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CFA Level I · CFA Level I Exam · Analysis of Long-Term Assets

Under IFRS, an analyst reviewing a company's financial statement notes wants to understand how much of the carrying amount of property, plant and equipment is attributable to past depreciation. Which disclosure is most likely to provide the reconciliation of gross carrying amount, accumulated depreciation and impairment at the start and end of the period?

The property, plant and equipment note most likely provides it. IFRS requires a reconciliation by class of asset showing opening and closing gross carrying amounts, accumulated depreciation and impairment, additions, disposals and other movements. The cash flow statement and management commentary do not give this detail.

  1. AThe property, plant and equipment noteCorrect
  2. BThe statement of cash flows
  3. CThe management commentary on liquidity

Explanation

IFRS requires a reconciliation of the carrying amount of each class of PP&E, showing additions, disposals, depreciation, impairment and other movements, in the notes. The cash flow statement shows only cash outflows for capital expenditure, and management commentary is not a required reconciliation.

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