Question

Read the 2015 annual report of Air France – KLM and answer the 20 questions asked regarding the accounting issues. Link is provided below: http://www.airfranceklm.com/sites/default/files/publications/afkl_registration_doc_2015.pdf

17. Which of the following is not true about accounting treatment for the overhaul cost of major airframe and engine?

a. The cost is treated as separate asset component.

b. The cost is capitalized.

c. The cost is depreciated over the remaining useful life.

d. The cost is expensed as incurred.

18. How are financial assets accounted for if the Air France-KLM intends to sell them in the near future to realize capital gains?

a. At fair value with fair value changes recognized in the current period profit and loss

b. At fair value with fair value changes recognized as other comprehensive income

c. At cost with no recognition of fair value changes

d. At amortized cost with no recognition of fair value changes

19. Which of the following is not true about impairment test?

a. Tangible fixed assets, intangible assets, goodwill, and other assets with indefinite useful life are subject to an impairment test.

b. The impairment test is done at least once a year.

c. Recoverable value is the lower of the net realizable value and value in use.

d. The value in use is determined according to the discounted future cash flow method.

20. Which of the following is not an ‘other non-current income and expenses’ item?

a. Restructuring costs

b. Gains and losses on disposal of shares available for sale

c. Gains and losses on disposal of subsidiaries and affiliates

d. Gains and losses on sale of trading securities

Answer 1

With reference to the provided link of Air France-KLM annual report 2015:-

(I have also attached the pics as a reason for why I have choosed this options as answers for your questions.)

17) c. The cost is depreciated over the remaining useful life.

Ref:- Pg. no. 182 of the Air France-KLM annual report 2015.

18) a. At fair value with fair value changes recognized in the current period profit and loss

Ref:- Pg. no. 195 of the Air France-KLM annual report 2015

19) c. Recoverable value is the lower of the net realizable value and value in use.

Ref:- Pg. no. 182 of the Air France-KLM annual report 2015

20) d. Gains and losses on sale of trading securities

Ref:- Pg. no. 193 of the Air France-KLM annual report 2015.