Question 1

IFRS 12 sets out the requirement to disclose information about:&#10;A) Unconsolidated structured entities.&#10;B) Long-term employee benefit plans.&#10;C) Separate financial statements.&#10;D) An interest held by an entity that participates in a joint arrangement without joint control.&#10;E) None of the above.

Accepted Answer

IFRS 12 requires entities to disclose information about interests in subsidiaries, joint arrangements, associates, and unconsolidated structured entities to help users understand the nature and risks associated with these interests.

Question 2

The main judgmental issue arising in consolidated financial statements is the identification of:&#10;A) Investment entities&#10;B) Partners&#10;C) Associates&#10;D) Agents&#10;E) None of the above.

Accepted Answer

None of the above.&#10;

Question 3

Which of the following are the elements of control under IFRS 10?
I. The ability of an investor to affect its amount of variable returns.
II. 20% Voting power
III. Exposure to variable returns
IV. Power

A) All of the above
B) I, II, III
C) I, II, IV
D) II, III, IV

I, II, IV

Accepted Answer

I, III, and IV are elements of control under IFRS 10. 20% voting power (II) alone does not necessarily confer control; it's the power over the investee (IV), exposure to variable returns (III), and the ability to use power over the investee to affect the amount of the investor's returns (I) that are key indicators of control.

Question 4

Which of the following would not be a significant restriction that should be disclosed in the financial statements?&#10;A) Restriction on transfer of assets between entities in the group&#10;B) Guarantees or other requirements that enable dividends to be paid&#10;C) The nature and extent to which protective rights of NCI significantly enhances an entity's ability to use the assets and settle the liabilities of the group.&#10;D) The carrying amounts in the consolidated financial statements of the assets and liabilities to which any restrictions apply.

Accepted Answer

The answer of Which of the following would not be...

Question 5

IFRS 12 provides guidance on separate financial statements.

Accepted Answer

IFRS 12 provides guidance on the disclosure of interests in other entities, not on separate financial statements. Separate financial statements are covered by IAS 27.

Question 6

All subsidiaries should be consolidated under IFRS 10, 12, and 27.

Accepted Answer

Under IFRS 10, not all subsidiaries are required to be consolidated. Exceptions include cases where the subsidiary is held for sale and is classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations.

Question 7

A structured entity is an entity that has been designed so that voting or similar rights are not the dominant factor in determining who controls the entity.

Accepted Answer

A structured entity is indeed defined by the fact that voting or similar rights are not the primary factor in deciding control, instead, control is often determined by contractual arrangements or other mechanisms.

Question 8

When an entity sponsors another but has no interest, the entity is required to disclose the nature purpose, and size.

Accepted Answer

Sponsorship without interest typically does not require disclosure of the nature, purpose, and size of the sponsorship in financial statements or regulatory filings. Disclosure requirements generally apply to financial interests or relationships that could affect the financial position or performance of the entity.

Question 9

Entities are required to make certain disclosures about interests in Unconsolidated Structured Entities. Explain these disclosures (regarding the interest and risks), and how they fulfill the objectives of general purpose financial reporting as explained in the Conceptual Framework.

Accepted Answer

The answer of Entities are required to make certain disclosures...

Deck 31: Disclosure of Interests in Other Entities