The 'Derecognition of Financial Assets' under Ind AS 109 is based on: MCQ with Answer and Explanation

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The 'Derecognition of Financial Assets' under Ind AS 109 is based on:

A. Title

B. Legal ownership

C. Transfer of risks and rewards of ownership

D. Possession

Answer: Option C

Solution (By JKSSB Mock Tests)

Derecognition occurs when risks and rewards are substantially transferred.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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Question #1

The 'Non-Current Assets Held for Sale' (Ind AS 105) are measured at:

A. Cost

B. Revaluation amount

C. Lower of carrying amount and fair value less costs to sell

D. Fair value

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Correct Answer: Option C

Explanation:
Ind AS 105 requires measurement at lower of carrying amount and fair value less costs to sell.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #2

Advance tax must be paid in instalments during the financial year if the estimated tax liability exceeds:

A. Rs 10,000

B. Rs 50,000

C. Rs 1,00,000

D. Rs 5,000

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Correct Answer: Option A

Explanation:
Under Section 208, advance tax is mandatory if the estimated tax liability for the year is Rs 10,000 or more.

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Question #3

Assertion (A): Under Ind AS 2, inventories are measured at the lower of cost and net realizable value (NRV). Reason (R): This ensures that assets are not overstated and losses are recognized in the period they occur, adhering to the prudence concept. Choose the correct option.

A. A is false but R is true

B. Both A and R are true but R is NOT the correct explanation of A

C. Both A and R are true and R is the correct explanation of A

D. A is true but R is false

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Correct Answer: Option C

Explanation:
Ind AS 2 mandates the lower of cost and NRV rule. This is a direct application of the prudence (conservatism) concept, ensuring assets aren't overstated and potential losses are recognized immediately. R correctly explains A.

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