Below are the most commonly tested IFRS standards in Case Study scenarios with key application points.

IFRS 15 — Revenue from Contracts with Customers:

Five-step model:

Identify the contract
Identify the performance obligations (POs)
Determine the transaction price
Allocate transaction price to POs
Recognise revenue when (or as) PO satisfied

Key Case Study issues:

Multiple POs in single contract: software + implementation + support — separate POs typically
Variable consideration: discounts, rebates, performance bonuses, returns; constraint applies (only include if highly probable no significant reversal)
Significant financing component: long-term contracts where payment timing differs from performance
Over time vs point in time:
- Over time: customer simultaneously receives benefits; OR customer controls asset as created; OR no alternative use AND right to payment for work to date
- Point in time: control transfer (legal title; physical possession; risks/rewards; customer acceptance)
Principal vs agent: who controls goods/services before transfer to customer? Principal recognises gross; agent net
Bill-and-hold: revenue recognised pre-delivery only if specific criteria met (substantive reason, separately identifiable, ready to be physically transferred, no ability to use)
Right of return: refund liability + asset for product to be returned
Warranties: assurance type vs service type (separate PO if service)
Loyalty programs: separate PO; allocation based on relative standalone selling price

IFRS 16 — Leases:

Lessee:

Right-of-use (RoU) asset and lease liability recognised
Lease liability: PV of lease payments at incremental borrowing rate
RoU asset: lease liability + initial direct costs + prepayments − lease incentives + decommissioning
Subsequent: depreciate RoU asset; amortise lease liability (interest + principal)
Exemptions: short-term (≤12 months); low-value (e.g., laptops)

Common Case Study issues:

Sale and leaseback: only partial gain recognised (transferred portion only); seller-lessee retains RoU asset
Lease modifications: separate lease vs modification of existing
Variable lease payments: only those based on index/rate in lease liability
Lessor accounting: operating vs finance lease classification (similar to old IAS 17)
Transition: now beyond transition period for most

IFRS 9 — Financial Instruments:

Classification of financial assets:

Amortised cost (business model: hold to collect; SPPI)
FVOCI (business model: hold to collect AND sell; SPPI)
FVTPL (other; including held for trading and equity instruments unless OCI election)

Expected Credit Loss (ECL):

Three stages:
- Stage 1: 12-month ECL (no significant increase in credit risk)
- Stage 2: lifetime ECL (significant increase but not credit-impaired)
- Stage 3: lifetime ECL on net carrying amount (credit-impaired)
Simplified approach for trade receivables (always lifetime ECL)
Forward-looking information required

Hedge accounting:

Three types: fair value hedge; cash flow hedge; net investment hedge
Documentation; effectiveness; rebalancing
Cash flow hedge: effective portion to OCI (cash flow hedge reserve); ineffective to P&L
Recycling to P&L when hedged item affects P&L

IFRS 3 — Business Combinations:

Acquisition method (no merger accounting)
Identify acquirer; acquisition date
Recognise and measure identifiable assets/liabilities at fair value
Measure non-controlling interest (NCI): full goodwill (FV of NCI) OR proportionate (% of net assets)
Goodwill = consideration + NCI − net identifiable assets
Bargain purchase: recognise gain in P&L (rare; requires re-examination)
Acquisition costs expensed
Contingent consideration: classified as liability or equity; subsequent fair value through P&L (if liability)
Step acquisitions: previously held interest remeasured to FV; gain/loss to P&L

IAS 36 — Impairment of Assets:

Indicators required for non-goodwill non-indefinite-life intangibles (annual otherwise)
Goodwill: annual impairment test (allocated to CGUs)
Indefinite-life intangibles: annual impairment test
Recoverable amount = HIGHER of fair value less costs to sell OR value in use
Value in use: PV of future cash flows (entity-specific assumptions)
If carrying amount > recoverable amount: impairment loss to P&L (or OCI for revalued)
CGU allocation: lowest level of independently generating cash inflows
Goodwill impairment NOT reversed in subsequent periods
Other asset impairment may be reversed (capped at original carrying amount less normal depreciation)

Common Case Study issues:

Indicators: declining performance; market value decline; obsolescence; physical damage; significant changes; covenant breach
CGU identification controversies
Goodwill allocation challenges
VIU model assumptions scrutiny
Climate-related impairment

IAS 37 — Provisions, Contingent Liabilities and Contingent Assets:

Provision recognition criteria (all 3 required):
1. Present obligation (legal or constructive) from past event
2. Probable outflow of economic benefits
3. Reliable estimate
Measurement: best estimate of expenditure required to settle
Discount if material time value
Contingent liability: disclosed (unless remote)
Contingent asset: disclosed only if probable; recognise when virtually certain

Common Case Study issues:

Restructuring provisions: detailed plan + announced or commenced before year-end
Onerous contracts: unavoidable costs > expected benefits; provide for lower of (cost to fulfil; cost to exit)
Environmental obligations: present obligation from past contamination
Warranties: assurance vs service type
Litigation: probable vs possible; reliable estimate
Decommissioning: capitalised on PPE; provision for present value of future cost

IAS 19 — Employee Benefits:

Defined contribution:

Expense recognition when service rendered
No actuarial calculations
Recent UK trend: closure of DB schemes to new entrants

Defined benefit:

Defined Benefit Obligation (DBO) — actuarial calculation
Plan assets — fair value
Net DB liability/asset = DBO − plan assets (asset capped)
Service cost (current + past) → P&L
Net interest (DB liability × discount rate) → P&L
Remeasurements (actuarial gains/losses + return on plan assets above net interest) → OCI (no recycling)
Past service cost (plan amendments) → P&L immediately

Common Case Study issues:

Pension scheme deficit; funding plan
Plan amendments (e.g., closing benefits)
Curtailments and settlements
Discount rate assumptions (corporate bond yields)
Mortality assumptions

IFRS 2 — Share-Based Payment:

Equity-settled: measure at fair value of equity instruments at grant date; spread over vesting period; no remeasurement (except changes in service/non-market conditions)
Cash-settled: measure at fair value of liability; remeasure at each reporting date through P&L
Modifications: incremental fair value
Vesting conditions:
- Service conditions: affect timing
- Non-market performance conditions: affect timing AND number expected to vest
- Market conditions: affect grant date FV; not subsequent revisions
- Non-vesting conditions: similar to market

IAS 12 — Income Taxes:

Current tax: amount payable in respect of period
Deferred tax:
- Temporary differences (tax base vs carrying amount)
- Taxable temporary differences → DT liability
- Deductible temporary differences → DT asset (only if probable future taxable profits)
Tax base: amount attributable for tax purposes
Recognise at rates expected at reversal (not current rates if changes substantively enacted)
Initial recognition exemption (some)
Group considerations: investments in subsidiaries — DT not always recognised

Common Case Study issues:

Acquisition fair value adjustments (DT impact)
Loss recognition (DT asset only if probable utilisation)
Tax rate changes
Pillar Two (15% global minimum tax) — IAS 12 amendments allow temporary mandatory exception from recognition of DT for Pillar Two top-up tax
Uncertain tax positions (IFRIC 23)

IAS 21 — Foreign Currency:

Functional currency: primary economic environment
Foreign transactions: use spot rate at transaction date
Monetary items: retranslate at closing rate; differences to P&L
Non-monetary items at historical cost: use historical rate
Non-monetary items at fair value: use rate when FV measured
Foreign operation translation:
- Assets/liabilities at closing rate
- Income/expenses at average rate (or transaction date)
- Differences to OCI (foreign currency translation reserve)
- On disposal: cumulative reserve recycled to P&L

IAS 8 — Accounting Policies, Changes in Accounting Estimates and Errors:

Accounting policy changes: apply RETROSPECTIVELY (restate comparatives)
Estimate changes: apply PROSPECTIVELY
Errors: correct RETROSPECTIVELY (third balance sheet if material)
Distinction important: aggressive estimate vs error

EMERGING / RECENT STANDARDS:

IFRS 18 (effective 1 January 2027) — Presentation and Disclosure of Financial Statements: replaces IAS 1; new income statement structure (operating, investing, financing categories); MPMs (management performance measures) required reconciliation; aggregation/disaggregation principles
IFRS S1 (effective 2024) — General Sustainability Disclosures
IFRS S2 (effective 2024) — Climate-related Disclosures (TCFD-aligned)
IFRS 19 — Subsidiaries without Public Accountability (Disclosures) — reduced disclosure framework for eligible subsidiaries