Question bank — IFRS 7 — Financial Instruments: Disclosures
57 questions in FR/EN/ES, scored by the real scoring engine.
Objective: importance of instruments and risks3 questions
- IFRS 7 aims to enable users to assess the significance of financial instruments for the entity's financial position and performance, and the nature and extent of the risks arising from them and how the entity manages them.True / falseL1
- What is the objective of IFRS 7?Single choiceL1
- A colleague summarises the purpose of IFRS 7 for a newcomer. Which of the colleague's sentences is wrong?Single choiceL1
Classes of instruments3 questions
- The classes of financial instruments used for the disclosures are identical to the IFRS 9 measurement categories.True / falseL1
- Where the standard requires disclosures by class, the entity provides enough information for the classes to be reconciled to the line items of the statement of financial position.True / falseL1
- Sora SA holds retail loans, corporate loans, listed bonds and derivatives (case facts). It prepares the disclosures by class. Which approach is consistent with the rule on grouping into classes?Single choiceL2
Carrying amounts by category3 questions
- The entity provides, in the statement of financial position or in the notes, the carrying amount of each category of financial assets and financial liabilities.True / falseL1
- What must the entity provide for each category of financial assets and financial liabilities?Single choiceL1
- A colleague prepares the table of carrying amounts by category for a period subject to IFRS 9. Which of the colleague's sentences is wrong?Single choiceL2
Offsetting disclosures3 questions
- Which instruments fall within the scope of the IFRS 7 offsetting disclosures? Several answers are possible.Multiple choiceL2
- Orion SA prepares the offsetting table for its derivative assets. Counterparty A: gross amount …, of which … is offset in accordance with IAS 32; related financial instruments not offset …; cash collateral received …. Counterparty B: net amount presented …; related financial instruments …; cash collateral received …. Table rule (case data): the amount deducted for an instrument does not exceed its net amount. Calculate the net amount presented for A, then the final net amount of A and that of B.CalculationL3
- What is the objective of the IFRS 7 disclosures on the offsetting of financial assets and financial liabilities?Single choiceL2
Income, expense, gains and losses2 questions
- Lyra SA recognised over the year, for its loans measured at amortised cost: interest income under the effective interest method of 420,000, which already includes 30,000 of loan origination fees; and 55,000 of account maintenance fees, outside the effective interest rate (case facts). What amount of fee income does Lyra present separately, in addition to total interest income?Single choiceL2
- A working file for the notes describes the disclosures on income, expense, gains and losses on financial instruments. Which of its sentences is wrong?Single choiceL2
Reclassification1 question
Overview of hedging disclosures1 question
Fair value disclosures3 questions
- Tigre SA acquires a financial instrument for a transaction price of 1,000. Its fair value at inception, estimated using unobservable inputs, is 940 (case facts). What does IFRS 7 provide about this difference of 60?Single choiceL2
- Kelp SA, which has no lease liabilities (case fact), omits the disclosure of an instrument's fair value only if its carrying amount is a reasonable approximation of it (IFRS 7, para. 29). A working file applies this rule to Kelp's instruments. Which of its conclusions is wrong?Single choiceL3
- Mira SA holds a portfolio of loans measured at amortised cost, which form a class of financial assets; none of the exemptions provided by the Standard applies to this class (case data). What does IFRS 7 require about the fair value of this class?Single choiceL3
Nature and extent of risks3 questions
- The disclosures on the nature and extent of the risks arising from financial instruments concern the exposure at the date of initial recognition of each instrument.True / falseL1
- What is the second part of the objective of IFRS 7, alongside the significance of financial instruments for financial position and performance?Single choiceL1
- A regional bank mainly holds loans, deposits and interest rate derivatives. A colleague comments on the risks to be documented at the reporting date. Which of the colleague's sentences is wrong?Single choiceL1
Qualitative information3 questions
- Qualitative disclosures on risks may be limited to generalities, with no link to the entity's exposure or to how it manages its risks.True / falseL1
- Marée SA exports products invoiced in dollars and finances its inventories with a floating-rate loan (case facts). Which wording of qualitative disclosures on currency risk is consistent with the rule?Single choiceL2
- Which statements about the qualitative disclosures on risks are correct? Several answers are possible.Multiple choiceL2
Quantitative information and concentrations2 questions
- Étoile SA has 70% of its receivables from one customer and 85% of its deposits with a single bank (case facts). Which conclusion is consistent with the quantitative disclosures on risks?Single choiceL2
- A working paper describes the quantitative disclosures on a company's risks. Which of its sentences is wrong?Single choiceL2
Credit risk management practices2 questions
- Quartz SA describes its commercial credit policy (limits per customer, payment terms) in the credit risk disclosures, without linking it to the measurement of its expected credit losses (case facts). Write a short justification stating whether this description is complete, distinguishing rule, case facts and correction.JudgmentL2
- Rubis SA's notes describe its credit risk management practices: internal rating, limits, monitoring of arrears. They say nothing about how Rubis assesses a significant increase in credit risk, although Rubis relies on it to classify its loans, and do not mention the low credit risk exemption that Rubis uses for its government bonds (case facts). Write a short judgement note assessing whether the description covers what is expected, distinguishing rule, case facts and professional judgement.JudgmentL3
Exposure by credit risk rating grade3 questions
- Which statements about the credit risk table by rating grade are correct? Several answers are possible.Multiple choiceL2
- Phare SA prepares its credit risk table on its loans (gross carrying amounts, case data). 12-month expected losses: grade A …, grade B …, grade C …. Lifetime expected losses, not credit-impaired: grade C …, grade D …. Credit-impaired assets: grade D …. Calculate the total gross carrying amount in 12-month expected losses, then the total of the table, which must equal the gross carrying amount of the loans.CalculationL3
- An analyst checks a bank's credit risk table by rating grade. Which of the analyst's conclusions is wrong?Single choiceL3
Loss allowance reconciliation3 questions
- Borée Banque SA prepares the reconciliation of the loss allowance for expected credit losses on its loans. Opening allowance …; charge for the year …; loans written off and charged against the allowance …. The draft note shows a closing allowance of … (case data; no other movement). Calculate the closing loss allowance, then the difference between the draft and your calculation.CalculationL3
- Fluor SA writes off a loan with a gross carrying amount of …. The loan was already covered by a loss allowance of …, that is, its full amount (case data). Record the write-off entry.Journal entryL2
- A trainee summarises the reconciliation of the loss allowance for expected credit losses. Which of the trainee's sentences is wrong?Single choiceL2
Maximum exposure and collateral3 questions
- Tanit Banque SA has granted loans for a total of 2,000,000, secured by mortgages worth 1,500,000 (case facts). What amount does it present as the maximum exposure to credit risk, under the IFRS 7 rule?Single choiceL2
- Tanit Banque SA has two loans. Loan X: maximum exposure …, collateral held worth …. Loan Y: maximum exposure …, collateral held worth …. To measure the net exposure, the value of collateral taken into account for a loan is capped at the exposure of that loan (case data; supplementary information, the maximum exposure itself remaining stated before collateral). Calculate the net exposure after collateral for X, for Y, then the total.CalculationL3
- Nereid SA holds a bond measured at fair value through profit or loss, an instrument within the scope of IFRS 7 but not subject to the impairment requirements of IFRS 9; its carrying amount, 2,000,000, represents its maximum exposure to credit risk at the reporting date. The bond is secured by a pledge of 1,500,000 (case data). What does Nereid disclose?Single choiceL2
Maturity analysis3 questions
- Cèdre SA has two non-derivative financial liabilities at 31 December: trade payables of …, payable in three months, and a loan of …, repayable in two years, with contractual interest of … paid at the end of each year. Total carrying amount of the two liabilities: …. Prepare the maturity analysis in undiscounted contractual cash flows: total of the "less than one year" bucket, total of the "one to two years" bucket, then the difference between the total of the flows and the carrying amount.CalculationL3
- A working paper comments on the maturity analysis of a company's financial liabilities. Which of its sentences is wrong?Single choiceL2
- Hélios SA's non-derivative financial liabilities represent 4,500,000 of undiscounted contractual cash flows, of which 3,960,000, or 88%, fall due within 90 days. The draft notes propose two buckets: "less than five years" and "more than five years" (case facts). Write a short judgement note assessing this choice of buckets, distinguishing rule, case facts and professional judgement.JudgmentL3
Supplier finance and concentration1 question
Sensitivity analysis3 questions
- Aurore SA has floating-rate borrowings of … at the reporting date, unhedged. Management considers a rise in rates of … reasonably possible for the next year (management's judgement, case data). Calculate the effect of this change on profit before tax, in absolute value (a rise in rates reduces profit); the tax effect is ignored.CalculationL3
- What does the sensitivity analysis for market risk include? Several answers are possible.Multiple choiceL2
- Four employees from different groups describe their practice for the interest rate sensitivity analysis. Which of these practices is wrong?Single choiceL3
Objective and continuing involvement3 questions
- Prisme SA has sold a portfolio of receivables and derecognised it. As part of the sale, it gave the buyer a first-loss guarantee covering losses up to 5% of the portfolio; it also gave the usual representations that there is no fraud (case facts). Which of these items creates continuing involvement in the transferred assets?Single choiceL2
- A working paper describes the objective of the IFRS 7 disclosures on transfers of financial assets. Which of its sentences is wrong?Single choiceL2
- Which statements about the IFRS 7 disclosures on transfers of financial assets are correct? (Several answers.)Multiple choiceL2
Transferred assets not fully derecognised1 question
Continuing involvement in derecognised assets1 question
The link with IFRS 9 (impairment)2 questions
- At year-end, the finance team of Banque Alcor allocates four tasks relating to its Stage 2 loans (case facts). Which of these tasks is an IFRS 7 disclosure requirement, rather than the measurement provided for by IFRS 9?Single choiceL2
- An analyst prepares a note on the boundary between IFRS 9 and IFRS 7 for expected credit losses. Which of his sentences is wrong?Single choiceL2