Question 3ISTQ - Intermediate Accounting (Kieso)

Question

3. Companies that use IFRS: 

(a) may report all their assets on the statement of financial position at fair value. 

(b) are not allowed to net assets (assets − liabilities) on their statement of financial positions.

(c) may report non-current assets before current assets on the statement of financial position. 

(d) do not have any guidelines as to what should be reported on the statement of financial position.

Step-by-Step Solution

Answer

The correct option is (c) may report non-current assets before current assets on the statement of financial position.

Definition of Statement of Financial Position

The statement that is generally concerned with the reporting of all assets and liabilities of the business entity is known as the statement of financial position.

The Explanation for Correct option

Companies that adopt IFRS report their balance sheet items in reverse order of GAAP. Under IFRS, non-current assets are reported first, and then-current assets are reported. The same procedure is followed in the liabilities section.

The Explanation for Incorrect options

(a) The business entity’s assets are not reported at fair value under IFRS.

(b) IAS 5 states that a business entity can disclose its net assets on the financial statement.

(d) IAS 1 states all the requirements regarding what must be reported on the statement of the financial position.