Move Forward International » CertIFR Sample Exam

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1. Which two of the following can be classified as “Cash and cash equivalents” according to IAS 7- “Cash Flow Statement”?
(A) A bank overdraft
(B) Equity investments
(C) Loan notes held due for repayment in 90 days
(D) Redeemable preference shares due in 180 days

A and B

C and D

A and D

B and C

2. Which of the following items qualify as an intangible asset under IAS 38?

Advertising and promotion on the launch of a huge product

College tuition fees paid to employees who decide to enroll in an executive MBA program at Harvard University while working with the company

Operating losses during the initial stages of the project

Legal cost paid to intellectual property lawyers to register a patent

3. Once recognized, intangible assets can be carried at:

Cost less accumulated depreciation

Cost less accumulated depreciation and less accumulated amortization

Revalued amount less accumulated depreciation

Cost plus a national increase in fair value since the intangible asset is acquired

4. Which of the following disclosures is not required by IAS 38?

Useful lives of the intangible assets

Reconciliation of carrying amount at the beginning and at the end of the year

Contractual commitments for the acquisition of intangible assets

Fair value of similar intangible assets used by its competitors

5. IAS 16 requires that revaluation surplus resulting from initial revaluation of property, plant and equipment should be treated in one of the followings ways. Which of the four options mirrors the requirements of IAS 16?

Credited to retained earnings as this is an unrealized gain

Released to the income statement an amount equal to the difference between the depreciation calculated on historical cost vis a vis revalued amount

Deducted from current assets and added to the property, plant and equipment

Debited to the class of property, plant and equipment that is being revalued and credited to a reserve captioned “revaluation surplus” which is presented under equity

6. Economic life of an enterprise is split into the periodic interval as per

Money Measurement

Matching

Going concern

Accrual

7. Capital expenditure is that expenditure which is:

Paid in lump-sum

Large in amount

Intended to benefit the future period

Intended to benefit the current period

8. Those liabilities which arise only on the happening of some event, are called:

Current liabilities

Outstanding liabilities

Contingent liabilities

Deferred liabilities

9. An example of financing activities in the context of cash flow statement is

Fixed capex

Long term deposit

Financial charges paid

Dividends paid

10. Which of the following is not a disclosure requirement under IAS 23?

Accounting policy adopted for borrowing costs

Amount of borrowing costs capitalized during the period

Segregation of assets that are qualifying assets from other assets on the balance sheet or as a disclosure in the footnotes to the financial statements

Capitalization rate used to determine the amount of borrowing costs eligible for capitalization

11. A newly set up dot.com entity has engaged you as a financial advisor. The entity has recently completed one of its highly publicized research and development projects and seeks your advice on the accuracy of the following statements made by one of its stakeholders. Which one is it?

Costs incurred during the research phase can be capitalized

Costs incurred during the development phase can be capitalized if criteria such as technical feasibility of the project being established are met

Training costs of technicians used in research can be capitalized

Designing of jigs and tools qualify as research activities

12. Which item below does not qualify as an intangible asset?

Computer software

Registered patent

Copyrights protected

Notebook

13. A company determined the following values for its inventory as of the end of its fiscal year: Historical cost- $100,000, Current replacement cost – $70,000, Net realizable value- $90,000, Net realizable value less a normal profit margin- $85,000, Fair value $95,000. Under IFRS, what amount should the company report as inventory on its balance sheet?

US$ 70,000

US$ 85,000

US$ 90,000

US$ 95,000

14. On January 1, year 1, an entity acquires for $100,000 a new piece of machinery with an estimated useful life of 10 years. The machine has a drum that must be replaced every five years and costs $20,000 to replace. Continued operation of the machine requires an inspection every four years after purchase; the inspiration cost is $8,000. The company uses the straight-line method of depreciation. Under IFRS, what is the depreciation expense for year 1?

US$ 10,000

US$ 10,800

US$ 12,000

US$ 13,200

15. Healthy Inc bought a private jet for the use of its top ranking officials. The cost of the private jet is US$ 15 million and can be depreciated either using a composite useful life or useful lives of its major components. It is expected to be used over a period of 7 years. The engine of the jet has a useful life of 5 years. The private jet’s tires are replaced every 2 years. The private jet will be depreciated using the straight line method over:

7 years composite useful life

5 years for the engine, 2 years for the tires and 7 years applied to the balance cost of the jet

2 years useful life based on conservatism (the lowest useful life of all the parts of the jet)

5 years useful life based on a simple average of the useful lives of all major components of the jet

16. Under IAS 16, which two subsequent accounting treatments are allowed subsequently to initial recognition?

Cost model and present value model

Cost model and revaluation model

Fair value model and revaluation model

Fair value model and cost model

17. If one large asset has a number of individual components with different useful lives, how should this be depreciated?

Treat as one asset

Break down into different parts

Expense it all

Treat as one asset, but disclose in the notes to the financial statements

18. When is offsetting permitted under IAS 1?

Always

Never

When permitted or required under IFRS

When approved by the board of directors

19. Which of the following is not required in the financial statements under IAS 1?

Name of the entity

Whether accounts cover a single entity or a group

The accounting period

Presentation currency

Chairman’s commentary on performance

20. If any entity uses part of a building for their own use, and rents the remainder. How should this be treated?

All as investment property under IAS 40- Investment Property

Account for separately under “IAS – 16 Property, Plant and equipment” and “IAS – 40 Investment Property”

All under IAS 16 – Property, Plant and Equipment

None of these

21. Under IAS 40 – Investment Property, where should a gain or loss on disposal be recognized?

Income statement

Statement of changes in equity

Statement of financial position

None of these

22. Under IAS 16, if an asset is idle

Depreciation is paused

Depreciation for the entire period does not apply

Depreciation continues

Depreciation is ignored

23. Inventories are stated at:

Lower of cost and carrying value

Lower of fair value and net realizable value

Lower of cost and net realizable value

Cost of production

24. Which of the following costs are not included while computing the cost of purchase?

Purchase price

Recoverable taxes

Import duties

Shipping costs

25. The estimated selling price in the ordinary course of business less estimated cost of completion and estimated cost of sale is called:

Market value

Fair value

Current value

Net realizable value

26. Which of the following is not permitted as a cost of inventory?

Non- recoverable taxes

Shipping

Fixed manufacturing overheads

Storage costs

27. Which of the following items should be disclosed as per the requirements of IAS 2?

Average holding period of inventories of the entity as at the end of the reporting period

List of major customers to whom the inventories were sold during the reporting period

Average lead time of procurement for major classes of inventories

Carrying amount of inventories pledged as security for liabilities

28. Which of the following cost models is not permitted under IAS 2?

FIFO

LIFO

Weighted average

Actual cost

29. Which of the following is not a related party as envisaged by IAS 24?

A director of the entity

The parent company of the entity

A shareholder of the entity that owns 1% of the stake in the entity

The son of the chief executive officer of the entity

30. Change in accounting policy does not include:

Adoption of the revaluation model after using cost method under IAS 16

A change of method of valuation of inventory from FIFO to weighted-average

A change of method of valuation of inventory from weighted-average to FIFO

Change from the practice (convention) of paying as Christmas bonus one month’s salary to staff before the end of the year to the new practice of paying one-half month’s salary only

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