chap 6: recognition and measurement

Question 1

the process of capturing for incluusion in the financial statements an itemt hat meets the definition of an asset, liability, equity, income or expense.

Answer 1

recognition

Question 2

The amount at which an asset, a liability or equity in the statement of financial position is reported recognized as _?

Answer 2

carrying amount

Question 3

links the elements to the statement of financial position and statement of financial performance.

Answer 3

recognition. statement of financial performance.
The statements are linked because the recognition of an item in one statement requires the recognition of the same item in another statement.

Question 4

true or false: The recognition of expense happens simultaneouly with the recognition of a decrease in asset or increase in liability.

Answer 4

true

Question 5

true or false: Only items that meet the definition of an asset, a liability or equity are recognized in the statement of financial position.

Answer 5

true

Question 6

true or false: only items that meet the definition of income or expense are recognized in the statement of financial performance.

Answer 6

true

Question 7

In addition to meeting the definition of an element, items are recognized only when their recognition provides users of financial statements with information that is both _ and _.

Answer 7

relevant and faithfully represented.

Question 8

it does not focus anymore on how probable economic benefits will flow to or from the entity and that the cost can be measured reliably.

Answer 8

recognition

Question 9

true or false: An asset or liability and any corresponding income or expense can exist even if the probability of inflow or outflow of the benefits is low.

Answer 9

true

Question 10

income shall be recognized when earned.

Answer 10

income recognition principle

Question 11

under certain conditions, income may be recognized at the point of _, during production, and at the point of collection.

Answer 11

production

Question 12

with respect to sale of goods in the ordinary course of business, the point of dale is unquestionably the point of _?

Answer 12

income recognition

Question 13

legal title to the goods passes to the buyer at the _?

Answer 13

point of sale

Question 14

means that expenses ate recognized when incurred.

Answer 14

expense recognition principle

Question 15

the expense recognition principle is the application if the _?

Answer 15

matching principle

Question 16

requires that those costs and expenses incurred in earning a revenue shall be reported in the same period.

Answer 16

matching principle

Question 17

matching principle had three applications, namely?

Answer 17

1. cause and effect association
2. systematic and rational allocation
3. immediate recognition

Question 18

the expense is recognized when the revenue is already recognized.

Answer 18

cause and effect association

Question 19

the cause and wffect association principle is actually the _?

Answer 19

strict matching concept. the reasin is the presumed direct association of the expense with specific income.

Question 20

this matching process, commonly reffered to as _, involvex the simultaneous or combined recognition of revenue and expenses that reiskt directly snd jointly from the same transactions or events.

Answer 20

the matching if cost with revenue

Question 21

some costs are expensed by simply allocatinv them over the periods benefitted.

Answer 21

systematic and rational allocation. cost incurred eill benefit future periods and that there is an absencd of a direct or clear association of the expense with specific revenue.

Question 22

true or false: when economic benefits are expected to arise over serveral accounting periods and the association with incomr can only be broad or indrectly determined, expenses are recognized on the basis of _?

Answer 22

systematic and allocation procedures

Question 23

the cost incurred outright because of uncertainty of future economic benefits or difficulty of reliably associating costs iwth future revenue.

Answer 23

immediate recognition

Question 24

defined as the removal of all or part of a recognized asset or liability from the statement of financial position.

Answer 24

derecognition

Question 25

it normallt occurd when an item no longer meets the definition of an asset or liability.

Answer 25

derecognition

Question 26

it occurs when the entity loses control of all part of an asset.

Answer 26

derecognition of an asset

Question 27

it occurs when the entity no longer has a present obligation for all part or part of the liabilities.

Answer 27

derecognition of a liability

Question 28

is defined as quantifying in monetary terms the elementd in the financial statements.

Answer 28

measurement

Question 29

what are the two categories of measurement?

Answer 29

historical cost and current value

Question 30

is the cost incurred in acquiring or creating the asset comprising the consideration paid plus transaction cost.

Answer 30

historical cost or original cost of an asset

Question 31

is the consideration received to incur the liability minhd transaction cost.

Answer 31

historical cost of a liability

Question 32

is the entry orice or entry orice to acquire an asset or to incur a liability.

Answer 32

historical cost

Question 33

an application of the historical cost measurement is to measure financial asset and financial liability at _?

Answer 33

amortized cost

Question 34

it reflects the estimate of future cadh flows discounted at a rate determined at initial recognition.

Answer 34

amortized cost

Question 35

current value includes what?

Answer 35

a. fair value
b. value in use for asset
c. fulfillment value for liability
d. current cost

Question 36

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

Answer 36

fair value of an asset

Question 37

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

Answer 37

fair value of liability

Question 38

is an exit orice or exit value.

Answer 38

fair value

Question 39

it can be observed directly using market price of the asset or liability in an active market.

Answer 39

fair value

Question 40

in cases where fair value cannot be directly measured, and entity can use _?

Answer 40

present value if cash flows

Question 41

it is not adjusted for transaction cost. the reason id that such cost js a characteristic of the transaction and not of the asset or liability.

Answer 41

fair value

Question 42

is the present value of the cash flows that an entity expects to derive from the use of an asset and from the ultimate disposal.

Answer 42

value in use. it doesn’t include transaction cost on acquiring the asset but includes transaction cost in the disposal of the asset.

Question 43

is the present value if cash that an entity expects to transfer in paying or settling a liability.

Answer 43

fulfillment value. it doesn’t include transaction cost on incurring a liability but includes transaction cost on fulillment of a liability.

Question 44

is the cost of an equivalent asset at the measurement date comprising the consideration oaid and transaction cost.

Answer 44

current cost of an asset

Question 45

is the consideration that would be received less any transaction cost a measurement date.

Answer 45

current cost a liability. is also based on the entity price or entry value but reflectd market conditions in measurement date.

Question 46

true or false: in most cases, no single factor will determine which measurement basis should be selected.

Answer 46

true