Which of the following income and expense items is NOT recorded initially directly in equity?
A) The impairment of goodwill in accordance with IAS 36 Impairment of Assets, where the entity is confident that the factors giving rise to the impairment will reverse in a future period.
B) An increase in the fair values of land & buildings, where the revaluation method is used to account for land & buildings in accordance with IAS 16 Property, Plant and Equipment.
C) Foreign currency translation adjustments arising on the translation of a foreign operations financial statements from their functional currency in accordance with IAS 21 The Effects of Changes in Foreign Exchange Rates.
D) None of the above.

Question

Quizplus · Accepted Answer

The impairment of goodwill is recorded initially in the income statement as an expense, not directly in equity. This expense reduces the entity's net income and therefore reduces equity indirectly. The other options listed, B and C, are both examples of items that are initially recorded directly in equity.

Which of the Following Income and Expense Items Is NOT