CERTYNEX IFRS ACADEMY

The Stélia group is choosing between two policies developed for a transaction not covered by IFRSs (case data). Policy X follows the legal form of an arrangement; policy Y reflects the actual economic exposure and relies on an industry practice consistent with the Conceptual Framework. Which conclusions are justified?

Policy Y better meets the requirement of economic substance.

Policy X is preferable because legal form is more objective.

The industry practice must be rejected as a matter of principle.

The industry practice may be used since it does not conflict with the higher sources.

The choice between X and Y may be made according to the effect on profit.