CFAS FINALS

Question 1

All of the following shall be measured at FVPL, except
a. Financial asset held for trading b. Debt investment irrevocably designated at FVPL
c. Investment in quoted equity instruments
d. Debt investment at amortized cost

Answer 1

D

Question 2

Depending on the business model for managing financial assets, an entity shall classify financial assets subsequent to initial recognition at
a. Fair value through profit or loss
b. Amortized cost
c. Fair value through other comprehensive income
d. All of these are used in measuring financial assets

Answer 2

D

Question 3

Exploration and evaluation expenditures are incurred
a. When searching for an area that may warrant detailed exploration even though the entity has not yet obtained the legal rights to explore a specific area.
b. When the legal right to explore a specific area has been obtained but the technical feasibility and commercial viability of extracting a mineral resource are not yet demonstrable.
c. BWhen a specific area is being developed and preparations for commercial extraction are being made.
d. In extracting mineral resource and processing the resource to make it marketable or transportable

Answer 3

B

Question 4

4. Which measurement model applies to exploration and evaluation asset subsequent to initial recognition?

Answer 4

Cost model and Revaluation Model

Question 5

An operating segment is a component of an entity.
a. That engages in business activities from which it may earn revenue and incur expenses.
b. Whose operating results are regularly reviewed by the entity’s chief operating decision maker.
c. For which discrete information is available
d. All of these characterize an operating segment

Answer 5

D

Question 6

The term chief operating decision maker
a. Refers to a manager with a specific title.
b. Must be disclosed by title in the financial reporting for segments.
c. Must be described in the disclosures for the financial reporting for segments
d. Refers to a function of allocating resources to the operating segments and assessing their performance

Answer 6

D

Question 7

The approach used in segment reporting is known as
a. Segment approach
b. Revenue approach
c. Management approach
d. Enterprise approach

Answer 7

C

Question 8

3. Segment revenue includes
   a. Sales to unaffiliated customers
   b. Sales to unaffiliated customers and intersegment sales
   c. Sales to unaffiliated customers and interest revenue
   d. Sales to unaffiliated customers and other inco

Answer 8

B

Question 9

Debt investments that meet the business model and contractual cash flow tests are reported it

Answer 9

Amortized Cost

Question 10

Debt investment not held for collection of contractual cash flow are reported at

Answer 10

Fair Value

Question 11

a. For use in the production or supply of goods or services or for administrative purposes
b. For sale in the ordinary course of business

Answer 11

An investment property is not held:

Question 12

a. To earn rentals
b. For capital appreciation

Answer 12

only land and building can qualify as investment property and held

Question 13

property (land or building or part of a building or both) held by an owner or by the lessee under a finance lease to earn rentals or for capital appreciation or both

Answer 13

Investment property

Question 14

PAS 40

Answer 14

Investment Property

Question 15

Investment Property

Answer 15

PAS 40

Question 16

When ancillary services are provided by the entity to the occupants of the property and these services are a relatively insignificant component of the arrangement, the property is treated as

Answer 16

investment property

Question 17

if an entity owns and manages a hotel, services provided to guests are significant to the arrangement as a whole. Therefore, an owner-managed hotel is

Answer 17

owner-occupied property

Question 18

From the perspective of the individual entity that owns it, the property leased to another subsidiary or its parent is considered an

Answer 18

investment property

Question 19

from the perspective of the group as a whole and for purposes of consolidated financial statements, the property is treated as

Answer 19

owner-occupied property

Question 20

the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date.

Answer 20

Fair value

Question 21

Equipment such as lift or air-conditioning is often an integral part of a building and is generally _____ in the fair value of the investment property.

Answer 21

included

Question 22

If an office is leased on a furnished basis, the fair value of the office generally includes the _____________ because the rental income relates to the furnished office

Answer 22

fair value of the furniture

Question 23

The fair value of investment property excludes .

Answer 23

prepaid or accrued operating lease income

Question 24

In exceptional cases, when an entity first acquires an investment property, or when an existing property becomes investment property because there has been a change of use, there may be clear evidence that the fair value of the investment property cannot be determined reliably on a continuing basis.

Under such exceptional cases, PAS 40, paragraph 53, mandates that the entity shall measure such investment property using the ______ until the disposal of the investment property.

Moreover, under such exceptional cases only, the residual value of the investment property shall be assumed to be ____.

Answer 24

Cost Method
Zero

Question 25

An investment property shall be measured initially at its ___.

________ shall be included in the initial measurement.

Answer 25

cost
Transaction costs

Question 26

The cost of a purchased investment property comprises the

Answer 26

purchase price and any directly attributable expenditure

Question 27

includes professional legal services, property transfer taxes and other transaction cost.

Answer 27

Directly attributable expenditure

Question 28

a. Start up cost
b. Operating loss incurred before occupancy
c. Abnormal amount of wasted material, labor or other resources incurred in constructing or developing the property

Answer 28

Costs excluded from cost of investment property

Question 29

Costs excluded from cost of investment property

Answer 29

a. Start up cost
b. Operating loss incurred before occupancy
c. Abnormal amount of wasted material, labor or other resources incurred in constructing or developing the property

Question 30

An entity shall choose either of the following models as the accounting policy and shall apply that policy to all of the investment property:

Answer 30

a. Fair value model
b. Cost model

Question 31

investment property is carried at

Answer 31

Fair Value

Question 32

No ________ is recorded for the investment property.

Answer 32

depreciation

Question 33

If the entity decides to measure the investment property under the fair value model, the changes in fair value from year to year are recognized in

Answer 33

profit or loss

Question 34

If the entity decides to measure the investment property under the cost model, the asset shall be carried

Answer 34

at cost less accumulated depreciation and any accumulated impairment loss.

Question 35

In cost model, fluctuations in the fair value of the investment property from year to year are

Answer 35

not recognized

Question 36

Gain or loss from disposal of investment property shall be determined as the difference between the

Answer 36

net disposal proceeds and the carrying amount of the asset.

Question 37

Transfers to and from investment property shall made only when there is a

Answer 37

change of use

Question 38

Commencement of owner occupation- transfer from

Answer 38

investment property to owner-occupied property.

Question 39

Commencement of development with a view to sale - transfer from

Answer 39

investment property to inventory.

Question 40

End of owner occupation - transfer from

Answer 40

owner-occupied property to investment property.

Question 41

Commencement of an operating lease to another entity - transfer from

Answer 41

owner-occupied property to investment property

Question 42

When the entity uses the cost model, transfers between investment property, owner-occupied property and inventory shall be made at

Answer 42

carrying amount

Question 43

A transfer from investment property carried at fair value to owner-occupied property or inventory shall be accounted for at ____ which becomes the deemed cost for subsequent accounting.

Answer 43

fair value

Question 44

If owner-occupied property is transferred to investment property ___________, the difference between the fair value and the carrying amount of the property shall be accounted for as ____ of property, plant and equipment.

Answer 44

that is to be carried at fair value
revaluation

Question 45

If an inventory is transferred to investment property that is to be carried at fair value, the remeasurement to fair value shall be included in

Answer 45

profit or loss

Question 46

When an investment property under construction is completed and ____________ the difference between fair value and carrying amount shall be included in profit or loss.

Answer 46

to be carried at fair value,

Question 47

are living animals and living plants.

Answer 47

Biological assets

Question 48

is the harvested product of an entity’s biological assets.

Answer 48

Agricultural produce

Question 49

is the detachment of produce from a biological asset or the cessation of a biological asset’s life processes.

Answer 49

Harvest

Question 50

Sheep

Answer 50

Biological assets

Question 51

Dairy cattle

Answer 51

Biological assets

Question 52

Trees in plantation forest

Answer 52

Biological assets

Question 53

Felled trees

Answer 53

Agricultural produce

Question 54

Harvested cane

Answer 54

Agricultural produce

Question 55

Carcass and Wool

Answer 55

Agricultural produce

Question 56

Sugar

Answer 56

Product after harvest

Question 57

Sausage, cured ham

Answer 57

Product after harvest

Question 58

Yarn, carpet

Answer 58

Product after harvest

Question 59

is the management by an entity of the biological transformation and harvest of biological assets for sale or for conversion into agricultural produce or into additional biological assets.

Answer 59

Agricultural activity

Question 60

In agricultural activity, control may be evidenced by, for example,

Answer 60

legal ownership of cattle and the branding or otherwise marking of the cattle on acquisition or birth.

Question 61

A biological asset shall be measured on initial recognition and at the end of each reporting period at

Answer 61

fair value less cost of disposal.

Question 62

Agricultural produce harvested shall be measured at

Answer 62

fair value less cost of disposal at the point of harvest

Question 63

Agricultural produce growing on bearer plant is measured at

Answer 63

Agricultural produce growing on bearer plant is measured at fair value less cost of disposal

Question 64

A gain or loss arising on initial recognition of a biological asset at fair value less cost of disposal and any subsequent changes in fair value less cost of disposal shall be included in

Answer 64

profit and loss

Question 65

A ____ may arise on initial recognition of a biological asset, for example, when a calf is born.

Answer 65

gain

Question 66

Agricultural land is _________ a biological asset.

Answer 66

not deemed

Question 67

The agricultural land may be classified either as ______________ for purposes of measurement.

Answer 67

property, plant and equipment or investment property

Question 68

Under _____, bearer plants should be accounted for in the same way as ____________ because the operation of bearer plants is similar to that of manufacturing

Answer 68

IFRS
property, plant and equipment

Question 69

is a living plant used in the production of agricultural produce, expected to bear produce for more than one period and has a remote likelihood of being sold as agricultural produce, except as incidental scrap

Answer 69

bearer plant

Question 70

are used solely to grow agricultural produce over several periods.

Answer 70

Bearer y

Question 71

A bearer plant that no longer bears produce is commonly ______ and sold as ___ at the end of the productive life.

Answer 71

cut down
scrap

Question 72

Trees grown to be harvested and sold as log or lumber are

Answer 72

not bearer plant

Question 73

The agricultural produce as it grows is measured at the end of each reporting period

Answer 73

prior to harvest at fair value less cost of disposal

Question 74

The agricultural produce growing on bearer plant is classified as

Answer 74

biological assets

Question 75

Once harvested, the agricultural produce is measured at

Answer 75

fair value less cost of disposal at the point of harvest.

Question 76

The fair value less cost of disposal at the point of harvest is the deemed

Answer 76

cost of inventory

Question 77

The harvested product is recorded as ____ and recognized as from agricultural produce.

Answer 77

inventory
gain

Question 78

animals related to recreational activities shall be accounted for as

Answer 78

PPE

Question 79

is an existing liability of uncertain timing or uncertain amount.

Answer 79

Provisions

Question 80

Actually, a provision may be the equivalent of an estimated liability that is accrued because it is both

Answer 80

probable and measurable

Question 81

The present obligation may be

Answer 81

legal or constructive

Question 82

is an obligation arising from a contract, legislation or other operation of law.

Answer 82

legal obligation

Question 83

exists when the entity has a stated policy that created a valid expectation that it will accept certain responsibilities from an established pattern of practice.

Answer 83

Constructive Obligations

Question 84

The past event that leads to a present obligation is called an

Answer 84

obligating event

Question 85

is an event that creates a legal or constructive obligation because the entity has no realistic alternative but to settle the obligation created by the event.

Answer 85

obligating event

Question 86

An accounting provision cannot be created in anticipation of a

Answer 86

future event

Question 87

if the event is more likely than not to occur, meaning, the probability that the event will occur is greater than the probability that it will not occur.

Answer 87

probable

Question 88

means more than 50% likely to occur

Answer 88

Probable

Question 89

means 50% or less likely to occur

Answer 89

Possible

Question 90

means 10% or less likely to occur or very slightboccurrence

Answer 90

Remote

Question 91

When no reliable estimate can be made, no ____ is recognized

Answer 91

liability

Question 92

The amount recognized as a provision should be the ______ of the expenditure required to settle the present obligation at the end of reporting period.

Answer 92

best estimate

Question 93

is the amount that an entity would rationally pay to settle the obligation at the end of reporting period.

Answer 93

best estimate

Question 94

Where there is a continuous range of possible outcomes and each point in that range is as likely as any other, the _________ is the best estimate.

Answer 94

midpoint of the range

Question 95

Where the provision being measured involves a large population of items, the obligation is estimated by ________ all possible outcomes by their associated possibilities.

Answer 95

weighting

Question 96

The following items are taken into consideration in recognizing and measuring a provision:

Answer 96

1. Risks and uncertainties
2. Present value of obligation
3. Future events
4. Expected disposal of assets
5. Reimbursements
6. Changes in provision
7. Use of provision
8. Future operating losses.
9. Onerous contract

Question 97

that inevitably surround events and circumstances shall be taken into account in reaching the best estimate of a provision

Answer 97

risk and uncertainties

Question 98

describes variability of outcome.

Answer 98

Risk

Question 99

A ______ may increase the amount at which a liability is measured.

Answer 99

risk adjustment

Question 100

As ______ dictates, caution is needed in making judgment under conditions of uncertainty so that income and assets are not overstated, or expenses and liabilities are not understated

Answer 100

prudence

Question 101

Where the effect of the time value of money is material, the amount of provision shall be the _____ of the expenditure expected to settle the obligation

Answer 101

present value

Question 102

Gains from expected disposal of assets _____ be taken into account in measuring a provision.

Answer 102

shall not

Question 103

any ______ from disposal are treated separately from the measurement of the provision.

Answer 103

cash inflows

Question 104

Where some or all of the expenditure required to settle a provision is expected to be reimbursed by another party, the reimbursement shall be recognized when it is _____ that reimbursement would be received if the entity settles the obligation.

Answer 104

virtually certain

Question 105

The reimbursement shall be treated as a _____ and ____ against the estimated liability for the provision.

Answer 105

separate asset and not netted

Question 106

The amount of reimbursement shall not ___ the amount of the provision.

Answer 106

exceed

Question 107

The provision shall be ____ if it is no longer probable that an outflow of economic benefits would be required to settle the obligation.

Answer 107

reversed

Question 108

Provisions shall be reviewed at ___________ and adjusted to reflect the current best estimate.

Answer 108

every end of the reporting period

Question 109

shall be used only for expenditures for which the provision was originally recognized.

Answer 109

Provision

Question 110

Provision shall not be recognized for future

Answer 110

operating losses

Question 111

is a contract in which the unavoidable costs of meeting the obligation under the contract exceed the economic benefits expected to be received under it.

Answer 111

Onerous contract

Question 112

unavoidable costs under a contract represent the

Answer 112

least net cost of exiting from the contract

Question 113

The ______ between the cost of fulfilling the contract and the compensation or penalty arising from failure to fulfill the contract is the least cost of exiting from the contract.

Answer 113

lower amount

Question 114

is a possible obligation that arises from past event and whose existence will be confirmed only by the occurrence or nonoccurrence of uncertain future events

Answer 114

Contingent liability

Question 115

is defined also as a probable obligation that arises from past event but the amount of the obligation cannot be measured reliably.

Answer 115

Contingent liability

Question 116

a contingent liability is either probable or measurable but

Answer 116

not both

Question 117

If the obligation is probable and the amount can be measured _____, the obligation is not a contingent liability but shall be recognized as a _____.

Answer 117

reliably
provisin

Question 118

Treatment of contingent liability.

Possible

Answer 118

disclosure only

Question 119

Treatment of contingent liability.

Probable but not measurable

Answer 119

disclosure only

Question 120

Treatment of contingent liability.

Remote

Answer 120

no need for disclosure

Question 121

Treatment of contingent liability.

Probable and measurable

Answer 121

recognize a loss and an estimated liability

Question 122

is a possible asset that arises from past event and whose existence will be confirmed only by the occurrence or nonoccurrence of uncertain future events.

Answer 122

Contingent asset

Question 123

Treatment of contingent asset

Probable

Answer 123

disclosure only

Question 124

Treatment of contingent asset

Possible

Answer 124

no need for disclosure

Question 125

Treatment of contingent asset

Remote

Answer 125

no need for disclosure

Question 126

Biological assets are measured at

a. Fair value less cost of disposal
b. Fair value plus cost of disposal
c. cost
d. Cost less accumulated depreciation

Answer 126

A

Question 127

should be accounted for in the same way as ppe because the operation of this is similar to that of manufacturing

are used solely to grow agricultural produce over several periods

Answer 127

bearer plants

Question 128

biological transformation results from asset changes through all of the following, except

a. growth
b. degeneration
c. procreation
d. production of agricultural produce

Answer 128

D

Question 129

agricultural activity includes all of the following except

a. raising livestock
b. perennial cropping
c. aquaculture
d. ocean fishing

Answer 129

D

Question 130

the harvested agricultural produce is

a. accounted for as inventory
b. initially recognized at fair value less cost of disposal at the point of harvest
c. recorded as gain from change in fair value of agricultural produce
d. all of these are correct

Answer 130

D

Question 131

generally speaking, biological assets relating to agricultural activity shall be measured using

a. historical cost
b. historical cost less depreciation less impairment
c. a fair value approach
d. net realizable value

Answer 131

C

Question 132

which of the following criteria must not be satisfied before a biological asset can be recognized?

a. the entity controls the asset as a result of past event
b. it is probable that future economic benefits relating to the asset will flow to the entity
c. an active market for the asset exists
d. the fair value can be measured reliably

Answer 132

C

Question 133

an entity had a plantation forest that is likely to be harvested and sold in 30 years. the income shall be accounted for in which of the following?

a. no income shall be reported annually until first harvest
b. income shall be measured annually and reported using a fair value approach
c. the eventual sale proceeds shall be estimated and recognized over the 30-year period
d. the plantation forest shall be measured every 5 years.

Answer 133

b. income shall be measured annually and reported using a fair value approach

Question 134

when there is a long aging or maturation process after harvest, the accounting shall be dealth with by

a. PAS 41, Agriculture
b. PAS 2, Inventories
c. PAS 16, property, plant and equipment
d. PAS 40, Investment Property

Answer 134

b. PAS 2, Inventories

Question 135

How should a contingent liability be reported in the financial statements when it is reasonably possible?

a. As a deferred liability
b. As an accrued liability
c. As a disclosure only
d. As an account payable

Answer 135

c. As a disclosure only

Question 136

A contingent liability

a. Has a most probable value -of zero but may require a payment if a given future event occurs.
b. Definitely exists as a liability but the amount or due date is indeterminate.
c. Is reported of current liability.
d. Is not disclosed in the financial statements.

Answer 136

a. Has a most probable value -of zero but may require a payment if a given future event occurs.

Question 137

Gain contingency that is remote and measurable

a. Must be disclosed in a note to the financial statements.
b. May be disclosed in a note to the financial statements
c. Must be reported in the body of the financial statements.
d. Should not be reported or disclosed

Answer 137

d. Should not be reported or disclosed

Question 138

Reporting in the financial statements is required for

a. Loss contingency that is probable and measurable.
b. Gain contingency that is probable and measurable.
c. Loss contingency that is possible and measurable.
d. All loss contingencies.

Answer 138

a. Loss contingency that is probable and measurable.

Question 139

Financial Instruments - Presentation

Answer 139

PAS 22

Question 140

Provision, Contingent Liability and Asset

Answer 140

PAS 37

Question 141

Agriculture

Answer 141

Pas 41

Question 142

any contract that gives rise to both a financial asset of one entity and a financial liability or equity instrument of another entity.

Answer 142

Financial Instrument

Question 143

is any liability that is a contractual obligation:

Answer 143

financial liability

Question 144

Deferred revenue and warranty obligations ____________ because the outflow of economic benefits is the delivery of goods and services rather than a contractual obligation to pay cash.

Answer 144

are not financial liabilities

Question 145

is not a financial liability because it is imposed by law and noncontractual.

Answer 145

Income tax payable

Question 146

are not financial liabilities because the obligations do not arise from contract.

Answer 146

Constructive obligations

Question 147

is any contract that evidences a residual interest in the assets of an entity after deducting all of the liabilities.

Answer 147

Equity instrument

Question 148

as a financial instrument that contains both a liability and an equity element from the perspective of the issuer.

Answer 148

compound financial instrument

Question 149

If the financial instrument contains both a liability and an equity component, PAS 32 mandates that such components shall be accounted for separately.

The approach in accounting for a compound financial instrument is known as

Answer 149

“split accounting”

Question 150

The fair value of the liability component is then deducted from the total consideration received from the issuance of the compound financial instrument.

The ______ is allocated to the equity component.

Answer 150

residual amount

Question 151

This means that the consideration received from the issuance of the compound financial instrument shall be allocated between the liability and equity components.

Answer 151

Split Accounting

Question 152

A financial instrument is any contract that gives rise to

a. A financial asset
b. A financial liability
c. A financial asset of one entity and a financial liability of another entity
d. A financial asset of one entity and a financial liability or equity instrument of another entity

Answer 152

d. A financial asset of one entity and a financial liability or equity instrument of another entity

Question 153

Which is not classified as a financial instrument?

a. Convertible bond
b. Foreign currency contract
c. Warranty provision
d. Loan receivable

Answer 153

c. Warranty provision

Question 154

Which cannot be considered a financial asset?

a. Cash
b. A contractual right to receive cash or another financial asset from another entity.
c. A contractual right to exchange financial instruments with another entity under conditions that are potentially unfavorable.
d. An equity instrument of another entity

Answer 154

c. A contractual right to exchange financial instruments with another entity under conditions that are potentially unfavorable.

Question 155

Which should be classified as financial asset?

a. Patent
b. Trade accounts receivable.
c. Inventory
d. Land.

Answer 155

b. Trade accounts receivable.

Question 156

A financial liability

a. Must be classified as noncurrent liability.
b. Is a contractual obligation to deliver cash or another financial asset to another entity.
c. Is a contractual obligation to exchange financial instrument with another entity under conditions that are potentially favorable to the entity.
d. Is a contractual obligation to deliver cash or any asset to another entity.

Answer 156

b. Is a contractual obligation to deliver cash or another financial asset to another entity.

Question 157

Financial liabilities include all of the following, except

a. Trade accounts payable
b. Notes payable
c. Bonds payable
d. Income tax payable

Answer 157

d. Income tax payable

Question 158

It is any contract that evidences residual interest in the assets of an entity after deducting all of the liabilities.

a. Equity instrument
b. Debt instrument
c. Loan receivable
d. Financial asset with indeterminable fair value

Answer 158

a. Equity instrument

Question 159

How should preference shares that are redeemable mandatorily be presented in the statement of financial position?

a. Noncurrent liability
b. Current liability
c. Equity
d. Either current or noncurrent liability depending on redemption date

Answer 159

d. Either current or noncurrent liability depending on redemption date

Question 160

What is the presentation of preference dividend on mandatorily redeemable preference shares?

a. Deducted from retained earnings
b. Deducted from share premium
c.Interest expense
d. Deducted from share capital

Answer 160

c.Interest expense

Question 161

when bonds are issued with share warrants, the equity component is equal to

a. zero
b. the excess of the proceeds over the face amount of the bonds.
c. the market value of the share warrants.
d. the excess of the proceeds over the fair value of the bonds without the share warrants

Answer 161

d. the excess of the proceeds over the fair value of the bonds without the share warrants

Question 162

A bond convertible by the holder into a fixed number of ordinary shares of the issuer is

a. A compound financial instrument
b. A primary financial instrument
c. A derivative financial instrument
d. An equity instrument

Answer 162

a. A compound financial instrument

Question 163

Convertible bonds

a. Have priority over other indebtedness.
b. Are usually secured by a mortgage.
c. Pay interest only in the event net income is sufficient.
d. May be exchanged for shares of the issuer.

Answer 163

d. May be exchanged for shares of the issuer

Question 164

Issued convertible bonds are

a. Separated into liability and equity with the liability recorded at fair value and the residual assigned to the equity.
b. Always recorded using fair value
c. Recorded at face amount for the liability
d. Recorded at par value of the shares

Answer 164

a. Separated into liability and equity with the liability recorded at fair value and the residual assigned to the equity.

Question 165

Convertible bonds

a. Are separated into liability and expense
b. Allow an entity to issue debt financing at lower rate.
c. Are separated into liability and equity components based on fair value.
d. Are not accounted for as compound instrument

Answer 165

b. Allow an entity to issue debt financing at lower rate.

Question 166

The proceeds from an issue of bonds payable with share warrants should not be allocated between the liability and equity components when

a. The fair value of the warrants is not readily available.
b. The exercise of the warrants within the next reporting period seems remote.
c. The warrants issued are nondetachable.
d. The proceeds should be allocated between liability and equity under all of these circumstances

Answer 166

d. The proceeds should be allocated between liability and equity under all of these circumstances

Question 167

is the income appearing on the traditional income statement and computed in accordance with accounting standards.

Answer 167

Accounting income

Question 168

Income Taxes

Answer 168

PAS 12

Question 169

are items of revenue and expense which are included in either accounting income or taxable income but will never be included in the other.

Answer 169

Permanent differences

Question 170

permanent differences pertain to

Answer 170

nontaxable revenue and nondeductible expenses

Question 171

do not give rise to deferred tax asset and liability because they have no future tax consequences.

Answer 171

Permanent Difference

Question 172

are items of income and expenses which are included in both accounting income and taxable income but at different time periods.

Answer 172

Temporary Difference

Question 173

give rise either to a deferred tax liability or deferred tax asset.

Answer 173

Temporary Difference

Question 174

is the income for the period determined in accordance with tax law upon which income taxes are payable or recoverable.

Answer 174

Taxable Income

Question 175

shall be recognized for all taxable temporary differences.

Answer 175

deferred tax liability

Question 176

is the temporary difference that will result in future taxable amount in determining taxable income of future periods.

Answer 176

Taxable temporary difference

Question 177

arises when accounting income is higher than taxable income because of future taxable amount.

Answer 177

deferred tax liability

Question 178

Expenses and losses are ____ for tax purposes in the current period but deductible for accounting purposes in future periods.

Answer 178

deductible

Question 179

is an excess of tax deductions over gross income in a year that may be carried forward to reduce taxable income in a future year.

Answer 179

Operating loss carryforward

Question 180

is the temporary difference that will result in future deductible amount in determining taxable income of future periods.

Answer 180

Deductible temporary difference

Question 181

when it is probable that taxable income will be available against which the deferred tax asset can be used..

Answer 181

operating loss carryforward

Question 182

A deferred tax liability or deferred tax asset shall be measured using the tax rate that has been enacted by the __________ and ___ to apply to the future period.

Answer 182

end of the reporting period
expected

Question 183

is the current tax expense or the amount of income tax actually payable. The income tax payable is classified as current liability.

Answer 183

current tax liability

Question 184

Under our income tax law, income tax for corporations is payable

Answer 184

every quarter

Question 185

If the amount of tax already paid for the current period exceeds the amount actually payable for the period, the excess is recognized as a

Answer 185

current tax asset.

Question 186

is a prepaid income tax and shall be classified as current asset.

Answer 186

current tax asset

Question 187

In computing the deferred tax asset or liability, which tax, rate is used?

a. Current tax rate
b. Estimated future tax rate
c. Enacted future tax rate
d. Prior tax rate

Answer 187

c. Enacted future tax rate

Question 188

When temporary difference will result in taxable amount in future years

a. A deferred tax liability is recognized in the current year.
b. A deferred tax asset is recognized in the current year.
c. A deferred tax asset may be recognized in the current year if certain conditions are met.
d. A deferred tax liability may be recognized in the current year if certain conditions are met.

Answer 188

a. A deferred tax liability is recognized in the current year.

Question 189

It is the amount of income tax payable related to taxable income.

a. Current tax expense
b. Total income tax expense
c. Deferred tax expense
d. Deferred tax benefit

Answer 189

a. Current tax expense

Question 190

It is the deferred tax consequence attributable to a deductible temporary difference and operating loss carryforward.

a. Deferred tax liability
b. Deferred tax asset
c. Current tax liability
d. Current tax asset

Answer 190

b. Deferred tax asset

Question 191

It is the sum of the amount of income tax payable and deferred tax liability related to accounting income.

a. Tax expense reported in the income statement
b. Current tax expense
c. Deferred tax expense
d. Deferred tax benefit

Answer 191

a. Tax expense reported in the income statement

Question 192

Employee Benefits

Answer 192

PAS 19

Question 193

all forms of consideration given by an entity in exchange for services rendered by employees or for the termination of employment.

Answer 193

Employee Benefits

Question 194

include directors and other management personnel.

Answer 194

employee

Question 195

The employee benefits include:

Answer 195

a Short-term employee benefits
b. Postemployment benefits
c. Other long term employee benefits d Termination benefits

Question 196

short-term benefits are payable

Answer 196

no later than twelve months

Question 197

are employee benefits which are expected to be settled wholly within twelve months after the end of annual reporting period

Answer 197

Short-term employee benefits

Question 198

are employee benefits, other than termination benefits and short-term employee benefits, which are payable after completion of employment

Answer 198

Postemployment benefits

Question 199

Most postemployment benefit plans are __ arrangements between an employer entity and the employees..

Answer 199

formal

Question 200

are classified as either defined contribution plan or defined benefit plan.

Answer 200

Postemployment benefit plans

Question 201

is a postemployment benefit plan under which an entity pays fixed contributions into a separate entity known as the fund.

Answer 201

contribution plan

Question 202

retirement benefit to be received by the employee

The contribution is __ but the benefit is ___. Once the defined contribution is paid, the employer has no more obligation under the plan.

Answer 202

definite
indefinite

Question 203

the ___ administers, manages and invests the funds.

Answer 203

trustee

Question 204

at the end of the period shall be recognized as accrued expense.

Answer 204

unpaid contribution

Question 205

an entity’s obligation is to provide the agreed benefits to employees.

Answer 205

defined benefit plan

Question 206

may be unfunded, fully funded or partly funded by the contributions of the entity.

Answer 206

Defined benefit plan

Question 207

the expense recognized is not necessarily the amount of contribution for the period.

Answer 207

defined benefit plan

Question 208

a. Current service cost
b. Past service cost
c. Any gain or loss on plan settlement

Answer 208

Service Cost

Question 209

Under a defined benefit plan, the employee benefit expense comprises the following:

Answer 209

Service cost
Net interest

Question 210

is the increase in the present value of the defined benefit obligation resulting from employee service in the current period.

Answer 210

Current service cost

Question 211

is the cost to an entity under a defined benefit plan for services rendered by employees in the current year.

Answer 211

current service cost

Question 212

is the cost under a defined benefit plan for services rendered by employees in prior periods resulting from the introduction of a defined benefit plan or amendment of an existing plan or curtailment of an existing plan.

Answer 212

Past service cost

Question 213

All ______, whether vested or unvested, shall be recognized as an expense immediately.

Answer 213

past service costs

Question 214

The information contained in the memorandum records of the benefit plan contains the following:

Answer 214

a Fair value of plan assets (FVPA)
b. Projected benefit obligation (PBO)

Question 215

is the source of fund set aside in meeting future benefits.

Answer 215

fair value of the plan assets

Question 216

is the present value of expected future benefits required to be settled.

Answer 216

projected benefit obligation

Question 217

If the FVPA is ___ than the PBO, the plan is overfunded and the difference is a prepaid benefit cost, a noncurrent asset.

Answer 217

more

Question 218

If the FVPA is __ than the PBO, the plan is underfunded and the difference is an accrued benefit cost, a noncurrent liability

Answer 218

less

Question 219

Observe that the “prepaid/accrued benefit cost” account is the

Answer 219

balancing figure.

Question 220

are employee benefits which are not expected to be settled wholly within twelve months after the end of annual reporting period in which the employees render the related service.

Answer 220

Other long-term employee benefits

Question 221

are employee benefits provided in
exchange for the termination of an employee’s employment as a result of either a. An entity’s decision to terminate an employee’s employment before the normal retirement date. b. An employee’s decision to accept an offer of benefits in exchange for the termination of employment.

Answer 221

termination benefits

Question 222

It is the increase in the present value of the defined benefit obligation for employee service in prior periods resulting from a plan amendment or curtailment.

a. Current service cost
b. Net interest
c. Past service cost
d. Employee benefit cost

Answer 222

c. Past service cost

Question 223

It is the increase in the present value of the defined benefit obligation resulting from employee service in the current period

a. Current service cost
b. Interest expense
c. Past service cost
d. Remeasurement

Answer 223

a. Current service cost

Question 224

A pension liability is reported when

a. PBO exceeds FVPA
b. Accumulated benefit obligation exceeds
c. Pension expense is greater than funding
d. FVPA exceeds PBO

Answer 224

a. PBO exceeds FVPA

Question 225

A pension asset is reported when

a. FVPA eceeds accumulated benefit obligation
b. FVPA exceeds PBO
c. PBO exceeds FVPA
d. FVPA exceeds remeasurements

Answer 225

b. FVPA exceeds PBO

Question 226

Vested benefits

a. Usually require minimum number of years of service
b. Are those that the employee is entitled to receive even if fired.
c. Are not contingent upon additional service under the plan.
d. Are defined by all of these.

Answer 226

D

Question 227

Postemployment employee benefits include following, except

a. Long-term disability benefits b. Retirement benefits, such as pensions
c. Postemployment life insurance
d. Postemployment medical care

Answer 227

a. Long-term disability benefits

Question 228

Earnings Per Share

Answer 228

PAS 33

Question 229

figure is the amount attributable to every ordinary share outstanding during the period.

Answer 229

earnings per share

Question 230

earnings per share information pertains only to

Answer 230

ordinary share

Question 231

is an equity instrument that is subordinate to all other classes of equity instruments.

Answer 231

ordinary share

Question 232

The computation of earnings per share requires two presentations of earnings per share, namely

Answer 232

a. Basic earnings per share
b. Diluted earnings per share

Question 233

Basic EPS =

Answer 233

Net income ÷ Ordinary shares outstanding

Question 234

If the preference share is ____, the preference dividend for the current year is deducted from net income only if there is declaration.

Answer 234

noncumulative

Question 235

The share dividends or share split shall be treated _____ as a change from the date the original shares were Issued.

Answer 235

restrospectively

Question 236

if the preference share is ____, the preference dividend is added to the net loss to get total loss to the ordinary shareholders.

Answer 236

cumulative

Question 237

If convertible bonds are outstanding during the entire year it is assumed that the conversion takes place at the

Answer 237

beginning of the year.

Question 238

_____ are granted to employees enabling them to acquire ordinary shares of the entity at a specified price during a definite period of time.

Answer 238

Share options

Question 239

have no cash yield but they derive their value from the right to obtain ordinary shares at a specified price that is usually lower than the prevailing market price.

Answer 239

Share option

Question 240

are dilutive if the exercise price or option price is less than the average market price of the ordinary share

Answer 240

Share option

Question 241

Share options are included in the EPS computation through the

Answer 241

treasury share method.

Question 242

is used to simplify the computation of incremental or potential ordinary shares that are assumed to be issued for no consideration as a result of share options.

Answer 242

treasury share method

Question 243

Earnings per share shall be reported for all of the following except

a. Income from continuing operations
b. Income from discontinued operations
c. Netincome
d. Gross income

Answer 243

d. Gross income

Question 244

In computing basic loss per share, the annual preference dividend on cumulative preference shares should be

a. Ignored
b. Deducted from the net loss whether declared or not
c. Added to the net loss whether declared or not
d. Added to the net loss only when declared

Answer 244

c. Added to the net loss whether declared or not

Question 245

In computing basic earnings per share, the full amount of the required preference dividends on cumulative preference shares for the period should be

a. Ignored
b. Deducted from net income only when declared
c. Deducted from net income whether declared or not
d. Added to net income whether declared or not

Answer 245

c. Deducted from net income whether declared or not

Question 246

In computing basic earnings per share, the amount of preference dividends on noncumulative preference shares should be

a. Deducted from net income whether declared or not
b. Deducted from net income only when declared
c. Added to net income only when declared
d. Ignored

Answer 246

b. Deducted from net income only when declared

Question 247

Where in the financial statements should basic and diluted EPS be reported?

a. In the accompanying notes
b. In management discussion and analysis
c. In the income statement
d. In the statement of cash flows

Answer 247

C

Question 248

Earnings per share should be computed on the basis of

a. Preference shares
b. Voting ordinary shares
c. Voting and nonvoting ordinary shares
d. Voting ordinary shares and preference shares

Answer 248

d. Voting ordinary shares and preference shares

Question 249

Undeclared preference dividends are deducted from net income in the EPS computation for which preference shares?

a. Noncumulative
b. Cumulative
c. Neither cumulative nor noncumulative
d. Both cumulative and noncumulative

Answer 249

b. cumulative

Question 250

Interim Financial Reporting

Answer 250

PAS 34

Question 251

means the preparation and presentation of financial statements for a period of less than one year.

Answer 251

Interim financial reporting

Question 252

Interim financial reports may be presented

Answer 252

monthly, quarterly or semiannually.

Question 253

___ interim reports are the most common.

Answer 253

Quarterly

Question 254

publicly traded entities are encouraged to provide interim financial reports at least ____ and such reports are to be made available not later than 60 days after the end of interim period.

Answer 254

semiannually

Question 255

The Securities and Exchange Commission and Philippine Stock Exchange require entities covered by the reportorial requirements of Revised Securities Act to file quarterly interim financial reports within ____ after the end of each of the first three quarters.

Answer 255

45 days

Question 256

means that each of the headings and subtotals presented in the entity’s most recent annual financial statements is required but there is no requirement to include greater detail unless this is specifically required.

Answer 256

Condensed

Question 257

are designed to provide an explanation of significant events and transactions arising since the last annual financial statements.

Answer 257

selected explanatory notes

Question 258

shall be measured at the lower of cost or net realizable value even for interim purposes.

Answer 258

inventories

Question 259

Dividend revenue, royalties and other income shall be recognized in the interim period when

Answer 259

realized

Question 260

dividend revenue is not recognized until declared because even when highly predictable based on past experience, the dividend is not an obligation of the entity until it is

Answer 260

legally declared

Question 261

are encouraged to provide interim financial reports at least semiannually and such reports are to be made available not later than 60 days after the end of interim period

Answer 261

public traded entities

Question 262

Interim financial reports shall be published

a. once a year at any time during the year.
b. within a month of the half year-end
c. on a quarterly basis
d. whenever the entity wishes

Answer 262

d. whenever the entity wishes

Question 263

If an entity does not prepare interim financial reports

a. the year-end financial statements are deemed not to comply with IFRS.
b. the year-end financial statements’ compliance with IFRS is not affected
c. the year-end financial statements shall not be acceptable under local jurisdiction.
d. interim financial reports shall be included in the year-end financial statements

Answer 263

B

Question 264

There is a presumption that anyone reading interim financial reports shall

a. understand all international financial reporting standards
b. have access to the records of the entity
c. have access to the most recent annual report
d. not make decisions based on the report

Answer 264

C

Question 265

Which statement in relation to an interim report is true?

a. an interim financial report must consists of a complete set of financial statements
b. an interim financial report must consists of a condensed set of financial statements
c. an interim financial report must consists of a condensed set or complete set of financial statements.
d. all of these statements are true.

Answer 265

C

Question 266

Which statement is true regarding interim reporting?

a. interim reports are required on a quarterly basis
b. interim reports are not required
c. interim reports require the preparation of only an income statement and a statement of financial position.
d. all of these statement are true.

Answer 266

B

Question 267

When the business is highly seasonal, what does the standard suggest?

a. additional note about the seasonal nature
b. disclosure of financial information for the latest and comparative 12-month period in addition to the interim report
c. additional disclosure in the accounting policy note
d. no additional disclosure

Answer 267

B

Question 268

For interim reporting, an inventory loss from a market decline in the second quarter shall be recognized

a. in the fourth quarter
b. proportionately over the last quarters
c. proportionately in each of the four quarters
d. in the second quarter

Answer 268

D

Question 269

for external reporting, it is appropriate to use estimated gross profit rate to determine the cost of goods sold for

a. interim reporting
b. year-end reporting
c. interim reporting and year-end reporting
d. neither interim reporting nor year-end reporting

Answer 269

A

Question 270

Advertising costs incurred shall be deferred to provide an appropriate expense in each period for

a. interim reporting
b. year-end reporting
c. interim reporting and year-end reporting
d. neither interim reporting nor year-end reporting

Answer 270

D

Question 271

Conceptually, interim financial statements can be described as emphasizing

a. timeliness over reliability
b. reliability over relevance
c. relevance over comparability
d. comparability over neutrality

Answer 271

A

Question 272

Hyperinflation

Answer 272

PAS 29

Question 273

Hyperinflation is a matter of

Answer 273

judgment

Question 274

is indicated by characteristics of the economic environment of a country which include but are not limited to the following:

Answer 274

Hyperinflation

Question 275

provides that the financial statements of an entity that reports in the currency of a hyperinflationary conomy shall be stated in terms of the

Answer 275

measuring unit current at the end of reporting period

Question 276

is the restatement of conventional or historical financial statements in terms of the current purchasing power of the peso through the use of index number.

Answer 276

Constant peso accounting

Question 277

also known as purchasing power or price level accounting.

Answer 277

Constant peso accounting

Question 278

The traditional concept of preparing financial statements based on historical cost is known as

Answer 278

nominal peso accounting

Question 279

as money held and assets and liabilities to be received or paid in fixed or determinable amount of money.

Answer 279

monetary items

Question 280

is a right to receive or an obligation to deliver a fixed or determinable amount of money.

Answer 280

essential feature of a monetary item

Question 281

refer to cash and assets that represent a fixed amount of pesos to be received, or obligations that represent a fixed amount of pesos to be paid.

Answer 281

monetary items

Question 282

their peso amounts reported in the financial statements differ from the amounts that are ultimately realizable or payable.

Answer 282

nonmonetary

Question 283

Only _____ items are restated when preparing constant peso financial statements.

Answer 283

nonmonetary

Question 284

means the goods and services that money can buy

Answer 284

Purchasing power

Question 285

An increase in the general price index means that the purchasing power of money has

Answer 285

decreased

Question 286

An increase in the general price index means that the purchasing power of money has decreased. This is popularly known as

Answer 286

inflation

Question 287

A decrease in the general price index means that the purchasing power of money has

Answer 287

decreased

Question 288

A decrease in the general price index means that the purchasing power of money has increased. This is popularly known as

Answer 288

deflation

Question 289

Retained earnings

Monetary or Non?

Answer 289

Nonmonetary

Question 290

Prepaid interest

Monetary or Non?

Answer 290

Monetary

Question 291

Consisting of bonds at amortized cost

Monetary or Non?

Answer 291

Monetary

Question 292

The general purchasing power gain or loss is computed on ___ items.

Answer 292

monetary

Question 293

Any revaluation surplus recognized previously is

Answer 293

eliminated

Question 294

First Time Adoption of PFRS

Answer 294

PFRS 1

Question 295

the index number used for restatement is known as?

such index is designed to show how much the overall level of prices in the economy has changed over time.

Answer 295

general price index

Question 296

all would indicate that hyperinflation exist, except

a. the general population regards monetary amounts in terms of relatively stable foreign currency
b. the cumulative inflation rate over three years is approaching, or exceeds 100%
c. inflation rates have exceeded interest rates in three successive years.
d. the general population prefers to keep wealth in nonmonetary assets

Answer 296

C

Question 297

All of the following are monetary items, except

a. Trade payables
b. Trade receivables
c. Administration costs paid in cash
d. Loan repayable at face amount

Answer 297

C

Question 298

The gain or loss on purchasing power in a hyperinflationary economy shall be included in

a. Profit or loss and separately disclosed
b. Retained earnings
c. Equity
d. Comprehensive income

Answer 298

A

Question 299

hyperinflation is indicated by all of the following, except

a. the general population prefers to keep wealth in nonmonetary assets.
b. interest rates, wages, and prices are linked to a price index
c. the cumulative inflation rate over three years is approaching or exceeds 100%
d. all of the indicate hyperinflation

Answer 299

D

Question 300

When computing information on a constant peso basis, which of the following is classified as nonmonetary?

a. Estimated warranty liability
b. Accrued expense
c. Unamortized discount on bonds payable
d. Refundable deposit

Answer 300

A

Question 301

When computing information on a constant peso basis which of the following is classified as nonmonetary?

a. Allowance for doubtful accounts
b. Accumulated depreciation equipment
c. Unamortized premium on bonds payable
d. Advances to unconsolidated subsidiaries

Answer 301

B

Question 302

During a period of deflation, an entity would have the greatest gain in general purchasing power by holding

a. Cash
b. Property, plant and equipment
c. Accounts payable
d. Mortgage payable

Answer 302

A

Question 303

During a period of deflation in which a liability account balance remains constant, which of the following occurs?

a. A purchasing power loss if the item is a nonmonetary liability.
b. A purchasing power gain if the item is a nonmonetary liability.
c. A purchasing power loss if the item is a monetary liability.
d. A purchasing power gain if the item is a monetary liability

Answer 303

C

Question 304

During a period of inflation in which a liability account balance remains constant, which of the following occurs?

a. A purchasing power loss if the item is a nonmonetary liability.
b. A purchasing power gain if the item is a nonmonetary liability.
c. A purchasing power loss if the item is a monetary liability.
d. A purchasing power gain if the item is a monetary liability.

Answer 304

D

Question 305

During a period of inflation, an account balance remains constant. With respect to this account, a purchasing power gain is recognized if the account is a

a. Monetary liability
b. Monetary asset
c. Nonmonetary liability
d. Nonmonetary asset

Answer 305

A

Question 306

is an entity that presents for the first time its financial statements in conformity with Philippine Financial Reporting Standards.

Answer 306

first time adopter

Question 307

are the first annual statements in which an entity adopts PFRS by an explicit and unreserved statement of compliance with PFRS.

Answer 307

first PFRS financial statements

Question 308

refers to the beginning of the earliest period for which an entity presents full comparative information under PFRS in its first PFRS financial statements.

Answer 308

date of transition to PFRS

Question 309

is the statement of financial position prepared by a first time adopter on the date of transition to PFRS.

Answer 309

opening PFRS statement of financial position

Question 310

is the starting point for accounting in accordance with PFRS.

Answer 310

opening PFRS statement of financial position

Question 311

Share Based Payment

Answer 311

PFRS 2

Question 312

is a compensation arrangement established by the entity whereby the entity’s employees shall receive equity shares in exchange for their services or receive cash based on the price of its shares.

Answer 312

share-based compensation plan

Question 313

Share-based compensation plans are classified into

Answer 313

equity settled and cash settled.

Question 314

The entity issues equity instruments in consideration for services received, for example, share options.

Answer 314

equity settled

Question 315

The entity incurs a liability for services received and the liability is based on the entity’s equity instruments, for example, share appreciation rights.

Answer 315

cash settled

Question 316

The compensation resulting from share options is measured following two methods, namely:

Answer 316

Fair value method
Intrinsic value method

Question 317

means that the compensation is equal to the intrinsic value of the share options.

Answer 317

intrinsic value method

Question 318

means that the compensation is equal to the fair value of the share options on the date of grant.

Answer 318

fair value method

Question 319

is the excess of the market value of the share over the option price.

Answer 319

intrinsic value

Question 320

If the share options ______, the employee is not required to complete a specified period of service before unconditionally entitled to the share options.

In this case, on grant date, the entity shall recognize the compensation as expense in full immediately.

Answer 320

vest immediately

Question 321

entitles an employee to receive cash which is equal to the excess of the market value of the entity’s share over a predetermined price for a stated number of shares on settlement or exercise date.

Answer 321

share appreciation right

Question 322

entitles the employee to a cash payment equal to the increase in the price of a given number of shares over a given period.

Answer 322

share appreciation right

Question 323

a share appreciation right creates a

Answer 323

liability

Question 324

Share options are what type of share-based payment transaction?

a. Asset-settled share-based payment transaction
b. Equity-settled share-based payment transaction
c. Cash-settled share-based payment transaction
d. Liability-settled share-based payment transaction

Answer 324

B

Question 325

The total compensation expense in a share option plan is measured at

a. Fair value of share options on date of grant
b. Fair value of share options on date of exercise
c. Intrinsic value of share options on date of grant
d. Intrinsic value of share options on date of exercise

Answer 325

A

Question 326

It is the difference between the fair value of the shares to which the counterparty has the right to subscribe and the price the counterparty is required to pay for those shares.

a. Fair value
b. Intrinsic value
c. Market value
d. Book value

Answer 326

B

Question 327

The date on which total compensation expense is computed in a share option plan is the

a. Date of grant
b. Date of exercise
c. Date when the market price coincides with the option price
d. Date when the market price exceeds the option price

Answer 327

A

Question 328

For transactions with employees, the fair value of the share options is measured on

a. Exercise date
b. Grant date
c. End of reporting period
d. Beginning of the year of grant

Answer 328

B

Question 329

It is a contract that gives the employees the right, but not the obligation, to subscribe to the entity’s shares at a fixed or determinable price for a specified period of time.

a. Share option
b. Share warrant
c. Share appreciation right
d. Share split

Answer 329

A

Question 330

Compensation expense resulting from a share option plan is generally

a. Recognized in the period of exercise
b. Recognized in the period of the grant
c. Allocated to the periods benefited by the employee’s required service
d. Allocated over the periods of the employee’s service life to retirement

Answer 330

C

Question 331

A cash settled share-based payment transaction increases which of the following?

a. A current asset
b. A noncurrent asset
c. Equity
d. A liability

Answer 331

D

Question 332

Non-current asse held for sale

Answer 332

PFRS 5

Question 333

_____ is classified as held for sale if the carrying amount will be recovered principally through a sale transaction rather than through continuing use.

Answer 333

noncurrent asset

Question 334

Measurement of asset held for sale

Answer 334

at the lower of carrying amount or fair value less cost of disposal.

Question 335

noncurrent asset classified as held for sale shall be presented separately as

Answer 335

current asset

Question 336

is a group of assets to be disposed of, by sale or otherwise, together as a group in a single transaction and liabilities directly associated with those assets that will be transferred in the transaction.

Answer 336

disposal group

Question 337

an entity shall not classify as held for sale a noncurrent asset that is to be

Answer 337

abandoned

Question 338

is accounted for as a “disposal group classified as held for sale “

Answer 338

discontinued operation

Question 339

Which criterion does not have to be met in order for an operation to be classified as discontinued?

a. The operation shall represent a separate major line of business or geographical area.
b. The operation is part of a single plan to dispose of a separate major line of business or geographical area.
c. The operation is a subsidiary acquired exclusively with a view to resale.
d. The operation must be sold within three months after the end of reporting period.

Answer 339

D

Question 340

What is the presentation of the results from discontinued operation in the income statement?

a. The entity shall disclose a single amount on the face of the income statement below the income from continuing operations.
b. The amounts from discontinued operations shall be broken down over each category of revenue and expense.
c. Discontinued operations shall be shown as a movement on retained earnings.
d. Discontinued operations shall be shown as a line item after gross income with the related tax being shown as part of income tax expense

Answer 340

A

Question 341

Exploration and Evaluation of Mineral Resources

Answer 341

PFRS 6

Question 342

is defined as the search for mineral resources after the entity has obtained legal right to explore in a specific area as well as the determination of the technical feasibility and commercial viability of extracting the mineral resources.

Answer 342

exploration and evaluation of mineral resources

Question 343

are expenditures incurred by an entity in connection with the exploration and evaluation of mineral resources before the technical feasibility and commercial viability of extracting a mineral resource

Answer 343

Exploration and evaluation expenditures

Question 344

is the cost incurred in an attempt to locate the natural resource that can economically be extracted.

Answer 344

exploration cost

Question 345

is the cost incurred to extract the natural resource that has been located through successful exploration

Answer 345

Development cost

Question 346

Exploration and evaluation asset shall be measured initially

Answer 346

at cost

Question 347

Exploration and evaluation asset is classified either as

Answer 347

tangible asset or an intangible asset.

Question 348

Two methods of accounting for exploration cost

Answer 348

a. Successful effort method
b. Full cost method

Question 349

All exploration costs, whether successful or unsuccessful, are capitalized as cost of the successful resource discovery.

Answer 349

Full cost method

Question 350

The exploration cost directly related to the discovery of commercially producible natural resource is capitalized as cost of the resource property.

The exploration cost related to “dry holes” or unsuccessful discovery is expensed in the period incurred.

Answer 350

Successful effort method

Question 351

Most large and successful oil entities follow the

Answer 351

successful effort method

Question 352

is popular among small oil entities.

Answer 352

full cost method

Question 353

Exploration and evaluation expenditures are incurred

a. When searching for an area that may warrant detailed exploration even though the entity has not yet obtained the legal rights to explore a specific area.
b. When the legal right to explore a specific area has been obtained but the technical feasibility and commercial, viability of extracting a mineral resource are not yet demonstrable.
c. When a specific area is being developed and preparations for commercial extraction are being made.
d. In extracting mineral resource and processing the resource to make it marketable or transportable.

Answer 353

B

Question 354

When is an entity required to recognize exploration and evaluation expenditure as an asset?

a. When such expenditure is recoverable ifi future periods.
b. When the technical feasibility and commercial viability of extracting the associated mineral resource have been demonstrated.
c. When required by the entity’s accounting policy for recognizing exploration and evaluation asset.
d. Such expenditure is always expensed as incurred.

Answer 354

C

Question 355

Which of the following expenditures would never qualify as an exploration and evaluation asset?

a. Expenditure for acquisitipn of right to explore.
b. Expenditure for exploratory drilling
c. Expenditures related to the development of mineral resource
d. Expenditures for activities in relation to evaluating the technical feasibility and commercial viability of extracting a mineral resource

Answer 355

C

Question 356

Which type of expenditure is included in exploration and evaluation of mineral resources?

a. The extraction and processing of mineral resource for transport to market.
b. The commercial review of possible areas for mineral extraction before bidding for the legal right to explore a speciflc area.
c. The expenditure incurred after the technical feasibility and commercial viability of extracting a mineral resource are demonstrable.
d. None of these should be included in exploration and evaluation expenditures.

Answer 356

D

Question 357

Operating Segments

Answer 357

PFRS 8

Question 358

is the disclosure of certain financial information about the products and services an entity produces and the geographical areas in which an entity operates

Answer 358

Segment reporting

Question 359

can generally be thought of as a distinguishable component of an entity that is engaged in business activities which generate revenue and incur expenses.

Answer 359

operating segment

Question 360

identifies a function and not necessarily a manager with a specific title.

This function is to allocate resources to the segments and assess their performance.

Answer 360

chief operating decision maker

Question 361

who within the organization is responsible for the allocation of resources and assessing the performance of operating segments.

Answer 361

chief operating decision maker

Question 362

is defined as a single external customer providing revenue which amounts to 10% or more of an entity’s external revenue.

Answer 362

major customer

Question 363

Which quantitative threshold is not a requirement in qualifying a reportable segment?

a. The segment revenue, both external and internal, is 10% or more of the combined external and internal revenue of all operating segments.
b. The segment profit or loss is 10% or more of the greater between the combined profit of profitable segments and combined loss of unprofitable segments.
c. The segment assets are 10% or more of the combined assets of all operating segments.
d. The segment assets are 20% or more of the combined assets of all operating segments

Answer 363

D

Question 364

An operating segment is considered reportable when any of the following conditions is met, except

a. Segment revenue is 10% or more of the combined revenue of all segments.
b. Segment assets are 10% or more of the combined assets of all segments.
c. Segment liabilities are 10% or more of the combined liabilities of all segments.
d. Segment profit or loss is 10% or more of the combined profit of all segments that did not incur a loss.

Answer 364

C

Question 365

For segment reporting, which tests must be applied to determine if an operating segment is reportable?

a. Revenue test and asset test
b. Revenue test, asset test and profit or loss test
c. Revenue test, asset test and expense test
d. Revenue test, asset test and cash flow test

Answer 365

B

Question 366

The approach used in segment reporting is known as

a. Segment approach
b. Revenue approach
c. Management approach
d. Enterprise approach

Answer 366

C

Question 367

Financial Instruments

Answer 367

PFRS 9

Question 368

INITIAL MEASUREMENT OF FINANCIAL ASSET

Answer 368

Fair value

Question 369

if the financial asset is held for trading the financial asset is measured at

Answer 369

fair value through profit or loss

Question 370

if the financial asset is held for trading or if the financial asset is measured at fair value through profit or loss, transaction costs are

Answer 370

expensed outright

Question 371

after initial recognition,ban entity shall measure a financial asset at:

Answer 371

a. Fair value through profit or loss (FVPL)
b. Fair value through other comprehensive income (FVOCI)
c. Amortized cost

Question 372

represent an ownership interest in an entity.

Answer 372

equity securities

Question 373

include ordinary shares, preference shares and rights or options to acquire ownership shares.

Answer 373

Ownership shares

Question 374

is any security that represents a creditor relationship with an entity. A debt security has a maturity date and a maturity value.

Answer 374

debt security or debt investment

Question 375

include corporate bonds, treasury bills, commerical papers and other debt instruments with maturity.

Answer 375

Debt securities

Question 376

Depending on the business model for managing financial assets, an entity shall classify financial assets subsequentbto initial recognition at
a. Fair value through profit or loss
b. Amortized cost
c. Fair value through other comprehensive income
d. All of these are used in measuring financial assets

Answer 376

D

Question 377

Under IFRS, the presumption is that equity investments are

a. Held for trading
b. Held to profit from price changes c. Held for trading and held to profit from price changes
d. Held as financial assets at fair value through other comprehensive income

Answer 377

C

Question 378

All of the following shall be measured at FVPL, except

a. Financial asset held for trading b. Debt investment irrevocably designated at FVPL
c.Investment in quoted equity instrument
d.Debt investment at amortized cost

Answer 378

D

Question 379

Equity investments irrevocably accounted for at fair value through other comprehensive income are

a. Nontrading investments of less than 20%.
b. Trading investments of less than 20%.
c. Investments of between 20% and 50%.
d. Investments of more than 50%.

Answer 379

A

Question 380

Debt investments held for collection of contractual cash

flows are reported at

a. Net realizable value
b. Fair value
c. Amortized cost
d. The lower of amortized cost and fair value

Answer 380

C

Question 381

Debt investments not held for collection of contractual cash flows are reported at

a. Amortized cost
b. Fair value
c. The lower of amortized cost and fair value
d. Net realizable value

Answer 381

B

Question 382

Debt investments reported at amortized cost

a. Managed and evaluated based on a documented risk management strategy
b. Trading debt investments
c. Held for collection debt investments
d. All of these are correct

Answer 382

C

Question 383

The amount recognized in other comprehensive income is not reclassified to profit or loss under any circumstances.

However, on derecognition, the amount may be transferred to

Answer 383

retained earnings

Question 384

The financial asset - FVOCI is normally classified as

Answer 384

noncurrent asset.

Question 385

Fair Value Measurement

Answer 385

PFRS 13

Question 386

is the price that would be received to sell an asset in an orderly transaction between market participants.

Answer 386

Fair value of an asset

Question 387

is the price that would be paid transfer a liability in an orderly transaction between market
participants.

Answer 387

Fair value of liability

Question 388

Fair value is the price in an

Answer 388

orderly transaction

Question 389

Fair value refers to an “___” or market price under current market conditions at measurement date.

Answer 389

exit price

Question 390

Fair value is the price agreed upon by

Answer 390

market participants

Question 391

is a market in which transactions for the asset or liability take place with sufficient regularity and volume to provide pricing information on an ongoing basis.

Answer 391

Active market

Question 392

is the market with the greatest volume and level of activity for the asset or liability.

Answer 392

principal market

Question 393

In the absence of a principal market, the entity should consider the

Answer 393

most advantageous market

Question 394

is the market that maximizes the amount that would be received to sell the asset or minimizes the amount that could be paid to transfer the liability.

Answer 394

most advantageous market

Question 395

The highest and best use of the asset should possess the following:

Answer 395

a. Physically possible
b. Legally permissable
c. Financially feasible

Question 396

Market participants

Answer 396

Independent
Knowledgeable
Willing or motivated

Question 397

is defined as the use of nonfinancial asset by market participants that would maximize the value of asset.

Answer 397

Highest and best use

Question 398

In determining the fair value of an asset or a liability, an entity may refer to information that is directly observable or readily available.

Answer 398

Valuation Premise

Question 399

Three valuation techniques can be used to measure fair value:

Answer 399

Market approach
Income approach
Cost approach

Question 400

uses prices and relevant information for market transactions for identical and comparable asset and liability.

Answer 400

Market approach

Question 401

Focuses on converting future amounts into discounted cash flows.

Answer 401

Income approach

Question 402

relies on the current replacement cost to replace the asset with a comparable asset.

Answer 402

Cost approach

Question 403

Valuation techniques for fair value that include the Black-Scholes formula, a binomial model, or discounted cash flow are examples of which valuation technique?

a. Income approach
b. Market approach
c. Cost approach
d. Exit value approach

Answer 403

A

Question 404

What is the market approach for measuring fair value?”

a. Present value of future cash flows
b. Prices and other relevant information of transactions
from identical or comparable assets.
c. The price to replace the service capacity of the asset
d. The average of the present value of future cash flows

Answer 404

B

Question 405

Which of the following would be considered a Level 2 input for fair value measurement?

a. Quoted market price on a stock exchange for an identical asset
b. Quoted market price available from a business broker for a similar asset
c. Historical performance and return on the investment
d. All of these would be considered Level 2 input

Answer 405

B

Question 406

Revenue from Contracts with Customers

Answer 406

PFRS 15

Question 407

is income in the ordinary course of business activities.

Answer 407

Revenue

Question 408

is the new global framework for revenue recognition.

Answer 408

PFRS 15

Question 409

An entity should recognize revenue in a manner that depicts the _______ of good or service to a customer.

Answer 409

pattern of transfer

Question 410

is an agreement between two or more parties that creates enforceable rights and obligations in a contract.

Answer 410

contract

Question 411

is a promise to deliver a good or service in a contract with customer

Answer 411

performance obligation

Question 412

is the amount of consideration in a contract to which an entity expects to be entitled in exchange for transferring good or service to a customer.

Answer 412

transaction price

Question 413

Noncash consideration is measured at

Answer 413

FV

Question 414

is the price that the entity would sell a promised good or service separately to a customer

Answer 414

Stand-alone selling price

Question 415

Revenue shall be recognized either

Answer 415

At a point in time
over time

Question 416

is a method of marketing goods in which the entity called the consignor transfers physical possession of certain goods to a dealer or distributor called the consignee that sells the goods on behalf of the consignor.

Answer 416

Consignment

Question 417

an entity ____ transfers physical possession of certain goods to a dealer or distributor called the ____ that sells the goods on behalf of the consignor.

Answer 417

consignor
consignee

Question 418

is a contract under which an entity bills a customer for a product but the entity retains possession of the product.

Answer 418

Bill and hold arrangement

Question 419

revenue shall be recognized when the customer obtains ___ or takes title of the product even though the product remains in an entity’s physical possession.

Answer 419

control

Question 420

____ is generally designed to reward customers for past purchases and to provide them with incentives to make further purchases

Answer 420

customer loyalty program

Question 421

If a customer buys goods, the entity grants the customer ____ often described as “points”.

Answer 421

award credits

Question 422

The consideration allocated to the award credits is initially recognized as

Answer 422

deferred revenue

Question 423

The revenue recognition in accordance with the core principle is applied following

a. Four-step model
b. Five-step model
c. Three-step model
d. Any model

Answer 423

B

Question 424

Sales in which the buyer is not yet ready to take delivery but does take title are known as
a. Barter sales
b. Bill and hold sales
c. Layaway sales
d. Sales with buyback

Answer 424

C

Question 425

Leases

Answer 425

PFRS 16

Question 426

is defined as a contract or part of a contract that conveys the right to use the underlying asset for a period of time in exchange for consideration.

Answer 426

lease

Question 427

is the subject of a lease for which the right to use that asset has been provided by the lessor to the lessee.

Answer 427

underlying asset

Question 428

is the entity that obtains the right to use an underlying asset for a period of time in exchange for consideration.

Answer 428

lessee

Question 429

is the entity that provides the right to use an underlying asset for a period of time in exchange for consideration.

Answer 429

lessor

Question 430

a lessee is permitted to to apply the operating lease made in two optional exemptions.

Answer 430

a. Short-term lease
b. Low value lease

Question 431

Low value asset is a matter of

Answer 431

professional judgment

Question 432

is defined as a lease with a term of twelve months or less at the commencement date of the lease

Answer 432

short-term lease

Question 433

is defined as an asset that represents the right of a lessee to use an underlying asset over the lease term in a finance lease.

Answer 433

right of use asset

Question 434

is payment by the lessor to the lessee associated with a lease or the reimbursement or assumption by the lessor of the cost of the lessee.

Answer 434

Lease incentive

Question 435

The lease incentive should be deducted from the cost of the right of use asset.

Answer 435

True

Question 436

is incremental cost of obtaining a lease that would not have been incurred if the lease had not been obtained.

Answer 436

Initial direct cost

Question 437

The lessee shall measure the lease liability at the

Answer 437

present value of lease payments.

Question 438

is a lease that does not transfer substantially all the risks and rewards incidental to ownership of an underlying asset.

Answer 438

operating lease

Question 439

is a lease that transfers substantially all the risks and rewards incidental to ownership of an underlying asset.

Answer 439

finance lease

Question 440

Lessor - Finance lease is either

Answer 440

Direct financing lease
Sales type lease

Question 441

A right of use asset is initially measured at

a. Cost
b. Fair value
c. Current cost
d. Present value of expected cash inflows

Answer 441

A

Question 442

Under IFRS, a lessee is required to recognize

a. Right of use asset and lease liability b. Right of use asset but not lease liability
c. Lease liability but not right of use asset
d. Neither right of use asset nor lease liability

Answer 442

A

Question 443

The lessee may apply the operating lease model under what condition?

a. Short-term lease
b. Low value lease
c. Both short-term lease and low value lease
d. Under all circumstances

Answer 443

C

Question 444

The cost of right of use asset comprises all, except

a. The present value of lease payments
b. Lease payment made to lessor on or before commencement date
c. Initial direct cost incurred by lessee
d. Estimated cost of dismantling the underlying asset for which the lessee has no present obligation

Answer 444

D

Question 445

The right of use asset is reported as

a. Noncurrent as separate line stem
b. Property, plant and equipment
c. Intangible asset
d. Investment property

Answer 445

A

Question 446

A lessee with a lease containing a purchase option that is reasonably certain to be exercised should depreciate the right of use asset over

a. Useful life of the asset
b. Lease term
c. Useful life of the asset or the lease term, whichever is shorter
d. Useful life of the asset or the lease term, whichever is longer

Answer 446

A

Question 447

A lease liability is measured at

a. The absolute amount of lease payments
b. The present value of lease payments
c. The present value of fixed lease payments
d. The fair value of the underlying asset

Answer 447

B

Question 448

The lease payments include all of the following, except

a. Fixed lease payments
b. Variable lease payments
c. Leasehold improvement
d. Residual value guarantee of the lessee

Answer 448

C

Question 449

Rent received in advance by the lessor in an operating lease should be recognized as revenue

a. When received
b. At the lease inception
c. At the lease expiration
d. In the period specified by the lease

Answer 449

D

Question 450

an obligation to dismantle, remove and restore an item of property, plant and equipment as required by law or contract.

Answer 450

Decommissioning Liability

Question 451

is capitalized as cost of the property and initially recognized at present value.

Answer 451

decommissioning liability

Question 452

Changes in existing decommissioning, restoration and similar liabilities

Answer 452

IFRIC 1

Question 453

Members’ shares in cooperative entities and similar instruments

Answer 453

IFRIC 2

Question 454

Distribution of noncash assets to owners

Answer 454

IFRIC 17

Question 455

Extinguishing financial liabilities with equity instruments

Answer 455

IFRIC 19

Question 456

Change in decommissioning liability

a. A decrease in decommissioning liability is ____ the cost of the asset.

Answer 456

deducted

Question 457

Change in decommissioning liability

b. A increase in decommissioning liability is ___ the cost of the asset.

Answer 457

added

Question 458

is the issuance of share capital by the debtor to the creditor in full or partial payment of an obligation

Answer 458

equity swap

Question 459

An entity shall measure a liability to distribute noncash asset as dividend to the owners at

a. Carrying amount of the asset distributed
b. Fair value of the asset distributed c. Either the carrying amount or fair value of the asset
d. Neither the carrying amount nor fair value

Answer 459

B

Question 460

An entity shall adjust the carrying amount of the dividend payable at the end of each reporting period and at the date of settlement with any changes in the carrying amount of the dividend payable recognized

a. Directly in retained earnings
b. As gain or loss on property dividend
c. As adjustment of share premium
d. As component of other comprehensive income

Answer 460

A

Question 461

When an entity settles the property dividend payable, it shall recognize the difference between the carrying amount of the asset distributed and the carrying amount of the dividend payable as

a. Gain or loss on distribution of property dividend.
b. Other comprehensive income
c. Equity adjustment
d. Prior period error

Answer 461

A

Question 462

An entity shall measure a noncurrent asset classified as held for distribution to owners at

a. Carrying amount
b. Fair value less cost to distribute.
c. Lower between carrying amount and fair value lesscost to distribute
d. Fair value

Answer 462

C

Question 463

An entity shall initially measure equity instrument issued to extinguish a financial liability at

a. Fair value of the equity instrument issued
b. Fair value of the liability extinguished
c. Par value of the equity instruments issued
d. Carrying amount of the liability extinguished

Answer 463

A

Question 464

If the fair value of the equity instrument issued cannot be reliably measured, the equity instrument issued to extinguish a financial liability shall be measured at

a. Fair value of the liability extinguished
b. Par value of the equity instrument issued
c. Carrying amount of the liability extinguished
d. Book value of the equity instrument issued

Answer 464

A

Question 465

If both the fair value of the equity instrument issued and the fair value of the financial liability extinguished cannot be measured reliably, the equity instrument issued shall be measured at

a. Carrying amount of the liability extinguished
b. Par value of equity instrument issued
c. Carrying amount of the equity instrument issued
d. Value assigned by the Board of Directors

Answer 465

A

Question 466

The gain or loss from extinguishment of a financial liability by issuing equity instrument is presented as

a. Other income or other expense b. Separate line item in the income statement
c. Component of other comprehensive income
d. Interest expense

Answer 466

B

Question 467

It is an obligation to dismantle, remove and restore an item of property, plant and equipment as required by law or contract.

a Decommissioning liability
b. Mining claim
c.Executory obligation
d. Contingent liability.

Answer 467

A

Question 468

The decommissioning liability is initially recognized at

Answer 468

Present Value

Question 469

The decommissioning liability is

a. Expensed immediately
b. Directly charged against retained earnings
c. Capitalized as cost of the mining facility
d. A deferred charge

Answer 469

C

Question 470

Members’ shares in cooperative entities are classified as

a. Equity
b. Liability
c. Partly equity and partly liability
d. Either equity or liability depending on the terms and conditions of the financial instrument

Answer 470

D

Question 471

Members’ shares in cooperative entities are classified as equity when

a The entity has an unconditional right to refuse redemption of the members’ shares b. The entity has a conditional right to refuse redemption of the members’ shares.
c. The redemption is conditionally prohibited by law
d. The redemption is conditionally prohibited by the
entity’s charter

Answer 471

A