MODULE 7

1. According to the amendments to IAS 16, the proceeds from selling items produced before an item
of PPE is available for use shall be part of
a. Inventories, recognize in profit/ loss
b. Inventories, recognize in other comprehensive income
c. Cost of the PPE
d. Amount to be deducted in the cost of the PPE

2. Testing the functioning of a PPE means

a. Assessing its technical and physical performance
b. Assessing its physical and financial performance
c. Assessing its financial and technical performance
d. Assessing its financial, technical, and physical performance

3. Statement 1: IAS 3 is currently in use to account for consolidated financial statements

Statement 2: IFRS 4 was superseded by IFRS 17 Insurance Contract on January 1, 2018
a. Only statement 1 is correct
b. Only statement 2 is correct
c. Both statements are correct
d. Both statements are wrong

4. Statement 1: IFRS 1 accounts for the presentation of financial statements, including

presentation of Current assets and current liabilities
Statement 2: IFRIC 3 is the standard for foreign currency transactions and Advance
consideration.
a. Only statement 1 is correct
b. Only statement 2 is correct
c. Both statements are correct
d. Both statements are wrong

5. The following conditions in relation to permitting a lessee to apply the practical expedient need
to be met, except
a. the rent concession provides relief to payments that overall results in the consideration for the lease
contract being substantially the same or less than the original consideration for the lease immediately
before the concession was provided
b. The rent concession is for relief for payments that were originally due on or before 30 June 2021.
So payments included are those that are reduced or deferred on or before 30 June 2021, but any
subsequent rental increases can go beyond 30 June 2021
c. there are no other substantive changes to the other terms and conditions of the lease
d. All of the following need to be met

6. Statement 1: The amendments to IFRS 9, IAS 39, IFRS 7, IFRS 16 and IFRS 4 apply for annual
periods beginning on or after January 1, 2021, with earlier application permitted.
Statement 2: Restatement of prior periods is required, however, the entity may not restate prior
periods if, and only if, it is possible without the use of hindsight.
a. Only statement 1 is correct
b. Only statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect

7. Statement 1: If applying the practical expedient, the amendments to IFRS 16 - Covid-19-Related

Rent Concessions beyond June 30, 2021 require the entity to disclose the amount in profit or loss for
the reporting period that reflects the change in lease payments arising from rent concessions
Statement 2: In March 2021 the Board issued Covid-19-Related Rent Concessions beyond 30
June 2021, which extended the availability of the practical expedient by one year.
a. Only statement 1 is correct
b. Only statement 2 is correct
c. Both statements are incorrect
d. Both statements are correct

8. PPE is initially measured at cost. The following are examples of directly attributable costs:
(Choose the incorrect item)
a. Costs of employee benefits arising directly from construction or acquisition of PPE
b. Costs of site preparation
c. Initial delivery and handling costs (e.g., freight costs)
d. Installation and assembly costs
e. Testing costs, net of disposal proceeds of samples generated during testing
f. Professional fees

9. Statement 1: An entity choosing to apply the deferral approach does so when it first applies
IFRS 9
Statement 2: An entity choosing to apply the overlay approach retrospectively to qualifying
financial assets does so for annual periods beginning on or after 1 January 2018
a. Only statement 1 is correct
b. Both statements are correct
c. Neither of the statements are correct
d. Only statement 2 is correct

10. Proceeds from sale of items produced while bringing the asset to the location and condition
necessary for it to be operating in the capacity as intended by the management is
a. Depreciated over the estimated useful life of the asset
b. Accounted for as a reduction of cost of the asset
c. Accounted for as an addition to the cost of the asset
d. Immediately recognized in profit or loss

IFRIC 12 QUIZ QUESTIONS

1. STATEMENT 1: According to IFRIC 12, the grantor in a service concession arrangement
is usually a private entity.
STATEMENT 2: IFRIC 12 only applies to infrastructure constructed by the operator
himself or infrastructure acquired from third parties. It doesn’t apply to existing
infrastructure of the grantor to which the grantor can give access to the operator.
a. Only statement 1 is correct.
b. Only statement 2 is correct.
c. Both statements are correct.
d. Both statements are incorrect.
2. STATEMENT 1: The operator in a BOT contracts acts as a service provider and accounts
for the services using PFRS 15.
STATEMENT 2: The operator in a BOT contract can capitalize borrowing costs only if the
consideration is in the contract is in the form of financial asset.
a. Only statement 1 is correct.
b. Only statement 2 is correct.
c. Both statements are correct.
d. Both statements are incorrect.

3. How should an operator subsequently measure a financial asset arising from service
concession arrangement under PFRS 9?
a. At amortized cost
b. At fair value through other comprehensive income
c. At fair value through profit or loss
d. Any of these

4. In a service concession arrangement that is within the scope of IFRIC 12, the operator
(choose the incorrect statement)
a. A private entity
b. Receives a right and incurs an obligation to provide public services.
c. Acts as a service provider
d. Is a public sector entity
e. All of the information provided above are correct.

5. Which of the following contracts is within the scope of IFRIC 12 service concession
arrangements?
a. ABC Co., a private entity, wins a government bid to provide computer equipment to be used in
the upcoming elections.
b. DEF Co., a private entity, wins a government bid to operate a canteen in a government agency
office.
c. XYZ, Inc. a private entity, wins a government bid to provide internet access to all government
offices.
d. GHI Co. a private entity, wins a government bid to construct, operate and maintain for 25
years an expressway. At the end of the contract, GHI Co. turns over the expressway to the
government.
e. None of the above
IFRS 17 Questions:
6. According to PFRS 17, insurance service result is recognized in
a. profit or loss
b. other comprehensive income
c. partly a and partly
d. a or b

7. The significant risk that is transferred from the policyholder to the issuer of an insurance
contract is
 a. lapse or persistency risk.
b. financial risk.
c. expense risk.
d. insurance risk.

8. Which of the following is in the scope of PFRS 17 Insurance Contracts?

a. warranties provided by a manufacturer in connection with the sale of its goods or services to a
customer
b. warranties provided by a dealer or retailer in connection with the sale of its goods or services to
a customer
c. warranties provided by another party in connection with the sale of its goods or services
of a manufacturer or dealer to a customer
d. insurance contracts in which the entity is the policyholder

9. Statement 1: Principle of Loss minimization means that the insured is compensated for the loss
incurred and reverted back to its previous financial condition before the occurence of loss
event.
Statement 2: Principle of Contribution is the consequence of principle of indemnity and applied
to the insured when it has two or more insurers wherein no double compensation should
happened.
Which of the following is/are true?
a. Statement 1
b. Statement 2
c. Both Statement
d. Neither of the statement

10. Which of the following regarding IFRS 17 presentation requirement is TRUE?

A. An entity shall present income or expenses from reinsurance contracts held separately from the
expenses or income from insurance contracts held
B. The statement of PL or OCI comprise insurance revenue and insurance service expenses;
and insurance finance income or expenses
C. Insurance revenue and insurance service expenses presented in profit or loss shall include
distinct investment components
D. An entity shall make an accounting policy choice between including insurance finance income
or expenses for the period in profit or loss; or disaggregating them into an amount recognized in other
comprehensive income only