International Financial Reporting Standards
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IFRS for SMEs
IFRS Foundation-World Bank
18–20 October 2011
Sarajevo, Bosnia and Herzegovina
Copyright © 2010 IFRS Foundation.
All rights reserved.
The IFRS for SMEs
Topic 3.4(a)
Quiz and Discussion
Liabilities
Sections 21 & 28
Liam Coughlan
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Section 21 – Discussion questions
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Question 3*: Provisions are measured at the best
estimate of the amount required to settle the
obligation at the reporting date. When the
provision involves a large population of items, the
estimate of the amount:
a. reflects the weighting of all possible
outcomes by their associated probabilities?
b. is determined to be the individual most likely
outcome?
c. is the individual most likely outcome
adjusted to consider the other possible
outcomes?
* see question 3 in Module 21 of the IFRS Foundation training material
Section 21 – Discussion questions
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Question 4*: Provisions are measured at the
best estimate of the amount required to settle
the obligation at the reporting date. When the
provision arises from a single obligation, the
estimate of the amount:
a. reflects the weighting of all possible
outcomes by their associated
probabilities?
b. is determined to be the individual most
likely outcome?
c. is the individual most likely outcome
adjusted to consider the other possible
outcomes?
* see question 4 in Module 21 of the IFRS Foundation training material
Section 21 – Discussion questions
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Question 6*: A is defending a patent
infringement lawsuit. Court is expected to
rule in 12/20X2. 30% chance court will
dismiss the case. If not, 20% chance A pays
CU200,000 & 80% chance pay CU100,000.
Apply a 7% risk adjustment factor to the
probability-weighted expected cash flows to
reflect the uncertainties in the cash flow
estimates.
* see question 6 in Module 21 of the IFRS Foundation training material
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Section 21 – Discussion questions
Question 6 continued:
An appropriate discount rate is 10% per
year.
At 31/12/20X1 A recognise a provision of?
a.
b.
c.
d.
e.
0?
CU100,000?
CU84,000?
CU89,880?
CU81,709?
Section 21 – Discussion questions
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Question 7*: Same as question 6 except,
disclosure of some of the information about
the case can be expected to prejudice
seriously A’s position in the dispute over
the alleged breach of patent.
At 31 December 20X1, A would:
* see question 7 in Module 21 of the IFRS Foundation training material
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Section 21 – Discussion questions
Question 7 continued:
a. not recognise a provision. Disclose the
general nature of the dispute, together
with the fact that, and reason why, the
information has not been disclosed?
b. recognise a provision measured at the
best estimate & disclose the general
nature of the dispute, together with the
fact that, and reason why, the
information has not been disclosed.
c. recognise a provision measured at the
best estimate & disclose the
information required by paragraphs
21.14–21.16.
Section 28 – Discussion questions
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Question 2*: A’s employees are each
entitled to 20 days of paid holiday leave per
calendar year. Unused holiday leave cannot
be carried forward and does not vest. The
entity has a 31 December annual reporting
date. The holiday leave is:
a.
b.
c.
d.
a short-term employee benefit?
a post-employment benefit?
an other long-term employee benefit?
a termination benefit?
* see question 2 in Module 28 of the IFRS Foundation training material
Section 28 – Discussion questions
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Question 3*: Same as question 2, except
unused holiday leave is paid out on 31
December of each year (ie it vests at the end
of each calendar year but does not
accumulate). The holiday leave is:
a. a short-term employee benefit?
b. a post-employment benefit?
c. an other long-term employee benefit?
d. a termination benefit?
* see question 3 in Module 28 of the IFRS Foundation training material
Section 28 – Discussion questions
Question 4*: Same as question 2, except
unused holiday leave may be carried
forward for one calendar year (ie it
accumulates but does not vest).
The holiday leave is:
a. a short-term employee benefit?
b. a post-employment benefit?
c. an other long-term employee benefit?
d. a termination benefit?
* see question 4 in Module 28 of the IFRS Foundation training material
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Section 28 – Discussion questions
Question 5*: Same as question 2, except
unused holiday leave may be carried
forward for two calendar years (ie it
accumulates but does not vest).
The holiday leave is:
a. a short-term employee benefit?
b. a post-employment benefit?
c. an other long-term employee benefit?
d. a termination benefit?
* see question 5 in Module 28 of the IFRS Foundation training material
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Section 28 – Discussion questions
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Question 7*: A publicly announces its
commitment to a voluntary redundancy
plan. It has an obligation to pay a lumpsum
to employees that elect redundancy.
The obligation is:
a. a short-term employee benefit?
b. a post-employment benefit?
c. an other long-term employee benefit?
d. a termination benefit?
* see question 7 in Module 28 of the IFRS Foundation training material
Section 28 – Discussion questions
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Question 8*: A reimburses 50% of past
employees’ post-employment medical costs
if the employee provides +25 years of
service.
The obligation is:
a. a short-term employee benefit?
b. a post-employment benefit?
c. an other long-term employee benefit?
d. a termination benefit?
* see question 8 in Module 28 of the IFRS Foundation training material
Section 28 – Discussion questions
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Question 9*: A profit sharing plan requires A
pay a specified portion of its cumulative
profit for a 5-year period to employees who
serve throughout the 5-year period.
The obligation is:
a. a short-term employee benefit?
b. a post-employment benefit?
c. an other long-term employee benefit?
d. a termination benefit?
* see question 9 in Module 28 of the IFRS Foundation training material
Questions or comments?
Expressions of individual views by
members of the IASB and its staff
are encouraged.
The views expressed in this
presentation are those of the
presenter.
Official positions of the IASB on
accounting matters are determined
only after extensive due process
and deliberation.
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the+trainer+workshops.htm
The accounting requirements applicable to small and
medium-sized entities (SMEs) are set out in the
International Financial Reporting Standard (IFRS) for SMEs,
which was issued by the IASB in July 2009.
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