36-The accounting concept that is principaily used to classity leases inta opera

Question

36-The accounting concept that is principaily used to classity leases inta operasing nd finanice a) Substance over form b) Prudence c) Neutrality d) Completeness 37- Which of the following accounting methods must be applied to all busines Combinations? a) Pooling of interest method b) Equity method c) Proportionate consolidation d) Purchase method under 1FRS 3.Busiess 38.Aowns30%of voting nterests n would have a 60% voting interest in Z. andownsconvertible det issued by Z such that, if A chose to convento, How should A account for its investment in a a) Consolidate b) Equity method c) Whatever policy A has adopted for its other associates d) Investment held at fair value 39- Which of the following information is not specifically a required disclooure o IAST(Presvemtation of Financnal Statements)? Name of the reporting entity or other means of identification, and any change in the information from the previous year b) Names of major/significant shareholders of the entity c) Level of rounding used in presenting the financial statements d) Whether the financial statements cover the individual entity or a group of entities

Explanation / Answer

36. Option A. Substance over form is the accounting concept that is principally used to classify leases into operating and finance. As per Substance over form accounting concept the company needs to accounts a transaction and events based on the economic substance rather than just taking their legal form in order to present a true and fair view of the affairs of the entity

37. Option D. Purchase method must be applied to all business combinations under IFRS 3. Under Prchase method the acquirer accounts asets and liabilities purchased from the acquired company at Fair values which provided true and fair view of affairs of entity thus Purchase method holds prodominent position in IFRS - 3 and in accounting of business compbinations

38. Option A. Consolidate Method

The consolidation method is an investment accounting method which is used for consolidation purposes when the company owns majority ownership in the other businesses.Majority menas holding at least 50.1% of subsidiary shares or rights. as A already holds 30% voting interest and if A converts the convertible debt it will get 60% stake in B which is higher than 50%. Thus Consolidate method should be used.

39. Option B. Names of the major/significant shareholders of the entity. Other options are must be disclosed as they are specifically mentioned in IAS 1 but Names of Major Shareholders of the entity is not specifically made for disclosure in IAS 1

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