CFA Level I · CFA Level I Exam · Analyzing Balance Sheets
Which of the following items is most likely reported as a contra-asset or deduction within the asset section of an IFRS balance sheet?
The allowance for expected credit losses is most likely a contra-asset. It is deducted from gross accounts receivable to show the net amount expected to be collected, whereas deferred revenue is a liability and share premium is equity.
- AAllowance for expected credit lossesCorrect
- BDeferred revenue
- CShare premium
Explanation
The allowance for expected credit losses reduces gross receivables to their net carrying amount. Deferred revenue is a liability and share premium is part of equity.
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