Conceptual Framework and Structural Accounting Relationships
Essay by mvitucci • November 3, 2017 • Exam • 5,857 Words (24 Pages) • 1,227 Views
Essay Preview: Conceptual Framework and Structural Accounting Relationships
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VERSION WITH MODEL SOLUTIONS
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Points:
- Theory: /50
- Statement of Cash Flows /100
- 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.
- 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 |
- 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. |
- 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 |
- 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. |
- 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 |
- 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 |
- 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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