IAS 1 – Page 2 – NBC Institute

CR – May 2023 – L3 – Q5b – Presentation of Financial Statements (IAS 1)

Discuss the importance of optimal disclosure and barriers to reducing excessive disclosures in annual reports.

Question

There have been various arguments globally about the extent of disclosures in the annual reports of companies. Some argue that annual reports should include more extensive disclosures, while others believe that efforts should focus on reducing the quantity of information to avoid overwhelming users of financial statements.

The latter perspective suggests that excessive disclosure is burdensome and may obscure key information. Conversely, some argue that there is no such thing as providing too much useful information to users of financial statements.

Required:

Discuss why it is important to ensure that an optimal level of disclosure is made in annual reports. Also, identify and explain the barriers that may exist when trying to reduce excessive disclosure of information in an annual report. (7 Marks)

Answer

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Tags: Annual Reports, Barriers to Disclosure Reduction, Disclosures, Financial Reporting, IAS 1
Level: Level 3

Topic: Presentation of Financial Statements (IAS 1)

CR – May 2023 – L3 – Q1b – Financial Instruments (IFRS 9, IAS 32, IAS 39)

Discuss IFRS 9 rules on derecognition of financial assets, apply these rules to factoring, and analyze ethical implications of falsifying a land sale.

Question

The directors of Omi PLC reviewed the group statement of financial position as of November 30, 2020. Concerned about meeting future loan agreements, they proposed the following actions to improve liquidity:

Factoring of Receivables:
- Factoring N400 million of receivables.
- 80% cash is received immediately (N320 million), and the factoring company charges N32 million.
- The balance will be paid 30 days later.
Adjusting Financial Statements:
- The executive director suggested falsifying financial statements to show that land located in Ikoyi was sold before year-end to improve liquidity.

Required:

Discuss the rules of IFRS 9 – Financial Instrument on derecognition of financial assets.
Apply these rules to factoring in part (1).
Discuss the ethical implications of falsifying the sale of land in part (2).

Answer

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Tags: Derecognition of Financial Assets, Ethical Issues, Factoring, Financial Statements Manipulation, IAS 1
Level: Level 3

Topic: Financial Instruments (IAS 32, IFRS 9)

FR – Nov 2023 – L2 – Q7b – Presentation of Financial Statements (IAS 1)

Lists minimum line items for the statement of financial position and changes in equity as per IAS 1

Question

IAS 1- Presentation of Financial Statements provides a list of line items that, as a minimum, must be shown on the face of the statement of financial position.

Required:

i. Give FIVE examples of minimum line items to be shown on the face of the statement of financial position. (5 Marks)
ii. State FIVE items that should be accounted for in the statement of changes in equity. (5 Marks)

Answer

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Tags: Changes in Equity, Equity Components, IAS 1, Minimum Line Items, Statement of Financial Position
Level: Level 2

Topic: Presentation of Financial Statements (IAS 1)

FR – Nov 2014 – L2 – Q4a – Presentation of Financial Statements

Explain the essential characteristics of assets and features of liabilities per IAS 1.

Question

The International Financial Reporting Standards (IFRS) through the International Accounting Standards Board (IASB) set out the definition and essential characteristics of assets and liabilities in the presentation of financial statements, which users of the statements are likely to rely on when making major economic decisions.

Required:

Identify the essential characteristics of assets and comment on the features of liabilities in accordance with provisions of IAS 1 on the presentation of financial statements. (10 Marks)

Answer

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Tags: Assets, Financial Statements, IAS 1, IFRS, Liabilities
Level: Level 2

Topic: Presentation of Financial Statements (IAS 1)
Series: NOV 2014

FR – Nov 2019 – L2 – Q1b – Presentation of Financial Statements (IAS 1)

Prepare financial statements for Uchena Nigeria Plc, including profit or loss, changes in equity, and financial position.

Question

The Chief Accountant of Uchena Nigeria plc has just forwarded the trial balance of the company to you for review before the preparation of draft financial statements for the year ended December 31, 2018.

The trial balance is as follows:

Description	Debit (N’m)	Credit (N’m)
Ordinary share capital		43,200
Revenue		125,280
Staff cost	18,720
Leasehold building	21,600
Patent rights	4,320
Work-in-progress (Jan 1, 2018)	9,000
Accum. Depreciation on building (Jan 1, 2018)		4,320
Inventories of finished goods (Jan 1, 2018)	11,160
Consultancy fee	3,168
Directors’ salaries	25,920
Computer at cost (Hardware)	3,600
Accum. Depreciation on computer (Jan 1, 2018)		1,440
Retained earnings (Jan 1, 2018)		8,712
Dividend paid	9,000
Cash and bank	31,680
Trade receivables	30,240
Trade payables		6,624
Sundry expenses	21,168
Totals	189,576	189,576

Additional information:

On January 1, 2018, buildings were revalued to N25,920 million. This has not been reflected in the accounts.
Computer (hardware) is depreciated over five years. Buildings are now to be depreciated over 30 years.
The patent rights relate to a computer software with a 3-year life span.
An allowance for bad debts of 5% is to be created.
Closing inventories of finished goods are valued at N12,960 million. Work-in-progress has increased to N10,080 million.
There is an estimated liability for current tax of N8,640 million, which has not been recognized.

Required:

Prepare a draft statement of profit or loss (analyzing expenses by nature) for the year ended December 31, 2018. (6 Marks)
Prepare a statement of changes in equity for the year ended December 31, 2018. (4 Marks)
Prepare a statement of financial position as at December 31, 2018. (6 Marks)

Answer

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Tags: Financial Statements, IAS 1, Profit or Loss, Revaluation, Statement of Changes in Equity, Statement of Financial Position
Level: Level 2

Topic: Presentation of Financial Statements (IAS 1)
Series: NOV 2019

FR – Nov 2020 – L2 – Q4 – Presentation of Financial Statements (IAS 1)

Prepare the Statement of Profit or Loss and Other Comprehensive Income for Gbenga Nigeria Plc based on provided trial balance.

Question

Gbenga Nigeria Plc trial balance as at December 31, 2019 is shown below:

Item	N’000	N’000
Revenue		2,290,125
Administrative expenses	237,150
Selling and distribution expenses	175,200
Legal and professional expenses	81,150
Allowance for receivables		8,625
Inventories – finished goods – 31/12/18	276,750
Work-in-progress – 31/12/18	49,125
Inventories – raw materials at cost – 31/12/18	162,600
Purchases – raw materials	1,125,900
Carriage inwards – raw materials	15,750
Manufacturing wages	375,000
Manufacturing overheads	187,500
Authorised and issued 900,000 ordinary shares of 50 kobo each fully paid		450,000
150,000 8.4% cumulative preference shares of N1 each fully paid		150,000
Revaluation surplus		65,000
Share premium		150,000
General reserve		85,000
Retained earnings – 31/12/18		425,250
Patents and trademarks	323,250
Motor vehicle at cost	112,500
Freehold property at cost	375,000
Leasehold property at cost	112,500
Plant and equipment at cost	225,000
Furniture and fittings at cost	75,000
Amortisation of leasehold property – 31/12/18		22,500
Accumulated depreciation @ 31/12/2018:
– Plant and equipment		102,750
– Furniture and fittings		23,625
– Motor vehicles		37,500
10% loan notes		150,000
Trade payables		146,250
Trade receivables	266,445
Bank overdraft		76,875
Cash	7,680
	4,183,500	4,183,500

Additional information:
(i) A gain of N20,000 made on the revaluation of old freehold property during the year is yet to be accounted for.
(ii) Inventories at December 31, 2019 were:

Raw materials: N168,900
Finished goods: N413,025
Work-in-progress: N56,700

(iii) Legal and professional expenses include solicitor’s fees for purchase of new freehold land during the year of N7,500.
(iv) Provision is to be made for full year’s interest on the loan notes.
(v) The leasehold land and buildings are held on a 50-year lease, with 40 years unexpired life left as at the end of December 31, 2018.
(vi) Depreciation for the year is to be charged as follows:

Plant and equipment 8% on cost – charged to production
Furniture and fittings 10% on cost – charged to administration
Motor vehicles 20% on carrying amount – charged 25% to administration and 75% to selling and distribution.

(vii) Income tax on the profit for the year is estimated at N68,900 and is due for payment on February 28, 2020.

Required:
Prepare the statement of profit or loss and other comprehensive income for the year ended December 31, 2019.

Answer

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Tags: Depreciation, Expenses, IAS 1, OCI, Profit or Loss, Revenue
Level: Level 2

Topic: Presentation of Financial Statements (IAS 1)
Series: NOV 2020

FA – Nov 2020 – L1 – SB – Q2 -Accounting Concepts (e.g., Going Concern, Accruals, Materiality)

Explain accounting concepts, provide examples, and list users of financial statements.

Question

a. Explain the term ‘accounting concepts’. (2 Marks)

b. With particular reference to the accounting treatments, explain the following accounting concepts:
i. Entity (2 Marks)
ii. Going concern (2 Marks)
iii. Accrual (2 Marks)
iv. Materiality and aggregation (2 Marks)
v. Consistency (2 Marks)

c. In accordance with IAS 1 – Presentation of Financial Statements, highlight six qualitative characteristics of general-purpose financial statements. (4 Marks)

d. Financial statements provide information to users, and each user’s information requirement is not always the same.

Required:
Using the table below and the example provided, list four users of financial statements and their information needs.

S/N	Users	Information Needs
1	Employees	Wage negotiation and determination of job security
2
3
4

(Total: 20 Marks)

Answer

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Tags: Accounting Concepts, Financial Statements, IAS 1, Materiality, Users of financial statements
Level: Level 1

Topic: Accounting Concepts
Series: NOV 2020

FA – Nov 2020 – L1 – SA – Q13 – Elements of Financial Statements

Identifies a component that is not part of the financial statements as defined by IAS 1.

Question

Which of the following is NOT a component of financial statements under IAS 1?
A. Statement of financial position
B. Statement of profit or loss and other comprehensive income
C. Statement of equity
D. Statement of changes in equity
E. Statement of cash flows

Answer

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Tags: Financial Statements, IAS 1, Statement of Financial Position
Level: Level 1

Topic: Elements of Financial Statements
Series: NOV 2020

FA – Nov 2021 – L1 – SA – Q10 – Financial Statement

This question tests the knowledge of the components of financial statements as per IAS 1.

Question

In accordance with IAS 1-Presentation of Financial Statements, which of the following is NOT a component of financial statements?
A. Statement of financial position
B. Statement of profit or loss and other comprehensive income
C. Statement of changes in equity
D. Statement of affairs
E. Statement of cashflows

Answer

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Tags: Financial Statements, IAS 1, Multiple Choice
Level: Level 1

FA – May 2022 – L1 – SB – Q6b – Elements of Financial Statements

Define an asset, explain the conditions for current assets, and provide examples of current and non-current assets.

Question

An important requirement of IAS 1 with regard to the financial statements is that current and non-current assets should be separately disclosed.

i. Define the term “asset.” (2 Marks)
ii. What are the conditions to be satisfied for an asset to be termed a current asset? (6 Marks)
iii. State TWO examples each of current and non-current assets. (2 Marks)

Answer

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Tags: Current Assets, Financial Statements, IAS 1, Non-current Assets
Level: Level 1

Topic: Elements of Financial Statements
Series: MAY 2022

FA – May 2022 – L1 – SB – Q1a – Financial Statements Preparation

Identify and list the components of financial statements according to IAS 1.

Question

In accordance with IAS 1 – Presentation of Financial Statements, state the components of financial statements.

Answer

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Tags: Comprehensive Income, Financial Position, Financial Statements, IAS 1
Level: Level 1

Topic: Financial Statements Preparation
Series: MAY 2022

FA – Nov 2022 – L1 – SA – Q10 – Financial Statements

Identify the component that is not part of financial statements under IAS 1.

Question

Answer

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Tags: Financial Statements, IAS 1, Reporting Standards
Level: Level 1

BL – Nov 2019 – L1 – SA – Q6 – Law of Trusts

Identifying a component that is not part of financial statements as per IAS 1

Question

In accordance with IAS1 – Presentation of Financial Statements, which of the following is not a component of a financial statement?
A. Statement of financial position
B. Statement of value added
C. Statement of changes in equity
D. Statement of cash flows
E. Statement of profit or loss

Answer

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Tags: Components, Financial Statements, IAS 1
Level: Level 1

Topic: Law of Trusts
Series: NOV 2019

FA – Nov 2019 – L1 – SA – Q6 Financial Statements Preparation-

Identify which is not a component of financial statements under IAS 1

Question

In accordance with IAS1-Presentation of Financial Statements, which of the following is not a component of financial statements?

Answer

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Tags: Financial Statements, IAS 1, Statement of Financial Position
Level: Level 1

Topic: Financial Statements Preparation
Series: NOV 2019

Question Tag: IAS 1

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CR – May 2023 – L3 – Q5b – Presentation of Financial Statements (IAS 1)

Discuss the importance of optimal disclosure and barriers to reducing excessive disclosures in annual reports.

CR – May 2023 – L3 – Q1b – Financial Instruments (IFRS 9, IAS 32, IAS 39)

Discuss IFRS 9 rules on derecognition of financial assets, apply these rules to factoring, and analyze ethical implications of falsifying a land sale.

FR – Nov 2023 – L2 – Q7b – Presentation of Financial Statements (IAS 1)

Lists minimum line items for the statement of financial position and changes in equity as per IAS 1

FR – Nov 2014 – L2 – Q4a – Presentation of Financial Statements

Explain the essential characteristics of assets and features of liabilities per IAS 1.

FR – Nov 2019 – L2 – Q1b – Presentation of Financial Statements (IAS 1)

Prepare financial statements for Uchena Nigeria Plc, including profit or loss, changes in equity, and financial position.

FR – Nov 2020 – L2 – Q4 – Presentation of Financial Statements (IAS 1)

Prepare the Statement of Profit or Loss and Other Comprehensive Income for Gbenga Nigeria Plc based on provided trial balance.

FA – Nov 2020 – L1 – SB – Q2 -Accounting Concepts (e.g., Going Concern, Accruals, Materiality)

Explain accounting concepts, provide examples, and list users of financial statements.

FA – Nov 2020 – L1 – SA – Q13 – Elements of Financial Statements

Identifies a component that is not part of the financial statements as defined by IAS 1.

FA – Nov 2021 – L1 – SA – Q10 – Financial Statement

This question tests the knowledge of the components of financial statements as per IAS 1.

FA – May 2022 – L1 – SB – Q6b – Elements of Financial Statements

Define an asset, explain the conditions for current assets, and provide examples of current and non-current assets.

FA – May 2022 – L1 – SB – Q1a – Financial Statements Preparation

Identify and list the components of financial statements according to IAS 1.

FA – Nov 2022 – L1 – SA – Q10 – Financial Statements

Identify the component that is not part of financial statements under IAS 1.

BL – Nov 2019 – L1 – SA – Q6 – Law of Trusts

Identifying a component that is not part of financial statements as per IAS 1

FA – Nov 2019 – L1 – SA – Q6 Financial Statements Preparation-

Identify which is not a component of financial statements under IAS 1

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CR – May 2023 – L3 – Q5b – Presentation of Financial Statements (IAS 1)

Discuss the importance of optimal disclosure and barriers to reducing excessive disclosures in annual reports.

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CR – May 2023 – L3 – Q1b – Financial Instruments (IFRS 9, IAS 32, IAS 39)

Discuss IFRS 9 rules on derecognition of financial assets, apply these rules to factoring, and analyze ethical implications of falsifying a land sale.

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FR – Nov 2023 – L2 – Q7b – Presentation of Financial Statements (IAS 1)

Lists minimum line items for the statement of financial position and changes in equity as per IAS 1

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FR – Nov 2014 – L2 – Q4a – Presentation of Financial Statements

Explain the essential characteristics of assets and features of liabilities per IAS 1.

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FR – Nov 2019 – L2 – Q1b – Presentation of Financial Statements (IAS 1)

Prepare financial statements for Uchena Nigeria Plc, including profit or loss, changes in equity, and financial position.

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FR – Nov 2020 – L2 – Q4 – Presentation of Financial Statements (IAS 1)

Prepare the Statement of Profit or Loss and Other Comprehensive Income for Gbenga Nigeria Plc based on provided trial balance.

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FA – Nov 2020 – L1 – SB – Q2 -Accounting Concepts (e.g., Going Concern, Accruals, Materiality)

Explain accounting concepts, provide examples, and list users of financial statements.

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FA – Nov 2020 – L1 – SA – Q13 – Elements of Financial Statements

Identifies a component that is not part of the financial statements as defined by IAS 1.

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FA – Nov 2021 – L1 – SA – Q10 – Financial Statement

This question tests the knowledge of the components of financial statements as per IAS 1.

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FA – May 2022 – L1 – SB – Q6b – Elements of Financial Statements

Define an asset, explain the conditions for current assets, and provide examples of current and non-current assets.

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FA – May 2022 – L1 – SB – Q1a – Financial Statements Preparation

Identify and list the components of financial statements according to IAS 1.

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FA – Nov 2022 – L1 – SA – Q10 – Financial Statements

Identify the component that is not part of financial statements under IAS 1.

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BL – Nov 2019 – L1 – SA – Q6 – Law of Trusts

Identifying a component that is not part of financial statements as per IAS 1

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FA – Nov 2019 – L1 – SA – Q6 Financial Statements Preparation-

Identify which is not a component of financial statements under IAS 1

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