Profit, loss and OCI

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. The purpose of the statement of profit or loss and other comprehensive income (OCI) is to show an entity's financial performance in a way that is useful to a wide range of users so that they may attempt to assess the future net cash inflows of an entity. The statement should be classified and aggregated in a manner that makes it understandable and comparable. What is the current requirement of IFRS regarding the statement of profit or loss and other comprehensive income?

  2. What does an entity have to show in OCI?

  3. Profit or loss includes all items of income or expense (including reclassification adjustments) except those items of income or expense that are recognised in OCI as required or permitted by IFRS. Reclassification adjustments are amounts reclassified to profit or loss in the current period that were recognised in OCI in the current or previous periods. Which of the following items recognised in OCI may be reclassified to profit or loss?

  4. Profit or loss includes all items of income or expense (including reclassification adjustments) except those items of income or expense that are recognised in OCI as required or permitted by IFRS. Reclassification adjustments are amounts reclassified to profit or loss in the current period that were recognised in OCI in the current or previous periods. Which of the following items recognised in OCI may not be reclassified to profit or loss?

  5. The interaction between profit or loss and OCI is unclear, especially the notion of reclassification and when or which OCI items should be reclassified. Which of the following is the main principle behind the reclassification of items to profit or loss?

  6. There are several arguments for and against reclassification. Which of the following is not an argument for keeping reclassification?

  7. There are several arguments for and against reclassification. Which of the following is not an argument for ceasing reclassification?

  8. The Discussion Paper on the Conceptual Framework considers three approaches to profit or loss and reclassification. Which of the following is not an approach being considered by the IASB?

  9. The narrow approach to reclassification allows recognition in OCI for bridging items or mismatched remeasurements. Whilst, the broad approach has an additional category of transitory measurements. Which of the following transactions is an example of a bridging item?

  10. The narrow approach to reclassification allows recognition in OCI for bridging items or mismatched remeasurements. Whilst, the broad approach has an additional category of transitory measurements. Which of the following transactions is an example of a mismatched remeasurement?