Which of the Following Income and Expense Items Is NOT

question 7

Multiple Choice

Which of the following income and expense items is NOT recorded initially directly in equity?

• A) The impairment of goodwill in accordance with IAS 36 Impairment of Assets, where the entity is confident that the factors giving rise to the impairment will reverse in a future period.
• B) An increase in the fair values of land & buildings, where the revaluation method is used to account for land & buildings in accordance with IAS 16 Property, Plant and Equipment.
• C) Foreign currency translation adjustments arising on the translation of a foreign operations financial statements from their functional currency in accordance with IAS 21 The Effects of Changes in Foreign Exchange Rates.
• D) None of the above.

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Definitions:

Decision-making Authority

The power or right to make decisions regarding policies, procedures, or spending in a business or organization.

Agent

A party primarily engaged to act on behalf of and for the benefit of another party or parties (the principal(s)) which therefore does not control the investee when it exercises its decision-making authority.

Variable Returns

Returns from an investment that fluctuate over time due to market conditions or other factors.

Economies of Scale

Cost advantages that entities experience as their operational size or volume increases, leading to reduced costs per unit of output.