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Question 1Financial Accounting and Reporting

Under IFRS, which of the following items is recognised as an intangible asset on the statement of financial position?

  1. Start-up costs incurred when establishing a new legal entity
  2. Internally generated goodwill arising from staff training programmes
  3. A separately purchased patent with a finite useful life Correct answer.
  4. An internally generated brand name developed over several years

Explanation

IAS 38 permits recognition of an intangible asset acquired separately at cost, so a purchased patent qualifies. Internally generated goodwill, brands, and start-up costs are prohibited from recognition because their cost cannot be reliably distinguished from developing the business as a whole.

Question 2Financial Accounting and Reporting

A company issues 10,000 ordinary shares with a nominal value of 1,000 tenge each at an issue price of 1,400 tenge per share. How should the excess over nominal value be presented?

  1. As share premium within equity Correct answer.
  2. As a liability for future dividends
  3. As a deduction from retained earnings
  4. As other income in profit or loss

Explanation

The difference between the issue price and nominal value of shares is share premium, presented within equity as part of contributed capital. It is not income and does not reduce retained earnings.

Question 3Financial Accounting and Reporting

Which financial statement reports the cash generated and used by a reporting entity over a period?

  1. Statement of cash flows Correct answer.
  2. Statement of comprehensive income
  3. Statement of changes in equity
  4. Statement of financial position

Explanation

The statement of cash flows classifies cash movements into operating, investing, and financing activities for the period. The statement of financial position is a point-in-time snapshot rather than a period flow statement.

Question 4Financial Accounting and Reporting

Under the accrual basis of accounting, when should revenue from the sale of goods be recognised?

  1. When the order is confirmed by the customer
  2. When cash is received from the customer
  3. When the goods are transferred to the customer and control passes Correct answer.
  4. When the sales invoice is printed by the accounting system

Explanation

IFRS 15 requires revenue to be recognised when the performance obligation is satisfied, which for goods normally occurs when control transfers to the customer. Timing of cash receipt or documentation is irrelevant to the recognition point.

Question 5Financial Accounting and Reporting

An entity purchases equipment for 5,000,000 tenge with an estimated residual value of 500,000 tenge and a useful life of five years. Using straight-line depreciation, what is the annual depreciation charge?

  1. 800,000 tenge
  2. 1,100,000 tenge
  3. 900,000 tenge Correct answer.
  4. 1,000,000 tenge

Explanation

Straight-line depreciation equals depreciable amount divided by useful life: (5,000,000 − 500,000) ÷ 5 = 900,000 tenge per year. The residual value is excluded from the depreciable base.

Question 6Financial Accounting and Reporting

What is the primary objective of general purpose financial statements according to the IASB Conceptual Framework?

  1. To provide financial information useful to existing and potential investors and lenders Correct answer.
  2. To satisfy the reporting requirements of the tax authority
  3. To guarantee that the entity will remain a going concern
  4. To determine the taxable profit of the entity

Explanation

The Conceptual Framework states that general purpose financial reports provide information about the reporting entity useful to primary users in making decisions about providing resources. Tax compliance and going concern assurance are not the stated objective.

Question 7Financial Accounting and Reporting

Which of the following best describes the going concern assumption?

  1. The entity will change its functional currency each year
  2. The entity will be liquidated within the next reporting period
  3. The entity will continue in operation for the foreseeable future Correct answer.
  4. The entity will merge with another entity in the next year

Explanation

Going concern assumes the entity has neither the intention nor the necessity to liquidate or curtail materially the scale of its operations. This justifies preparing statements on a historical cost and accrual basis rather than a break-up basis.

Question 8Financial Accounting and Reporting

A company receives a bank loan of 20,000,000 tenge repayable in three years. How is this classified in the statement of financial position at the reporting date?

  1. Current asset
  2. Non-current liability Correct answer.
  3. Non-current asset
  4. Current liability

Explanation

A loan repayable more than twelve months after the reporting date is a non-current liability. It is an obligation of the entity, not an asset, and its settlement date falls beyond the current period.

Question 9Financial Accounting and Reporting

Under IFRS, how should a change in accounting estimate be accounted for?

  1. By restating prior period comparatives retrospectively
  2. By recognising the cumulative effect directly in retained earnings
  3. By disclosing the change but making no adjustment to the accounts
  4. By applying the new estimate prospectively from the date of change Correct answer.

Explanation

IAS 8 requires changes in accounting estimates to be applied prospectively by affecting current and future periods. Retrospective restatement is reserved for changes in accounting policy and correction of prior period errors.

Question 10Financial Accounting and Reporting

An entity sells goods for 1,200,000 tenge including 12% VAT. What amount of VAT is included in the selling price?

  1. 108,000 tenge
  2. 120,000 tenge
  3. 144,000 tenge
  4. 128,571 tenge Correct answer.

Explanation

When the price is VAT-inclusive, VAT equals the gross amount multiplied by the rate divided by one plus the rate: 1,200,000 × 0.12 ÷ 1.12 = 128,571 tenge. Applying the rate directly to the gross figure overstates the VAT.

Question 11Financial Accounting and Reporting

Which of the following items would be classified as an investing activity in the statement of cash flows?

  1. Purchase of property, plant and equipment for cash Correct answer.
  2. Cash received from customers for goods sold
  3. Proceeds from issuing ordinary shares
  4. Interest paid on a bank loan

Explanation

Investing activities include acquisition and disposal of long-term assets such as property, plant and equipment. Customer receipts and interest paid relate to operating activities, while share issues are financing activities.

Question 12Financial Accounting and Reporting

A receivable of 4,000,000 tenge is expected to be settled in 18 months. Under IFRS 15, how should the transaction price be measured if the financing component is significant?

  1. At the amount expected to be collected after bad debt allowance
  2. At the fair value of the goods at the date of delivery
  3. At the present value of the consideration, discounting at an appropriate rate Correct answer.
  4. At the full nominal amount without discounting

Explanation

IFRS 15 requires adjustment for the time value of money when the period between transfer of goods and payment exceeds one year and the financing component is significant. The transaction price is discounted to present value using a rate reflecting the credit characteristics of the parties.

Question 13Financial Accounting and Reporting

An entity revalues its building upward by 3,000,000 tenge under the revaluation model. Where is the gain recognised?

  1. Directly in retained earnings as a prior period adjustment
  2. In profit or loss as other income
  3. In other comprehensive income and accumulated in equity as a revaluation surplus Correct answer.
  4. As a deferred liability until the building is sold

Explanation

IAS 16 requires an upward revaluation increase to be recognised in other comprehensive income and accumulated in equity as a revaluation surplus, unless it reverses a previous revaluation decrease recognised in profit or loss. It is not recognised in profit or loss or as a liability.

Question 14Financial Accounting and Reporting

Which of the following is a key characteristic of a provision under IAS 37?

  1. A contingent asset that is probable and measurable
  2. A possible obligation arising from a future event
  3. An obligation that will certainly be settled within one month
  4. A present obligation of uncertain timing or amount Correct answer.

Explanation

A provision is a liability of uncertain timing or amount recognised when a present obligation exists, an outflow is probable, and the amount can be reliably estimated. A possible obligation that depends on future events is a contingent liability and is not recognised.

Question 15Financial Accounting and Reporting

An entity has 500,000 tenge of inventory at cost and a net realisable value of 450,000 tenge at the reporting date. What is the required measurement under IAS 2?

  1. 475,000 tenge after a partial write-down
  2. 500,000 tenge at cost
  3. 475,000 tenge as an average of both
  4. 450,000 tenge at net realisable value Correct answer.

Explanation

IAS 2 requires inventory to be measured at the lower of cost and net realisable value. Because net realisable value is below cost, the inventory is written down to 450,000 tenge and the difference is recognised as an expense.

Question 16Financial Accounting and Reporting

Which of the following would cause a company's return on equity to increase, all else being equal?

  1. A decrease in average shareholders' equity Correct answer.
  2. An increase in operating expenses
  3. An increase in the effective tax rate
  4. A reduction in net profit after tax

Explanation

Return on equity equals net profit after tax divided by average shareholders' equity. A decrease in the denominator, with profit unchanged, raises the ratio, whereas higher taxes or expenses reduce profit and therefore lower the ratio.

Question 17Financial Accounting and Reporting

A company uses the allowance method for doubtful debts. What is the effect on the financial statements when an allowance of 200,000 tenge is first recognised?

  1. Assets decrease and profit decreases Correct answer.
  2. Assets decrease and profit is unchanged
  3. Liabilities increase and profit decreases
  4. Equity increases and assets are unchanged

Explanation

Recognising an allowance for doubtful debts reduces the carrying amount of receivables, an asset, and the corresponding impairment loss reduces profit. It does not create a liability or increase equity.

Question 18Financial Accounting and Reporting

Under IFRS 16, how does a lessee initially measure a right-of-use asset?

  1. At the total undiscounted lease payments over the lease term
  2. At the amount of the initial lease liability plus initial direct costs and prepayments Correct answer.
  3. At the fair value of the underlying asset on the commencement date
  4. At the residual value guaranteed by the lessee

Explanation

IAS 16-style measurement under IFRS 16 requires the right-of-use asset to be measured at the initial lease liability plus lease payments made at or before commencement, initial direct costs, and estimated restoration costs. It is not measured at fair value or at undiscounted payments.

Question 19Financial Accounting and Reporting

An entity recognises a deferred tax liability. Which of the following situations most likely gives rise to it?

  1. A permanent difference from non-deductible fines
  2. A deductible temporary difference from warranty provisions
  3. An accounting loss carried forward that can offset future taxable profit
  4. A taxable temporary difference arises because tax depreciation exceeds accounting depreciation Correct answer.

Explanation

A deferred tax liability arises from taxable temporary differences, where the carrying amount of an asset exceeds its tax base, typically because tax depreciation is faster than accounting depreciation. Deductible differences and tax losses give rise to deferred tax assets instead.

Question 20Financial Accounting and Reporting

A parent company owns 80% of a subsidiary. The subsidiary reports profit after tax of 10,000,000 tenge. How much is presented as non-controlling interest in the consolidated statement of profit or loss?

  1. 2,000,000 tenge Correct answer.
  2. 0 tenge
  3. 8,000,000 tenge
  4. 10,000,000 tenge

Explanation

Non-controlling interest is allocated its share of the subsidiary's profit, which is 20% of 10,000,000 tenge, equal to 2,000,000 tenge. The parent's 80% share is attributed to owners of the parent.

Question 21Financial Accounting and Reporting

In a consolidated statement of financial position, how is goodwill arising on acquisition of a subsidiary treated?

  1. Recognised as an intangible asset and tested annually for impairment Correct answer.
  2. Written off immediately against consolidated retained earnings
  3. Amortised over a maximum period of twenty years
  4. Recognised only to the extent of the parent's share of net assets

Explanation

IFRS 3 requires goodwill to be recognised as an intangible asset and not amortised; instead it is tested for impairment at least annually. The amount includes the non-controlling interest share under the full goodwill method.

Question 22Financial Accounting and Reporting

An entity has a defined benefit pension obligation with a present value of 50,000,000 tenge and plan assets with a fair value of 45,000,000 tenge. The net defined benefit liability of 5,000,000 tenge should be presented as which of the following?

  1. A current liability in full because it is due within one year
  2. An adjustment to retained earnings rather than a liability
  3. A non-current liability unless settlement is due within twelve months Correct answer.
  4. A contingent liability disclosed in the notes

Explanation

IAS 19 requires the net defined benefit liability to be recognised in the statement of financial position. It is classified as current only to the extent that settlement is expected within twelve months; otherwise it is non-current. It is a present obligation, not a contingent item.

Question 23Financial Accounting and Reporting

A company changes its accounting policy for inventory valuation from weighted average to FIFO, and the change is material. What is the required treatment under IAS 8?

  1. Recognise the cumulative effect in profit or loss for the current year
  2. Restate prior period comparatives and adjust opening retained earnings Correct answer.
  3. Apply the change prospectively from the current period
  4. Disclose the change without adjusting the financial statements

Explanation

IAS 8 requires a voluntary change in accounting policy to be applied retrospectively, restating comparative information and adjusting the opening balance of retained earnings. Prospective application is reserved for changes in accounting estimates.

Question 24Financial Accounting and Reporting

An entity issues a convertible bond with a face value of 100,000,000 tenge. The liability component is measured at 90,000,000 tenge. How is the remaining 10,000,000 tenge treated under IFRS?

  1. Recognised as an equity component within the compound instrument Correct answer.
  2. Recognised as a reduction of share premium
  3. Recognised as a deferred tax liability
  4. Recognised as an expense in the period of issue

Explanation

IAS 32 requires a compound financial instrument to be split into a liability component and an equity component. The residual after measuring the liability at the present value of contractual cash flows is recognised in equity, representing the conversion option.

Question 25Financial Accounting and Reporting

A company reports operating profit of 12,000,000 tenge, depreciation of 2,000,000 tenge, an increase in trade receivables of 1,500,000 tenge, and a decrease in trade payables of 500,000 tenge. What is the net cash generated from operating activities?

  1. 13,000,000 tenge
  2. 14,000,000 tenge
  3. 12,000,000 tenge Correct answer.
  4. 10,000,000 tenge

Explanation

Using the indirect method, add back depreciation of 2,000,000, deduct the increase in receivables of 1,500,000, and deduct the decrease in payables of 500,000: 12,000,000 + 2,000,000 − 1,500,000 − 500,000 = 12,000,000 tenge.

Question 26Financial Accounting and Reporting

Under the IASB Conceptual Framework, which qualitative characteristic is enhanced when information is comparable, verifiable, timely and understandable?

  1. Prudence
  2. Enhancing qualitative characteristics Correct answer.
  3. Relevance
  4. Faithful representation

Explanation

The Conceptual Framework identifies comparability, verifiability, timeliness and understandability as enhancing qualitative characteristics that supplement the two fundamental characteristics. They increase the usefulness of information that is already relevant and faithfully represented. Prudence is a component of neutrality within faithful representation, not an enhancing characteristic.

Question 27Financial Accounting and Reporting

An entity purchases equipment for 12,000,000 tenge on 1 January with an estimated residual value of 2,000,000 tenge and a useful life of five years, depreciated on a straight-line basis. What is the depreciation charge for the first year?

  1. 2,400,000 tenge
  2. 2,000,000 tenge Correct answer.
  3. 2,200,000 tenge
  4. 1,800,000 tenge

Explanation

Straight-line depreciation is calculated on the depreciable amount, which is cost less residual value: 12,000,000 minus 2,000,000 equals 10,000,000 tenge. Dividing by the five-year useful life gives 2,000,000 tenge per year. Residual value is never depreciated because the entity expects to recover it at the end of the asset's life.

Question 28Financial Accounting and Reporting

Which of the following costs is capitalised as part of the cost of property, plant and equipment under IAS 16?

  1. Training costs for staff operating the asset
  2. Costs of conducting business in a new location
  3. Administrative overheads not directly attributable to acquisition
  4. Initial delivery and handling costs Correct answer.

Explanation

IAS 16 includes in the cost of an item of property, plant and equipment its purchase price, directly attributable costs of bringing the asset to the location and condition for intended use, and initial estimates of dismantling costs. Delivery and handling are directly attributable costs of bringing the asset to its location. Training, relocation and general administration are excluded because they are not necessary to bring the asset to working condition.

Question 29Financial Accounting and Reporting

An entity's bank statement shows a balance of 8,500,000 tenge while its cash book shows 8,200,000 tenge. Outstanding cheques total 600,000 tenge and there is an unrecorded bank charge of 300,000 tenge. What is the correct cash book balance after the necessary adjustment?

  1. 8,200,000 tenge
  2. 7,900,000 tenge Correct answer.
  3. 8,500,000 tenge
  4. 7,600,000 tenge

Explanation

Items already recorded by the bank but not yet in the cash book must be adjusted in the cash book. The unrecorded bank charge of 300,000 tenge reduces the cash book balance to 7,900,000 tenge. Outstanding cheques are already recorded in the cash book and affect only the bank reconciliation, not the cash book balance.

Question 30Financial Accounting and Reporting

Under IFRS 15, an entity transfers control of a good to a customer on 1 December and grants a right of return valid for 60 days. At the reporting date of 31 December the entity cannot reliably estimate returns. How should revenue be recognised?

  1. Recognise full revenue because control has transferred
  2. Recognise revenue to the extent it is highly probable no reversal will occur Correct answer.
  3. Recognise revenue only when the return period expires
  4. Recognise no revenue and treat the transaction as a financing arrangement

Explanation

IFRS 15 requires variable consideration, including expected returns, to be constrained to the amount for which it is highly probable that no significant reversal will occur. If the entity cannot make a reliable estimate of returns, revenue is recognised only to the extent of that constrained amount. Recognising full revenue would ignore the variable consideration constraint.

Question 31Financial Accounting and Reporting

An entity issues 1,000 ordinary shares with a nominal value of 1,000 tenge each at a price of 1,500 tenge per share. How should the excess over nominal value be recorded?

  1. As a reduction of retained earnings
  2. As a liability payable to shareholders
  3. As share premium within equity Correct answer.
  4. As a gain in profit or loss

Explanation

The nominal value of the shares issued, 1,000,000 tenge, is credited to share capital, and the excess of 500,000 tenge is credited to share premium, which is a component of equity. IAS 32 treats amounts received in excess of nominal value as equity contributions, not income. No gain arises on issuing an entity's own shares.

Question 32Financial Accounting and Reporting

Under IAS 7, how should interest paid by a non-financial entity normally be classified in the statement of cash flows?

  1. Only as an operating activity
  2. As an operating or financing activity, applied consistently Correct answer.
  3. Only as a financing activity
  4. As an investing activity in all cases

Explanation

IAS 7 permits interest paid to be classified as either an operating cash flow or a financing cash flow, provided the choice is applied consistently from period to period. For a financial institution, interest paid is normally operating. Classifying it as investing is not an option permitted by the standard.

Question 33Financial Accounting and Reporting

An entity has taxable temporary differences of 5,000,000 tenge and deductible temporary differences of 2,000,000 tenge. The tax rate is 20% and there is no other information. What net deferred tax position should be recognised?

  1. Deferred tax asset of 400,000 tenge
  2. Deferred tax asset of 600,000 tenge
  3. Deferred tax liability of 1,000,000 tenge
  4. Deferred tax liability of 600,000 tenge Correct answer.

Explanation

Taxable temporary differences of 5,000,000 tenge create a deferred tax liability of 1,000,000 tenge at 20%, and deductible temporary differences of 2,000,000 tenge create a deferred tax asset of 400,000 tenge. Offsetting the two gives a net deferred tax liability of 600,000 tenge, assuming the offset criteria in IAS 12 are met.

Question 34Financial Accounting and Reporting

A machine with a carrying amount of 4,000,000 tenge is sold for 4,600,000 tenge. How is the resulting 600,000 tenge presented in the financial statements?

  1. As a gain on disposal within profit or loss, with the cash proceeds as an investing inflow Correct answer.
  2. As revenue in profit or loss
  3. As other comprehensive income
  4. As a direct adjustment to retained earnings

Explanation

The difference between proceeds and carrying amount on disposal of property, plant and equipment is recognised as a gain or loss in profit or loss. The cash received is presented as an investing activity in the statement of cash flows. Disposal gains are not revenue because they do not arise from ordinary sales transactions with customers.

Question 35Financial Accounting and Reporting

An entity has current assets of 15,000,000 tenge including inventory of 6,000,000 tenge, and current liabilities of 9,000,000 tenge. What is the quick ratio?

  1. 1.67
  2. 1.50
  3. 0.67
  4. 1.00 Correct answer.

Explanation

The quick ratio excludes inventory from current assets: 15,000,000 minus 6,000,000 equals 9,000,000 tenge. Dividing by current liabilities of 9,000,000 tenge gives 1.00. The current ratio, which includes inventory, would be 1.67.

Question 36Financial Accounting and Reporting

Under IAS 36, when should an entity test goodwill acquired in a business combination for impairment?

  1. Annually, and whenever there is an indication of impairment Correct answer.
  2. Only when there is an indication of impairment
  3. Only at the date of acquisition
  4. Every five years regardless of indicators

Explanation

IAS 36 requires goodwill and intangible assets with indefinite useful lives to be tested for impairment annually, irrespective of whether indicators exist. An additional test is required whenever events or changes in circumstances indicate possible impairment. Assets with finite lives are tested only when indicators are present.

Question 37Financial Accounting and Reporting

An entity has an asset with a carrying amount of 10,000,000 tenge and a recoverable amount of 8,500,000 tenge. What is the impairment loss and how is it recognised?

  1. 1,500,000 tenge recognised in other comprehensive income
  2. 8,500,000 tenge recognised in profit or loss
  3. 1,500,000 tenge recognised in profit or loss Correct answer.
  4. No loss because the asset is still in use

Explanation

An impairment loss arises when the carrying amount exceeds the recoverable amount: 10,000,000 minus 8,500,000 equals 1,500,000 tenge. Under IAS 36 the loss is recognised immediately in profit or loss unless the asset is carried under the revaluation model, in which case it may be treated as a revaluation decrease. The recoverable amount itself is not written off.

Question 38Financial Accounting and Reporting

An entity enters into a lease with annual payments of 3,000,000 tenge payable in arrears for five years, and the incremental borrowing rate is 10%. The present value of an annuity of 1 for five years at 10% is 3.7908. What is the initial lease liability?

  1. 11,372,400 tenge Correct answer.
  2. 15,000,000 tenge
  3. 13,790,800 tenge
  4. 3,000,000 tenge

Explanation

Under IFRS 16 the lease liability is measured at the present value of the lease payments not paid at the commencement date. Multiplying 3,000,000 tenge by the annuity factor of 3.7908 gives 11,372,400 tenge. Undiscounted payments are not used because the liability reflects the time value of money.

Question 39Financial Accounting and Reporting

Which of the following best describes the treatment of a finance lease in the books of the lessor under IFRS 16?

  1. The lessor recognises the full lease payments as revenue at commencement
  2. The lessor recognises a net investment in the lease and finance income over the term Correct answer.
  3. The lessor continues to recognise the underlying asset and records lease income
  4. The lessor recognises no asset because legal title remains with the lessor

Explanation

A lessor classifies a lease as a finance lease when it transfers substantially all the risks and rewards incidental to ownership. The lessor derecognises the underlying asset and recognises a net investment in the lease, with finance income recognised over the lease term using the interest rate implicit in the lease. This reflects the financing nature of the arrangement.

Question 40Financial Accounting and Reporting

An entity has profit before tax of 20,000,000 tenge and a tax rate of 20%. Non-deductible expenses are 2,000,000 tenge and there is tax-exempt income of 1,000,000 tenge. What is the current tax expense?

  1. 4,400,000 tenge
  2. 4,000,000 tenge
  3. 3,800,000 tenge
  4. 4,200,000 tenge Correct answer.

Explanation

Taxable profit is accounting profit adjusted for permanent differences: 20,000,000 plus 2,000,000 minus 1,000,000 equals 21,000,000 tenge. Applying the 20% rate gives current tax of 4,200,000 tenge. Non-deductible expenses increase taxable profit while exempt income reduces it.

Question 41Financial Accounting and Reporting

Which of the following is a requirement for recognising a provision under IAS 37?

  1. A contingent asset that is probable
  2. A possible obligation whose existence will be confirmed only by uncertain future events
  3. A future obligation expected to arise from a planned future event
  4. A present obligation arising from a past event that can be measured reliably Correct answer.

Explanation

IAS 37 requires a present obligation arising from a past event, a probable outflow of resources embodying economic benefits, and a reliable estimate of the amount. All three conditions must be met. Future events and possible obligations do not meet the definition of a provision.

Question 42Financial Accounting and Reporting

An entity has a defined benefit obligation of 40,000,000 tenge and plan assets with a fair value of 35,000,000 tenge. What is the net defined benefit liability recognised in the statement of financial position?

  1. 75,000,000 tenge
  2. 5,000,000 tenge Correct answer.
  3. 35,000,000 tenge
  4. 40,000,000 tenge

Explanation

IAS 19 requires the net defined benefit liability to be measured as the present value of the defined benefit obligation less the fair value of plan assets. Here 40,000,000 minus 35,000,000 equals 5,000,000 tenge. The obligation and plan assets are presented net on the statement of financial position.

Question 43Financial Accounting and Reporting

A parent owns 75% of a subsidiary. During the year the parent sells goods to the subsidiary at a profit of 2,000,000 tenge, and half of those goods remain in the subsidiary's inventory at year end. What unrealised profit adjustment is made in the consolidated financial statements?

  1. Deduct 1,000,000 tenge from consolidated profit Correct answer.
  2. Deduct 2,000,000 tenge from consolidated profit
  3. No adjustment is required
  4. Deduct 500,000 tenge from consolidated profit

Explanation

Profits on intragroup sales are unrealised to the extent the goods remain in inventory at the reporting date. Since half of the goods remain, half of the profit, 1,000,000 tenge, is eliminated against consolidated profit and inventory. The remaining half is realised through sale to external parties and is not eliminated.

Question 44Financial Accounting and Reporting

Under IFRS 3, how is non-controlling interest measured at the acquisition date when the fair value of the subsidiary's identifiable net assets is 30,000,000 tenge and the parent acquires 80%?

  1. At the NCI's proportionate share of identifiable net assets, or at fair value, as an accounting policy choice Correct answer.
  2. Always at the NCI's proportionate share of identifiable net assets
  3. Always at the fair value of the NCI
  4. At the parent's cost of investment

Explanation

IFRS 3 allows an entity to measure non-controlling interest at acquisition either at fair value or at the NCI's proportionate share of the acquiree's identifiable net assets. The choice is made separately for each business combination. This affects the amount of goodwill recognised.

Question 45Financial Accounting and Reporting

An entity has 1,000,000 tenge of inventory at cost, of which 200,000 tenge is obsolete and can be sold for only 50,000 tenge. The remaining inventory has a net realisable value of 900,000 tenge. What is the inventory carrying amount under IAS 2?

  1. 850,000 tenge
  2. 950,000 tenge Correct answer.
  3. 1,100,000 tenge
  4. 1,000,000 tenge

Explanation

IAS 2 requires inventory to be measured at the lower of cost and net realisable value, applied item by item. The obsolete inventory is written down to 50,000 tenge and the remaining inventory is carried at its NRV of 900,000 tenge, giving 950,000 tenge. The write-down of 150,000 tenge is recognised as an expense.

Question 46Financial Accounting and Reporting

An entity has a revalued building with a carrying amount of 12,000,000 tenge and a revaluation surplus of 3,000,000 tenge in equity. The building's fair value falls to 8,000,000 tenge. How should the decrease be treated?

  1. Recognise the full 4,000,000 tenge decrease in profit or loss
  2. Recognise the full 4,000,000 tenge decrease against the revaluation surplus
  3. Recognise 3,000,000 tenge against the revaluation surplus and 1,000,000 tenge in profit or loss Correct answer.
  4. Recognise 3,000,000 tenge in profit or loss and 1,000,000 tenge against the revaluation surplus

Explanation

Under IAS 16, a decrease in the carrying amount of a revalued asset is recognised in other comprehensive income to the extent of any credit balance in the revaluation surplus for that asset. The excess beyond the surplus is recognised in profit or loss. Here 3,000,000 tenge is charged against the surplus and the remaining 1,000,000 tenge is expensed.

Question 47Financial Accounting and Reporting

Which of the following events occurring after the reporting date is normally an adjusting event under IAS 10?

  1. A fire destroying a warehouse after the reporting date
  2. A customer bankruptcy confirming a receivable was impaired at the reporting date Correct answer.
  3. A decline in market value of investments after the reporting date
  4. A major business combination announced after the reporting date

Explanation

IAS 10 requires adjustment for events that provide evidence of conditions that existed at the reporting date. A customer bankruptcy that confirms a receivable was already impaired at year end is an adjusting event. Events that arose after the reporting date, such as a fire or a new business combination, are non-adjusting.

Question 48Financial Accounting and Reporting

An entity has revenue of 50,000,000 tenge, cost of sales of 30,000,000 tenge and operating expenses of 12,000,000 tenge. What is the gross profit margin?

  1. 40% Correct answer.
  2. 16%
  3. 60%
  4. 20%

Explanation

Gross profit is revenue less cost of sales: 50,000,000 minus 30,000,000 equals 20,000,000 tenge. Dividing gross profit by revenue gives a gross profit margin of 40%. Operating expenses are deducted after gross profit and do not affect this ratio.

Question 49Financial Accounting and Reporting

Under IFRS 15, how should an entity allocate a transaction price that includes a discount when a contract contains multiple performance obligations?

  1. Allocate the discount proportionally to all performance obligations
  2. Defer the discount and recognise it when the contract is completed
  3. Allocate the discount only to the performance obligations to which it relates, if observable evidence supports this Correct answer.
  4. Allocate the discount entirely to the largest performance obligation

Explanation

IFRS 15 requires the transaction price to be allocated to performance obligations on the basis of relative stand-alone selling prices. A discount is normally allocated proportionally, but it may be allocated entirely to specific performance obligations when the criteria for observable evidence are met. The discount is not arbitrarily assigned to one obligation.

Question 50Financial Accounting and Reporting

An entity's trade receivables are 8,000,000 tenge and the allowance for doubtful debts is 400,000 tenge. A customer owing 300,000 tenge is declared bankrupt and the debt is written off against the allowance. What is the net carrying amount of receivables after the write-off?

  1. 7,700,000 tenge
  2. 7,600,000 tenge
  3. 8,000,000 tenge
  4. 7,300,000 tenge Correct answer.

Explanation

Writing off a debt against an existing allowance reduces both gross receivables and the allowance by 300,000 tenge. Gross receivables become 7,700,000 tenge and the allowance becomes 100,000 tenge, giving a net carrying amount of 7,600,000 tenge. The write-off does not affect profit or loss because the allowance was already recognised.