Review Questions

Question 1

The simplified hedge accounting approach for private companies applies:

Answer 1

To specific cash flow hedge swaps.

Question 2

Gaffney uses IFRS to prepare its financial statements. During year 4, Gaffney voluntarily changes its accounting method because the new method will provide more reliable and relevant information. Gaffney can estimate the effects of the change. How should Gaffney treat the change in accounting principle?

Answer 2

On a retrospective basis.

Question 3

The purchase for cash of treasury stock should be presented in a statement of cash flows as a(n)

Answer 3

Financing activity

Question 4

IFRS permits netting of deferred taxes if they relate to the same _________ and only permits deferred taxes to be classified as __________.

Answer 4

taxing authority

noncurrent

Question 5

A company issued a bond with a stated rate of interest that is less than the effective interest rate on the date of issuance. The bond was issued on one of the interest payment dates. What should the company report on the first interest payment date?

Answer 5

An interest expense that is greater than the cash payment made to bondholders.

Question 6

For a company that has only common stock outstanding, total shareholders’ equity divided by the number of shares outstanding represents the

Answer 6

Book value per share