FAR 7

Question 1

Combined statements may be used to present the results of operations of:

Answer 1

• Unconsolidated subsidiaries
• Companies under common management
• Commonly controlled companies

Question 2

Combined statements may be used to present the results of operations of:

Answer 2

• Unconsolidated subsidiaries

- Companies under common management

Question 3

When derivatives are used for __________, the intent is not to hedge an existing position, the intent is to make a profit.

Answer 3

speculative purposes

Question 4

Under IFRS, ______________ would likely be treated in its entirety as a financial liability.

Answer 4

redeemable preferred stock

Question 5

An _____________ refers to a circumstance where related assets and liabilities are valued using different measures.

Answer 5

“accounting mismatch”

Question 6

The intrinsic value of a call option is the difference between the…

Answer 6

exercise (strike) price and the market price.

Question 7

The notional amount of a derivative is a __________ , for example, the total number of options (100) acquired by Instco.

Answer 7

specified unit of measure

Question 8

What is the characteristic of a perfect hedge?

Answer 8

No possibility of future gain or loss

Question 9

The definition of a derivative under IFRS does not include the concept of…

Answer 9

notional amount.

Question 10

Recognized servicing assets should be assessed for impairment and servicing liabilities should be assessed for understatement. In which of the following cases will an impairment loss be recognized?

Answer 10

Servicing liability with carrying value less than fair value.