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Wiley lFRS: Practicallmplementation Guide and Workbook
MULTIPLE·CHOICE QUESTIONS
1.
How should the income from discontinued opera–
tions be presented in the income statement?
(a) The entity should disclose a single amount
on the face of the income statement with
analysis in the notes or a section of the in–
come statement separate from continuing
operations .
(b) The amounts from discontinued operations
should be broken down over each category
of revenue and expense.
(c) Discontinued operation s should be shown as
a movement on retained earning s.
(d) Discontinued operation s should be shown as
a line item after gross profit with the taxa–
tion being shown as part of income tax ex–
pense.
Answer: (a)
2.
How should the assets and liabilities of a disposal
group classified as held for sale be shown in the bal–
ance sheet?
(a) The assets and liabilities should be offset
and presented as a single amount.
(b) The assets of the disposal group should be
shown separately from other assets in the
balance sheet, and the liabilities of the dis–
posal group should be shown separately
from other liabilities in the balance sheet.
(c) The assets and liabilities should be presented
as a single amount and as a deduction from
equity.
(d) There should be no separate disclosure of
assets and liabilities that form part of a dis–
posal group.
Answer: (b)
3. An entity is planning to dispose of a collection of
assets. The entity designates these assets as a disposal
group . The carrying amount of these assets immedi–
ately before classification as held for sale was $20
million. Upon being classified as held for sale, the
assets were revalued to $18 million. The entity feels
that It would cost $1 million to sell the disposal
group. What would be the carrying amount of the
disposal group in the entity's accounts after its classi–
fication as held for sale?
(a) $20 million.
(b) $18 million.
(c) $17 million .
(d) $19 million .
Answer: (c)
4. An entity is planning to dispose of a collection of
assets . The entity designates these assets as a disposal
group, and the carrying amount of these assets imme–
diately before classification as held for sale was $20
million. Upon being classified as held for sale, the
assets were revalued to $18 million . The entity feels
that the fair value less cost to sell would be $17 mil–
lion. How would the reduction in the value of the
assets on classification as held for sale be treated in
the financial statements ?
(a) The entity recognizes a loss of $2 million
immediately before classification as held for
sale and then recognizes an impairment loss
of $1 million.
(b) The entity recognizes an impairment loss of
$3 million .
(c) The entity recognize s an impairment loss of
$2 million.
(d) The entity recognizes a loss of $3 million
immediately before classifying the disposal
group as held for sale.
Answer: (a)
5. In order for a noncurrent asset to be classified as
held for sale, the sale must be highly probable .
"Highly probable " means that
(a) The future sale is likely to occur.
(b) The future sale is more likely than not to oc–
cur.
(c) The sale is certain .
(d) The probability is higher than more likely
than not.
Answer: (d)
6. An entity acquires a subsidiary exclusively with
a view to selling it. The subsidiary meets the criteria
to be classified as held for sale. At the balance sheet
date, the subsidiary has not yet been sold, and six
months have passed since its acquisition. How will
the subsidiary be valued in the balance sheet at the
date of the first financial statements after acquisition?
(a) At fair value .
(b) At the lower of its cost and fair value less
cost to sell.
(c) At carrying value.
(d) In accordance with applicable IFRS .
Answer: (b)
7. Any gain on a subsequent increase in the fair
value less cost to sell of a noncurrent asset classified
as held for sale should be treated as follows:
(a) The gain should be recognized in full.
(b) The gain should not be recognized.
(c) The gain should be recognized but not in ex–
cess of the cumulative impairment loss.
(d) The gain should be recognized but only in
retained earnings.
Answer: (c)
8. An entity has an asset that was classified as held
for sale. However, the criteria for it to remain as held
for sale no longer apply . The entity should therefore
(a) Leave the noncurrent asset in the financial
statements at its current carrying value.
(b) Remea sure the noncurrent asset at fair value.
(c) Measure the noncurrent asset at the lower of
its carrying amount before the asset was
classified as held for sale (as adjusted for
subsequent depreciation, amortization, or
revaluations) and its recoverable amount at
the date of the decision not to sell.