Multiple choice Flashcards
- An inappropriate accounting treatment can be corrected by way of a disclosure (Explanatory Note in the annual report), provided it gives a true and fair description of the case ;
- If the management concludes that applying IFRS would be misleading it X can depart from IFRS, provided full disclosure is done ;
- Departure from IFRS is authorized when another accounting treatment than IFRS would also give a true and fair view ;
- None of the above
- All of the above.
- If the management concludes that applying IFRS would be misleading it X can depart from IFRS, provided full disclosure is done
Under the Acquisition Method, the cost of the acquisition is allocated to the Fair Value of assets, liabilities and contingent liabilities acquired, the balance, if any, then being a goodwill.
This allocation and the resulting goodwill can be corrected / adjusted based on subsequent information during the following period after acquisition date
12 months
The shares exchange ratio based on the respective economic values of the companies will be the same whether one records the merger using the Acquisition Method or the Pooling of Interests Method
Always
On September 30, the company issues an invoice for an amount of 300.000 USD. The functional currency is EUR. At that date, the spot rate is 1,15 USD/1 EUR.
On year end balance sheet date (December 31) the spot rate is 1,17 USD/ 1 EUR. On contract settlement date (February 28), the spot rate is 1,13 USD/ 1 EUR.
On February 28, the company will record
An exchange income of EUR 9.077
The following item is not a Monetary item
Long term provision
On 1 October 2021, Gréolière sold a machine to a customer for a total sales price of 27 million. The terms of the sale were that Gréolière would provide the customer with a three- year service warranty. The service warranty covered all repairs which might be necessary should the machine break down in the three-year period. The normal selling price of the machine without the inclusion of any service warranty would have been 24 million. Gréolière would normally charge a customer a total of 6 million to provide a three-year service warranty covering breakdown costs on a machine of this nature.
On 1 October 2021, what is the revenue to be recognised in the statement of profit and loss in relation with the sale of the machine ?
21,6 million
On 1 October 2021, Gréolière sold a machine to a customer. Gréolière provides the customer with a three-year service warranty. The service warranty covered all repairs which might be necessary should the machine break down in the three-year period. Gréolière charges the customer 6 million to provide the three-year service warranty. It is assumed that the costs related to the service warranty accrue evenly over the warranty period.
What is the revenue to be recognised in the statement of profit and loss for the accounting year ended 31 March 2022 in relation with the three-year service warranty ?
1 million
On 1 April 2021, Gréolière began a research project. The aim of the project was to investigate ways of streamlining its production process. The initial costs of setting up the project were 5 million. From 1 April 2021 to 30 June 2021 ongoing project costs were 500.000 per month. On 1 July 2021, the project was considered to be technically feasible and commercially viable and from this date project costs increased to 600.000 per month. The project was completed on 31 December 2021 and the new production process began to be used from 1 January 2022. The new process is likely to produce economic benefits for Gréolière for five years from 1 January 2022.
At 31 March 2022 what is the amount of the intangible asset presented in the statement of financial position in relation with the project described above ?
3.420.000
On 1 January 2021, Andon purchased an item of plant for 4 million. The estimated useful life of the plant was four years, with no residual value. Under tax legislation in the country in which Andon is located, purchases of plant attract a tax deduction of 100% of the cost in the accounting period in which the plant is purchased. The rate of corporate income tax is 20% per annum.
At yearend 2021, that transaction generates
A deferred tax liability for an amount of 600.000
The board of directors met on 10 March 2021 to discuss over-capacity in parts of the group. The decision was reluctantly taken to implement a programme of redundancies. The programme was to be implemented in two phases:
- Phase 1 involves 300 redundancies on 30 June 2021. This phase of the programme was planned out in detail at the meeting on 10 March 2021. The redundancy costs were calculated in some detail at the meeting and this first phase was made public to all affected parties on 25 March 2021.
- Phase 2 involves 200 redundancies on 30 September 2021. This phase of the programme was also planned out in detail at the meeting on 10 March. The redundancy costs were estimated at the meeting and this second phase was announced on 25 April 2021.
In the financial statements for the year ended 31 March 2021
A provision for the first phase of the redundancies should be included
- Deferred taxes are computed using the tax rate applicable in the year during which the temporary difference item was generated;
- Deferred taxes are computed using the tax rate expected to be applicable in the year(s) during which the temporary difference item will become tax deductible or taxable;
- Same as statement 2, except for the deferred tax asset generated by a tax loss (in which case statement 1 applies);
- This choice of rate is up to the company’s management, as part of its decision on accounting policies;
Deferred taxes are computed using the tax rate expected to be applicable in the year(s) during which the temporary difference item will become tax deductible or taxable;
A group of companies is made of the parent company together with
The subsidiary companies + the jointly controlled companies;
P owns 50% of A; another shareholder owns the other 50%.
Management decisions are taken jointly. P consolidates A using the Equity Method. At year end, intra-group accounts are as follows:
* Receivable from A in the books of P : 17.000 EUR
* Payable to P in the books of A: 17.000 EUR
The consolidation entry to eliminate intra-group receivables and payables will eliminate an amount of
None
- The Matching Principle cannot be respected if the accounting records are not prepared on an Accrual Basis
- The Matching Principle is respected if the accounting records are not prepared on an Accrual Basis
- None of the above
The Matching Principle cannot be respected if the accounting records are not prepared on an Accrual Basis
The following item is not a Monetary item
Inventories
