IFRS Interview Questions & Answers

Accounting interview questions can be challenging. That’s why it’s important to prepare before you interview for any accounting position.

Many accountants fail to get their desired accounting position not because they are not qualified but because they are not fully prepared for the interview.

International Financial Reporting Standards (IFRS) are very vital part of interview for any senior or mid senior level Finance & Accounting position and I have tried to make it very simple and practical based on my 25 years journey in this field.

We recommend all job seekers to get at least intermediate level knowledge on IFRS as this could be a turning point of your interview and this statement is based on my own experience. Command on IFRS is a key to success in interviews.

Below is a deep dive into some IFRS interview questions you should be ready to answer at intermediate and senior level accounting positions.

 Question 1. What are International Financial Reporting Standards (IFRS)?

Answer:

• International Financial Reporting Standards (IFRS) are a set of widely used international standards for financial reporting. These standards are developed and maintained by the International Accounting Standards Board (IASB).
• IFRS aims to provide a common global language for business affairs and accounting treatments.

Question 2. What are the Key differences between IFRS and IAS?

Answer:

The key differences are

• IAS’s was published by the International Accounting Standards Committee (IASC) whereas the IFRS was published by the International Accounting Standards Board (IASB) and last IAS was issued in 2001, whereas, the standards for the IFRS were issued from 2001 onwards.
• The principles of the IFRS take precedence if there is a contradiction with IAS.

Recommended Reading: https://accountingblogger.com/ifrs-ias/

Question 3. What is Investment property as per IAS 40?

Answer:

Investment property includes land or a building or both that is:

• held for rental earnings, or
• kept for capital appreciation, or
• for both.

Question 4. How revenue recognized in IAS 40 at initial level and at subsequent stage for investment property?

Answer:

Initial measurement is at Cost and Subsequent measurement have two models:

1. Cost Model: It’s the same like IAS 16 cost model and investment property shown at cost less accumulated depreciation and impairment losses.
2. Fair Value Model: Investment property should be measured at fair value & fair value should be as per IFRS 13- Fair value measurement.

Question 5. How can you differentiate Revaluation Model as per IAS 16 and  Fair Value Model as per IAS 40?

Answer: The key differences between two models are

1. In the Revaluation model surplus on revaluation goes to equity under revaluation surplus while in the Fair value model it is reported to the income statement.
2. In the revaluation model if the trend is downward then it is reported to the income statement but in the Fair value model in both (upward & downward) trends it is reported to the income statement.
3. In the revaluation model depreciation is charged on revalued amounts but in the Fair value model, no depreciation is charged.

Recommended Reading: https://accountingblogger.com/ias-40-investment-property/

 Question 6. What are the major changes in IFRS 16 – Leases as compared to IAS 17-Leases?

Answer:

• Under IFRS 16 all leased assets will be shown on the lessees’ balance sheets. As per IAS 17, leased assets were reported on-balance sheet for the lessee if they are finance leases but operating leases were instead reported in the notes to the accounts.
• IFRS 16 has more focus on who has the right to use the asset but IAS 17 was concerned with who bears the risks and the rewards of the lease.
• The distinction between finance leases and operating leases for lessees under the IFRS 16 has been removed. However, there are optional exemptions for leases of low-value assets and short-term leases.
• The bigger your lease portfolio, the bigger the effect on your key reporting metrics.
• IAS 17 was superseded by IFRS 16 Leases.

Recommended Reading: https://accountingblogger.com/ifrs-16-leases/

Question 7. What is impairment of assets as per IAS 36 and how we treat it in FS?

Answer:

• IAS 36 described that Impairment is the fall in the value of an asset and assets are not carried at more than their recoverable amount (i.e., the higher of fair value less costs of disposal and value in use).
• An impairment loss is recognized whenever the recoverable amount is below the carrying amount. The impairment loss is recognized as an expense (unless it relates to a revalued asset where the impairment loss is treated as a revaluation decrease). Adjust depreciation for future periods.

Question 8. Describe the two golden rules regarding Impairment of goodwill under IAS 36?

Answer:

• First rule is that goodwill should be tested for impairment annually, and
• An impairment loss for goodwill is never reversed.

Recommended Reading:  https://accountingblogger.com/ias-36-impairment-of-assets/

Question 9. What are Events After the Reporting Period as per IAS 10?

Answer:

• Events after the reporting period are events, which could be favourable or unfavourable, that occurs between the end of the reporting period and the date that the financial statements are authorized for issue.
• These events can either be adjusting or non-adjusting events.

Recommended Reading: https://accountingblogger.com/ias-10-events-after-the-reporting-period/

Question 10. Can you quickly name the five-step model framework as stated in IFRS 15 – Revenue from Contracts with Customers?

Answer: The five-step model framework is

• Step 1: Identify the contract(s) with the customer.
• Step 2: Identify the performance obligations in the contract.
• Step 3: Determine the transaction price.
• Step 4: Allocate the transaction price to the performance obligations.
• Step 5: Recognize revenue when (or as) each performance obligation is satisfied.

Recommended Reading: https://accountingblogger.com/ifrs-15-revenue-from-contracts-with-customers/

Question 11. Please recall IFRS 5 – Non-current Assets Held for Sale and Discontinued Operations and tell us what depreciation method we used for these assets?

Answer:

• Non-current assets or disposal groups that are classified as held for sale are not depreciated even if they are still in use by the entity.

Recommended Reading: https://accountingblogger.com/ifrs-5-non-current-assets-held-for-sale/

Question 12. Do you know what are the two types of taxes explained in IAS 12 – Income Taxes?

Answer:

IAS 12 describes the accounting treatment for income taxes. Income taxes includes:

• current income tax, and
• deferred income tax.

Recommended Reading: https://accountingblogger.com/ias-12-income-taxes/

Question 13. How inventories are measure under IAS – 2 Inventories?

Answer:

Under IAS 2 inventory should be valued at the lower of Cost & Net Realizable value (NRV).

Cost should include all costs of purchase net of discounts and other costs incurred in bringing the inventories to their present location and condition.

Cost of inventories should be measured using either the:

• FIFO method (First-in, First-out method)
• Weighted-average cost (WAC) method

FIFO method assumes the inventories that are purchased first are sold first. The WAC method determines the weighted-average cost of similar items at the start of a period and the cost of goods or services purchased or produced during the period.

Humayun Atif | CMA, CPA, CA (FIN), MS-IT, CA Articles from Big 4, Certified Forensic Accountant (USA), Six Sigma & Oracle Certified.

Atif is passionate about Business, Tech, and the written word. He is also a published author of the book ‘IFRS Made Easy’. Atif has worked with some of the world’s largest brands in Canada and Dubai. He is a tax and IFRS coach and the founder of accountingblogger.com