Free Practice Questions for Myanmar CPA Part II

Explanation: IFRS 10 establishes a single control model applicable to all entities. Under paragraph 7, an investor controls an investee if and only if the investor has all of the following: (a) power over the investee (existing rights that give the current ability to direct relevant activities); (b) exposure, or rights, to variable returns from its involvement with the investee; and (c) the ability to use its power over the investee to affect the amount of the investor's returns (the link between power and returns).

Explanation: Under the proportionate share method of measuring NCI: NCI at acquisition = 20% of identifiable net assets = 20% * 100,000,000 MMK = 20,000,000 MMK. Goodwill = Consideration transferred (120,000,000 MMK) + NCI at acquisition (20,000,000 MMK) - Fair value of identifiable net assets (100,000,000 MMK) = 140,000,000 MMK - 100,000,000 MMK = 40,000,000 MMK. (Equivalently: Consideration of 120,000,000 MMK - Parent share of net assets of 80,000,000 MMK = 40,000,000 MMK).

Explanation: Under IFRS 3 paragraph 34-36, when the fair value of net identifiable assets acquired (90,000,000 MMK) exceeds the aggregate consideration transferred (75,000,000 MMK), a bargain purchase (negative goodwill) arises. After the acquirer reassesses whether it has correctly identified and measured all acquired assets and assumed liabilities, the remaining excess of 15,000,000 MMK must be recognized as a gain in profit or loss on the acquisition date.

Explanation: Under IAS 28 paragraph 5, if an entity holds, directly or indirectly, 20 percent or more of the voting power of the investee, it is presumed that the entity has significant influence, unless it can be clearly demonstrated that this is not the case. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but is not control or joint control over those policies. Associates are accounted for using the equity method.

Explanation: Transfer price is 20,000,000 MMK. A 25% markup on cost equals a 20% margin on selling price, so total intragroup profit is 4,000,000 MMK. Because 40% remains unsold, 1,600,000 MMK is unrealized. For the current-year downstream sale, the consolidation adjustment debits cost of sales and credits inventory by 1,600,000 MMK; a retained-earnings debit would be relevant only when eliminating profit carried forward from a prior period.

Explanation: IFRS 9 paragraph 4.1.2 mandates that a financial asset is measured at amortized cost if both of the following conditions are met: (1) The Business Model Test: the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and (2) The SPPI Test: the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Explanation: Total impairment loss = Carrying amount (120,000,000 MMK) - Recoverable amount (90,000,000 MMK) = 30,000,000 MMK. Under IAS 36 paragraph 104, the impairment loss must be allocated in the following strict order: (1) First, to reduce the carrying amount of any goodwill allocated to the CGU until goodwill is reduced to zero (20,000,000 MMK written off); (2) Second, any remaining impairment loss (10,000,000 MMK) is allocated pro rata across the other identifiable assets based on relative carrying amounts: Building = (60m / 100m) * 10,000,000 MMK = 6,000,000 MMK; Plant & Equipment = (40m / 100m) * 10,000,000 MMK = 4,000,000 MMK.

Explanation: Under IAS 19 (revised 2011), the former 'corridor method' was completely abolished. All remeasurements of the net defined benefit liability/asset (including actuarial gains/losses and the return on plan assets excluding net interest) must be recognized immediately in other comprehensive income (OCI). These amounts are transferred directly to retained earnings and are never reclassified (recycled) to profit or loss in subsequent accounting periods.

Explanation: Under IFRS 2 for equity-settled share-based payment transactions, the fair value is determined at the grant date (3,000 MMK per option) and is not subsequently remeasured. Expected options to vest = 200 employees * 90% (100% - 10% expected departures) * 100 options = 180 employees * 100 options = 18,000 options. Total expected fair value = 18,000 options * 3,000 MMK = 54,000,000 MMK. Cumulative expense required at Year 1 of the 3-year vesting period = 54,000,000 MMK * (1 / 3) = 18,000,000 MMK. Because no expense was recognized previously, the expense recognized in profit or loss for 2025 is 18,000,000 MMK.

Explanation: IAS 21 paragraph 39 mandates the translation method for foreign operations whose functional currency is not hyperinflationary: (a) assets and liabilities (both monetary and non-monetary) are translated at the closing rate at the date of that statement of financial position; (b) income and expenses are translated at exchange rates at the dates of the transactions (an average rate is acceptable if exchange rates do not fluctuate significantly); and (c) all resulting exchange differences are recognized in other comprehensive income and accumulated in a separate component of equity (Foreign Currency Translation Reserve).