S1: Under Ind AS 109, the Expected Credit Loss (ECL) model requires recognition of 12-month ECL for all financial assets initially. S2: If there is a significant increase in credit risk since initial recognition, lifetime ECL must be recognized. Which statement(s) is/are correct? MCQ with Answer and Explanation
S1: Under Ind AS 109, the Expected Credit Loss (ECL) model requires recognition of 12-month ECL for all financial assets initially. S2: If there is a significant increase in credit risk since initial recognition, lifetime ECL must be recognized. Which statement(s) is/are correct?
A. S1 only
B. Both S1 and S2
C. Neither S1 nor S2
D. S2 only
Answer: Option B
Solution (By JKSSB Mock Tests)
Ind AS 109 mandates a three-stage ECL model. Stage 1 requires 12-month ECL initially, and Stage 2 requires lifetime ECL if there is a significant increase in credit risk. Both statements are correct.
A: A Real Account is never closed at the end of the accounting year. R: Real accounts represent assets and properties of the business. Choose the correct option.
A.A is true but R is false
B.Both A and R are true but R is NOT the correct explanation of A
C.A is false but R is true
D.Both A and R are true and R is the correct explanation of A
Explanation:
Real accounts represent assets, which carry forward their balances to the next year because they represent ongoing resources of the business. R correctly explains why they are permanent and never closed.
Explanation:
Incomes that do not fall into the first four specific heads (like dividends, lottery winnings, bank interest) are taxed as Income from Other Sources.
Explanation:
Value added represents the wealth created by the firm, calculated as sales revenue minus the cost of materials/services bought from outside.
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