SPECIFIC TRANSACTIONS

Question 1

Examples of not extraordinary items:

Answer 1

~Write-down or write-off of receivables, inventories, equipment leased to others, or intangible assets
~Gains or losses from the exchange or translation of foreign currencies, including those relating to major devaluations and revaluations
~Gains or losses on the disposal of a segment of a business
~Other gains or losses from the sale or abandonment of property, plant, or equipment used in the business
~Effects of a strike, including those against competitors and major suppliers
~Adjustments of accruals on long-term contracts

Question 2

Contingent Liability

Answer 2

is the result of a past condition or event that will be resolved by an event or transaction in the future. The liability is recorded because a contingency is deemed to be probable—likely to happen—and its amount can be reasonably estimated. The liability arises because the expense or loss needs to be accounted for in the current period.

Question 3

How does IFRS and GAAP treat an estimate range in loss contingencies?

Answer 3

IFRS: Used Mid-point in the range

GAAP: Use min in range

Question 4

Components of Operating Segment

Answer 4

~Engages in activities that may earn rev and incur exp
~Its operating results are reg reviewed by the Chief operating decision maker
~Discrete info about that part of the enterprise is available

Question 5

What is a perfect hedge??

Answer 5

Would remove all of the risk- that is, remove the possibility of any future g/l

Question 6

Hedge

Answer 6

Is a protection against loss, specifically against a foreign exchange loss

Question 7

Under U.S. GAAP, an exception is allowed for the “impracticality” of calculating the impact of changes in accounting principles. For which category does IFRS allow an exception of “impracticality”?

Answer 7

Changes in accounting principles and correction of errors

Question 8

Contingency

Answer 8

Is an event that may occur in the future but that cannot currently be predicted. It has an uncertain outcome. The outcome of that event will change the existing condition or resolve a current uncertainity

Question 9

When are gain contingencies reported

Answer 9

When the event has occurred that establishes the gain

Question 10

What is the most advantageous market

Answer 10

The market that maximizes the amount that would be received to sell the asset or minimizes the amount that would be paid to transfer the liability, after taking into account transactions costs and transportation costs

Question 11

Accrual of Loss contingency

Answer 11

Requires accrual of a loss contingency when a loss is probable and the amount of such loss can be reasonably estimated.

When a loss is not accrued b/c of the absence of one or both of these conditions, but a loss is reasonably possible, a loss contingency should be disclosed but not accrued.

Question 12

Asset Retirement Obligation: Define “retirement”

Answer 12

is defined as the other-than-temporary removal of a long-lived asset from service. It includes the sale, abandonment, recycling, or disposal in some other manner, but does not encompass the temporary idling of a long-lived asset

Question 13

Selectivity - under risks and uncertainities

Answer 13

Involves the specified criteria that serve to screen the risks and uncertainties encountered by every entity. The objective is to restrict required disclosures to matters that are significant to that specific entity

Question 14

If a change in provision of a capital lease gives rise to a new agreement classified as an operating lease, then what happens…

Answer 14

the transaction shall be accounted for under the sale-leaseback requirements

Question 15

J/E for initial recognition of a liability for an asset retirement obligation

Answer 15

DR: Asset
CR: Liability