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Questions and Answers
What is the primary purpose of recognizing assets in IFRS?
What is the primary purpose of recognizing assets in IFRS?
At what value should assets be recognized in the opening statement of financial position, according to IFRS?
At what value should assets be recognized in the opening statement of financial position, according to IFRS?
What type of assets are expensed as incurred, rather than being recognized at their fair value?
What type of assets are expensed as incurred, rather than being recognized at their fair value?
What is the definition of fair value in IFRS?
What is the definition of fair value in IFRS?
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What is the exception to the retrospective application of IFRS for oil and gas assets?
What is the exception to the retrospective application of IFRS for oil and gas assets?
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What type of assets are not permitted to be recognized in IFRS?
What type of assets are not permitted to be recognized in IFRS?
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What is the primary principle for recognizing assets in IFRS?
What is the primary principle for recognizing assets in IFRS?
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Which of the following is a requirement for recognizing assets in IFRS?
Which of the following is a requirement for recognizing assets in IFRS?
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What is the purpose of IFRS 1's optional exemptions?
What is the purpose of IFRS 1's optional exemptions?
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What is the primary reason for assessing whether an arrangement contains a lease?
What is the primary reason for assessing whether an arrangement contains a lease?
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What is the guidance provided by IFRS on the transfer of assets not an output in the form of revenue?
What is the guidance provided by IFRS on the transfer of assets not an output in the form of revenue?
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What is the guidance provided by IFRS on a customer's accounting for implementation costs related to cloud computing arrangements?
What is the guidance provided by IFRS on a customer's accounting for implementation costs related to cloud computing arrangements?
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Study Notes
Assets Recognition in IFRS
International Financial Reporting Standards (IFRS) are a set of accounting standards that determine the treatment of various types of transactions. One of the key aspects of IFRS is the recognition of assets, which refers to the process of recording items that have economic value and are expected to benefit an organization. This article focuses on the recognition of assets in IFRS, highlighting the rules and principles governing the process.
Recognition of Assets
IFRS requires that assets be recognized in the opening statement of financial position at their fair value at the date of acquisition, except for certain types of assets like development costs, which are expensed as incurred. Fair value is the amount at which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm's length transaction.
Recognition of Contingent Assets
IFRS does not permit the recognition of contingent assets. Contingent assets are potential assets that may be realized at some point in the future, depending on the occurrence of certain events.
Full-Cost Oil and Gas Assets
Entities using the full cost method may elect not to apply the retrospective application of IFRS for oil and gas assets. In this case, the carrying amount under the old GAAP is used as the deemed cost of the oil and gas assets.
Determining Whether an Arrangement Contains a Lease
When determining whether an arrangement contains a lease, IFRS 1 requires an assessment of whether the arrangement is a lease based on the definition of a lease in IAS 17.
Optional Exemptions from the Basic Measurement Principle
IFRS 1 provides optional exemptions from the general restatement and measurement principles, allowing entities to choose not to apply certain requirements in specific situations.
Transfer of Assets Not an Output
IFRS provides guidance on the transfer of assets that are not an output in the form of revenue under a service concession arrangement.
Implementation Costs in Cloud Computing Arrangements
IFRS does not contain explicit guidance on a customer's accounting for implementation costs related to cloud computing arrangements.
In conclusion, IFRS sets out a framework for the recognition of assets, which includes the fair value principle, the prohibition of contingent assets, and optional exemptions for specific types of assets. Entities must comply with these rules when preparing their financial statements under IFRS.
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Description
This quiz covers the rules and principles governing the recognition of assets in International Financial Reporting Standards (IFRS), including fair value, contingent assets, and optional exemptions for specific types of assets. Learn how to apply IFRS in asset recognition and prepare financial statements accordingly. Understand the framework for asset recognition in IFRS and its applications in various scenarios.
