How do changes to IAS 16, 38 and IFRS 11 impact you?

In order to be awarded CPD units you must answer the following five random questions correctly. If you fail the test, please re-read the article before attempting the questions again.

  1. A variety of depreciation methods are used to allocate the depreciable amount of an asset over its useful life. Which of the following methods is now not allowable under IAS 16 Property, Plant and Equipment?

  2. The IASB decided to amend IAS 16, Property, Plant and Equipment to address issues that had arisen over the use of a revenue-based method for depreciating an asset. What is the basis of the revenue based method of depreciation?

  3. The amendment to IAS 16 came as a result of a request to clarify the meaning of 'consumption of the expected future economic benefits embodied in the asset' when deciding upon the amortisation method to be used for intangible assets of service concession arrangements. What principle is used in IAS 16 as regards the depreciation method to be used by an entity?

  4. Revenue may be a measurement of the output generated by the asset, but may represent the way in which an item of PPE is used. Why did the IASB feel that a revenue based method of depreciation was not appropriate?

  5. The principle in IAS 38 Intangible Assets is that an amortisation method should reflect the pattern of consumption of the expected future economic benefits and not the pattern of generation of expected future economic benefits. IAS 38 is therefore amended to introduce a rebuttable presumption that a revenue-based amortisation method for intangible assets is inappropriate for the same reasons as in IAS 16. What are limited circumstances when this presumption can be overturned?

  6. In 2011, the IASB issued IFRS 11 Joint Arrangements, which introduced several changes. Principally, there are now only two types of joint arrangements, which are joint ventures and joint operations. What matter does IFRS 11 not address?

  7. As both IFRS 11 and its predecessor, IAS 31 Joint Ventures, did not deal with accounting for a joint operation, which constituted a business, significant diversity in practice has occurred. What are the approaches used in practice in accounting for this type of joint operation?

  8. The diversity in practice in accounting for a joint operation, which constituted a business has lead to certain issues arising in financial statements. What has been the impact on financial statements of the diversity in practice?

  9. As a result of the IASB's deliberations, an amendment to IFRS 11 has been made.' Accounting for Acquisitions of Interests in Joint Operations (Amendments to IFRS 11)' requires that the acquirer of an interest in a joint operation which constitutes a business, as defined in IFRS 3, is required to apply all of the principles in IFRS 3 and other IFRSs with the exception of those principles that conflict with the guidance in IFRS 11. Which of the following accounting treatments will not be required by the amendment?

  10. The amendments apply to the acquisition of an interest in an existing joint operation and also to the acquisition of an interest when a joint operation is formed. IFRS 1'First-time Adoption of International Financial Reporting Standards' has also been amended. What amendment has been made to IFRS 1 as a result of this change to IFRS 11?