INTERNATIONAL ACCOUNTING CHAPTER
4 STUDY GUIDE 2026 COMPLETE
PRACTICE QUESTIONS AND CORRECT
ANSWERS WITH DETAILED RATIONALES
COMPREHENSIVE IFRS AND GLOBAL
FINANCIAL REPORTING EXAM REVIEW
Camerata Construction borrowed €19,000,000 for 10 years at 6%
specifically to modernize its operations with new equipment. The average
rate of interest on Camerata's debt after considering the most recent loan
was 5.5%. What rate of interest should be used for capitalizing the
borrowing costs on the new equipment under IAS 23?
A.
5.5%
B.
6%
C.
5.75%
,D.
Some other amount - CORRECT ANSWER -B.
6%
In what way does the IASB standard on leases (IAS 17) differ from U.S.
GAAP?
A.
It is less specific than U.S. GAAP in terms of defining what constitutes a
finance lease.
B.
U.S. GAAP requires more professional judgment in accounting for leases
than does IAS 17.
C.
IAS 17 is more specific than U.S. GAAP in defining an operating lease.
D.
Operating leases are capitalized under IAS 17 but are not capitalized under
U.S. GAAP. - CORRECT ANSWER -A.
It is less specific than U.S. GAAP in terms of defining what constitutes a
finance lease.
In what way should operating leases be accounted for under IAS 17?
,A.
The lease payments should be capitalized and shown on the balance sheet
as an asset.
B.
The lease payments must be expensed by the lessee as they are incurred.
C.
IAS 17 is flexible, allowing both capitalization and expensing of operating
lease costs.
D.
, The lessee capitalizes the operating lease and the lessor expenses the lease.
- CORRECT ANSWER -B.
The lease payments must be expensed by the lessee as they are incurred.
Under IAS 17, in a sale-leaseback transaction, how must the initial owner
treat any gain on a finance lease?
A.
Defer it and amortize it into income over the life of the lease.
B.
Recognize it in income immediately.
C.
Defer it until the end of the lease term, including extensions.
D.
He/she can choose to either defer it or recognize it in income immediately. -
CORRECT ANSWER -A.
Defer it and amortize it into income over the life of the lease.
Under IAS 40 (Investment Property), gains or losses from revaluation are:
4 STUDY GUIDE 2026 COMPLETE
PRACTICE QUESTIONS AND CORRECT
ANSWERS WITH DETAILED RATIONALES
COMPREHENSIVE IFRS AND GLOBAL
FINANCIAL REPORTING EXAM REVIEW
Camerata Construction borrowed €19,000,000 for 10 years at 6%
specifically to modernize its operations with new equipment. The average
rate of interest on Camerata's debt after considering the most recent loan
was 5.5%. What rate of interest should be used for capitalizing the
borrowing costs on the new equipment under IAS 23?
A.
5.5%
B.
6%
C.
5.75%
,D.
Some other amount - CORRECT ANSWER -B.
6%
In what way does the IASB standard on leases (IAS 17) differ from U.S.
GAAP?
A.
It is less specific than U.S. GAAP in terms of defining what constitutes a
finance lease.
B.
U.S. GAAP requires more professional judgment in accounting for leases
than does IAS 17.
C.
IAS 17 is more specific than U.S. GAAP in defining an operating lease.
D.
Operating leases are capitalized under IAS 17 but are not capitalized under
U.S. GAAP. - CORRECT ANSWER -A.
It is less specific than U.S. GAAP in terms of defining what constitutes a
finance lease.
In what way should operating leases be accounted for under IAS 17?
,A.
The lease payments should be capitalized and shown on the balance sheet
as an asset.
B.
The lease payments must be expensed by the lessee as they are incurred.
C.
IAS 17 is flexible, allowing both capitalization and expensing of operating
lease costs.
D.
, The lessee capitalizes the operating lease and the lessor expenses the lease.
- CORRECT ANSWER -B.
The lease payments must be expensed by the lessee as they are incurred.
Under IAS 17, in a sale-leaseback transaction, how must the initial owner
treat any gain on a finance lease?
A.
Defer it and amortize it into income over the life of the lease.
B.
Recognize it in income immediately.
C.
Defer it until the end of the lease term, including extensions.
D.
He/she can choose to either defer it or recognize it in income immediately. -
CORRECT ANSWER -A.
Defer it and amortize it into income over the life of the lease.
Under IAS 40 (Investment Property), gains or losses from revaluation are:
