Exam 4: Presentation of Financial Statements

IAS 1 requires certain line items in the Statement of Financial Position. However, there may be circumstances in which a company will augment the presentation to help users understand the entity's financial position. Which of the following is true about management's considerations to present additional items?

An entity may choose to present a net income instead of total comprehensive income.

Consider the following scenario: You are in a position of management at Varazdin Wireless, an international telecommunications provider. In preparing financial statements, what qualitative and quantitative factors would you use in determining whether the entity is a going concern? Is the company a going concern? Background: Varazdin Wireless has suffered five years of consecutive losses as a result of shifting consumer preferences. Last week, the CEO issued a press release highlighting that the company has a new proprietary mobile smartphone in the final stages of development. The company itself does not have requisite capital to finance the production of the device, and the company is already behind on its repayments to creditors. In an interview on a business television network, the company's CFO celebrated the anticipated next chapter of Varazin's business, citing the unparalleled capability of its new phone. The company's consultants believe that manufacturing the proprietary device will be a profitable line of business as it has tested exceptionally well with focus groups. Production has not begun because the company believes it has exhausted all available avenues for financing. The CEO's announcement and CFO's interview come on the heels of a blistering article in the Wall Street Diary highlighting that the international conglomerate has a rapidly decreasing consumer base. This report is consistent with internal projections forecasting that current consumer trends will lead to the company's insolvency and forced liquidation before the end of next year.

What is the Statement of Changes in Equity? Describe the relationship between it and the PL and OCI statements. What are the three disclosures required as a part of the statement?

Offsetting (presentation of a net amount):

The function of an expense method:

Explain the statement of compliance with IFRS. Where will it be found? Why is it important?

When an entity is no longer a going concern, most fixed assets would be measured at:

Which of the following would not be considered a going concern?

When a grouping of items is material, an entity should present them separately from other classes of items.

Entity A is an aged cheese producer. The length of the normal operating cycles is 30 months. Should the cheese inventory be considered current?

Under IFRS, an entity is permitted to title its statement of financial position as a balance sheet.

Which of the following is true about an entity's choices for presenting comprehensive income?

IFRS requires at least how many comparative year(s) of the amounts in the financial statements?

Entity A has a history of profitable and successful operations, as well as little or no business and financial risks. Is Entity A considered a going concern?

To achieve fair presentation consistent with principles set out in the Conceptual Framework, an entity may decide to choose not to comply with a particular IFRS:

Because investors and creditors care only about the overall profitability of a company, they do not consider whether assets and liabilities are current or non-current.

Accrual accounting depicts the effects of transactions on an entity's economic resources and claims when the resulting cash receipts and payments occur.

"Accumulated OCI" under US GAAP is the equivalent to "Other Reserves" under IFRS.

Which of the following best describes income as defined by IAS 1?