement that is correct by topic. All questions are IFRS based.

  1. Conceptual framework and structural accounting relationships

Where T = Treasury (Cash), CA = Current Assets (excluding T), CL = Current Liabilities, E = Equity, NCA = Non Current Assets, and NCL = Non Current Liabilities, the following equation is correct:

1. E + NCL + NCA = CA + CL + T

2. T = - NCA + E + NCL – CA + CL

X

3. NCA + NCL + T – E + CL = NCL + CA

4. – E + NCA – T = - NCL – CL + CA

5. None of the above

  1. Consolidation theories

As per IFRS, the total Fair Value of an identifiable asset of a subsidiary is recognized, including the portion then attributable to the Non Controlling Interests.

This is in compliance with:

1. the Parent Company theory ;

2. the Entity theory ;

X

3. the Property theory ;

4. None of the above.

  1. Revenue recognition – Upcoming IFRS 15

The upcoming IFRS 15 clarifies that the sale price to be recorded for a transaction should not include:

1. Estimated future year end volume discounts ;

2. Estimated performance bonuses ;

3. Estimated penalties

4. Estimated revenues based on future ‘usage’ e.g. royalties

X

5. All of the above


  1. Selection of consolidation methods

In case of joint control of a ‘joint operation’, the related entity should be consolidated using the following method:

1. Full consolidation ;

2. Equity method ;

3. Proportionate consolidation ;

X

4. Either 2. or 3. upon choice by the management of the parent company.

  1. Lease accounting – IFRS 16[pic 6]

A lease longer than 12 months that nowadays under IAS 17 qualifies as a finance lease will, under the upcoming IFRS 16, lead the lessee to record a ‘Right-of-Use’ asset:

1. In some cases ;

2. In all cases ;

X

3. In case the related P.P.&E. item is not carried anymore

on the balance sheet of the lessor

  1. IFRS conceptual framework[pic 7]

The following item is not a Monetary item:

1. Trade receivables

2. Bank overdraft

3. Long term financial debt

4. Inventories

X

5. Other current receivable


  1. IFRS Financial statements

1. Only European parent companies have to prepare IFRS consolidated

financial statements

2. All parent companies quoted on an European stock exchange have to prepare IFRS conolidated financial statements

X

3. Parent companies quoted on an European stock exchange are free to choose what accounting principles they can use to present their consolidated accounts

...

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