RANDOM QUIZ#2

Question 1

When outcome cannot be measured reliably, what method does IFRS require?

Answer 1

Cost-recovery method

Question 2

How are interest, royalties and dividends recognized under IFRS

Answer 2

When it is probably that an economic benefit will flow to entity and amt can be reasonably measured.

Question 3

How is interest measured under IFRS?

Answer 3

Using the EFFECTIVE INTEREST METHOD

Question 4

How are dividends recognized under IFRS?

Answer 4

Divs recognized WHEN SHAREHLDR OBTAINS RIGHTS to receive the dividend.

Question 5

How are royalties recognized under IFRS

Answer 5

Royalties are recognized on the ACCRUAL BASIS under IFRS

Question 6

Trial balance categories included in Current Assets total may include the following 6:

Answer 6

1. Net of overdrafts and uncleared drafts
2. Inventory
3. Cash from land sale
4. Cash
5. A/R (net allowances)
6. Prepaid exps

Question 7

What happens when Treasury stock is reissued for a higher or lower price than what it was purchased for?

Answer 7

No gain or loss is recognized on the purchase, reissue, or retirement of Treasury Stock!

Question 8

How do you figure amt of intercompany sales when given a consolidated B/S?

Answer 8

Add revenues shown for Parent and Subsidiary. Compare to Consolidated Revenue total. The difference will be the amt of intercompany sale’

Question 9

when calculating current liabilities what is the treatment for ‘discount on bonds payable”?

Answer 9

This is netted (contra acct) with the “bonds payable” amount so if b/p is 25k and discount on b/p is 3k, then you will be adding 22k to the CL for that year.

Question 10

What qualities are emphasized in the interim reports?

Answer 10

Timliness & Relevance

Question 11

Adjustment for specific price change equals_____

Answer 11

Current Cost

Question 12

Adjustment for general price level changes equals___

Answer 12

Constant Dollar

Question 13

what 2 things make up Comprehensive Income

Answer 13

Net Income

Other Compr. Income (OCI)

Question 14

What is J.E. when issuing a government purchase order?

Answer 14

dr: Encumbrances
cr: Reserved for Encumb. (Budg Fund bal)

Question 15

Where does unfunded prior service cost fit in to Pension Liability calculation?

Answer 15

was n/a in the problem i solved

Question 16

Change in business env. is affecting factory, how do you determine amount of impairment loss?

Answer 16

1. Determine IF loss - Sum of undiscounted future cash flows is compared to CV(BV) and is less.
2. Amt is determined by Book Value (CV) vs. FV

Question 17

For a company preparing 1st year of IFRS financial stmts, what is the minimum reporting requirement?

Answer 17

3 statements of financial position are minimum for 1st time IFRS reporting.

Question 18

1. Items recorded at original cost
2. Items are adjusted to their current amounts.
3. Items (assets/cash/dollars) are NOT adjusted for changes in general price level (inflation).
4. Items are adjusted for changes in the general price level (inflation) aka “Real Dollars.”

Answer 18

1. Historical Cost
2. Current Cost
3. Nominal Dollar
4. Constant Dollar

Question 19

What amt s/Frame report as a current asset for interest on a (details given) note receivable?

Answer 19

It is Carrying amt x Int rate x time, but you must remember to adjust the carrying amount for any principle that has already been paid!!

Question 20

If 200, 9%, $1000 bonds are sold at 101, what amount, including accrued interest, does the seller receive at issuance?

Answer 20

The bonds have a stated value of 200,000.
The sale at 101 means 202,000 was received.
The accrued interest is based on STATED, not MV, so 202000 + .09 x 200,000 x 5/12.
(there were 5 mos between sale and statements)