Far 5

Question 1

A liability is only recognized when all of the following criteria are met

Answer 1

1. An obligating event has occurred.
2. The event results in a present obligation to transfer assets or to provide services in the future.
3. The entity has little or no discretion to avoid the future transfer of assets or providing of services.

Question 2

If all amounts within a range of values are equally likely

Answer 2

then the lowest amount in the range is the measurement amount

Question 3

Market Price of a bond issued at a premium Equals:

Answer 3

PV of its principal amount and the PV of all future interest payments, at the market interest rate

Question 4

In a troubled debt restructuring, if the debtor achieves full settlement of the debt by transferring assets having a fair market value that is less than the amount of the debt

Answer 4

A gain is recognized for the difference between the carrying value of the payable at the date of transfer and the fair market value of the asset at the date of the transfer

Question 5

Effect of Amortization of a premium or a discountAS

Answer 5

Over time, the carrying amount of a bond sold at a discount will increase, wheras the carrying amount of a bond sold at a premium will decrease.