International Financial Reporting Standards (IFRS) are very vital part of interviews and we insist all job seekers to get at least intermediate level knowledge on IFRS as this could be a turning point of your interview as command on IFRS is a key to success in interviews.
In my first blog I have already covered interview questions on following IFRS/IAS. Please review here: https://accountingblogger.com/ifrs-interview-questions-and-answers/
- Difference between IFRS and IAS.
- IAS 40 – Investment Property.
- IFRS 16 – Leases.
- IAS 36 – Impairment of assets.
- IAS 10 – Events After the Reporting Period.
- IFRS 15 – Revenue from Contracts with Customers.
- IFRS 5 – Non-current Assets Held for Sale and Discontinued Operations.
- IAS 12 – Income Taxes.
- IAS – 2 Inventories.
Please continue with more interview questions related to IAS 16, IAS 38, IFRS 10, IAS 33 & IFRS 13 as follows.
Question 1. How Property, Plant and equipment as per IAS 16 initially recognized?
Answer:
- Initially PPE are recognized at Cost and Cost includes all costs necessary to bring the asset to working condition for its intended use. This would include not only its original purchase price but also costs of site preparation, installation & all other related professional fees & charges.
Question 2. What are the two models mentioned in IAS 16 Property, Plant and equipment for subsequent measurement?
Answer:
IAS 16 recommends two models:
- Cost Model: Property, Plant & equipment shown at cost less accumulated depreciation and after accumulated impairment losses as per paragraph 30 of standard.
- Revaluation Model: If revaluation model opts than revaluation should be carried for entire class of assets and carried out regularly. In this model the asset is carried at a revalued amount, being its fair value at the date of revaluation less depreciation and impairment. Revalued assets are depreciated in the same way as under the cost model.
Recommended Reading:https://accountingblogger.com/ias-16-property-plant-and-equipment/
IAS 16 – Property, Plant and Equipment | Humayun Atif (CMA, CPA)
Question 3. Which assets can be classified as Intangible assets as per IAS 38?
Answer: Intangible asset is an asset which is:
- Identifiable,
- non-monetary, and
- without physical substance.
Question 4. What are the two classifications of Intangible assets as per IAS 38?
Answer:
Classification of Intangible assets:
- Indefinite life: Intangible assets with indefinite useful life should not be amortized but tested for impairment annually.
- Finite life: An intangible asset with a finite useful life is amortized and is subject to impairment testing.
Recommended Reading: https://accountingblogger.com/intangible-assets-ias-38/
Question 5. Briefly state the main points of consolidation procedure as per IFRS 10 – Consolidated Financial Statements?
Answer:
Following procedure has been defined while consolidating financial statements:
- Like items of assets, liabilities, equity, income, expenses and cash flows of the parent and its subsidiaries are combined.
- The carrying amount of the parent’s investment in each subsidiary and the parent’s portion of its interest in the equity of each subsidiary is eliminated.
- eliminate in full intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between entities of the group.
Question 6. What do you understand by non-controlling interests as per IFRS 10 – Consolidated Financial Statements?
Answer:
NCI has been defined as Equity in a subsidiary not attributable, directly or indirectly, to a parent.
A parent presents non-controlling interests in its consolidated statement of financial position within equity, separately from the equity of the owners of the parent.
Recommended Reading: https://accountingblogger.com/consolidated-financial-statements/
Question 7. What are two methods of calculating Earning Per Share as mentioned in IAS 33?
Answer:
IAS – 33 Earnings Per Share sets out how to calculate
- Basic earnings per share, and
- Diluted earnings per share.
Question 8. How Earning Per Share as per IAS 33 calculated?
Answer:
Basic EPS = (net income – preferred dividends) / weighted average number of common shares outstanding.
- Numerator for basic EPS is profit after all expenses, tax, minority interest and preference dividends.
- Denominator for basic EPS is weighted average outstanding ordinary shares which means that if any change in share capital by issuing new shares than wt. average should be taken on prorated basis.
Recommended Reading: https://accountingblogger.com/ias-33-earnings-per-share/
Question 9. How can you describe Fair Value as defined in IFRS 13 – Fair Value Measurement?
Answer: IFRS 13 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price).
Question 10. What is fair value hierarchy that categorizes inputs to valuation techniques into three levels as defined in IFRS 13 – Fair Value Measurement?
Answer: IFRS 13 introduces a fair value hierarchy that categorises inputs to valuation techniques into three levels. The highest priority is given to Level 1 inputs and the lowest priority to Level 3 inputs. An entity must maximize the use of Level 1 inputs and minimize the use of Level 3 inputs. The three levels are:
Level 1 Inputs
Level 1 inputs are quoted prices in active markets for identical assets or liabilities that the entity can access at the measurement date.
Level 2 Inputs
Level 2 inputs are inputs other than quoted market prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3 Inputs
Level 3 inputs are unobservable inputs for the asset or liability. Unobservable inputs are used to measure fair value to the extent that relevant observable inputs are not available.
Question 11. What are the three valuation techniques recommended in IFRS 13 – Fair Value Measurement?
Answer: Valuation techniques
The Standard requires entities to apply valuation techniques consistent with any of the following three methods:
- Market approach,
- Cost approach,
- Income approach.
Recommended Reading: https://accountingblogger.com/ifrs-13-fair-value-measurement/
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 Canada and Dubai’s largest brands. He is a tax and IFRS coach and the founder of accountingblogger.com
