Which statement is true regarding interim reporting?

Interim reports are not required.

The independent view is required for interim financial statements.

Interim reports are required on a quarterly basis.

Interim reports require the preparation of only a statement of comprehensive income and a statement of financial position.

There is presumption that anyone reading interim financial reports shall

Have access to the most recent annual financial report.

Understand all International Financial Reporting Standards.

Have access to the records of the entity.

Not make decisions based on the report.

If an entity does not prepare interim financial reports

The year-end financials statements’ compliance with IFRS is not affected.

The year-end financial statements are deemed not to comply with IFRS.

The year-end financial statements shall not be acceptable under local jurisdiction.

Interim financial reports shall be included in the year-end financial statements.

Which of the following statements is true concerning significant influence?

All of these statements are true about significance influence.

If an investor holds, directly or indirectly, less than 20% of the voting power of the investee, it is presumed that the investor does not have significant influence, unless such influence can be clearly demonstrated.

If an investor holds, directly or indirectly, 20% or more of the voting power of the investee, it is presumed that the investor does have significant influence, unless it can be clearly demonstrated that this is not the case.

A substantial or majority ownership by another investor does not necessarily preclude an investor from having significant influence.

When an investor uses he equity method to account for investment in ordinary shares, the investment in ordinary shares, the investment account is increased when the investor recognizes

A proportionate interest in the net income of the investee

A cash dividend received from the investee

Periodic amortization of the goodwill

Depreciation related to the excess of market value over the carrying amount of the investee’s depreciable assets at the date if purchase by the investor.

If the associate has outstanding cumulative preference shares held by outside interests, the investor computes share of profit or loss

After adjusting for the preference dividends, whether or not the dividends have been declared.

After deducting for preference dividends which were actually paid during the year.

Without regard for preference dividends.

After adjusting for the preference dividends only when declared.

How are the proceeds from issuing a compound instrument allocated between the liability and equity components?

First, the liability component is measured at fair value, and then the remainder of the proceeds is allocated to the equity component (with-and-without method).

First, the equity component is measured at fair value, and then the remainder of the proceeds is allocated to the liability component (with-and-without method).

First, the fair values of both the equity component and the liability component are estimated. Then the proceeds are allocated to the liability and equity components based on the relation between the estimated fair values (relative fair value method).

The equity component is measured at its intrinsic value. The liability component is measured at the par amount less the intrinsic value of the equity component.

Which of the following instruments would not be classified as a financial liability?

A written call option that gives the holder the right to purchase a fixed number of the entity’s ordinary shares in return for a fixed price (i.e., the entity would issue a fixed number of own shares in return for cash, if the option is exercised by the holder, at a future date).

A preference share that will be redeemed by the issuer for a fixed amount of cash on a future date (i.e., the entity has an outstanding share that it will repurchase at a future date).

A contract for the delivery of as many of the entity’s ordinary shares as are equal in value to ₱100,000 on a future date (i.e., the entity will issue a variable number of own shares in return for cash at a future date).

An issued perpetual debt instrument (i.e., a debt instrument for which interest will be paid for all eternity, but the principal will not be repaid).

What is the accounting for treasury share transactions?

On repurchase or reissuance of previously repurchased own shares, no gain or loss is recognized.

On repurchase of treasury shares, a gain or loss is recognized equal to the difference between the amount at which the shares were issued and the repurchase price for the shares.

On reissuance of treasury shares, a gain or loss is recognized equal to the difference between the previous repurchase price and the reissuance price.

Treasury shares are accounted for as financial assets in accordance with PFRS 9.

An entity has several subsidiaries that operate in a hyperinflationary economy which uses the zloty as its local currency. Management wishes to show the financial statements in U.S. dollars. Many of the operations of the entity are within countries that are not hyperinflationary, and these subsidiaries use the euro as their functional currency. What currency should the entity use to present its consolidated financial statements?

The entity may use any currency.

An entity has a subsidiary that operates in a hyperinflationary economy. The subsidiary’s financial statements are measured in terms of the local currency, which is the zloty. The subsidiary’s financial statements have been restated in accordance with PAS 29. The parent is located in the United States and prepares the consolidated financial statements in U.S. dollars. Which of the following accounting procedures is correct in terms of the consolidation of the subsidiary’s financial statements?

The subsidiary’s financial statements should be prepared using the zloty, then restated according to PAS 29, and then retranslated into U.S. dollars at closing rates.

The subsidiary’s financial statements should be prepared using the zloty and then retranslated into U.S. dollars.

The subsidiary’s financial statements should be remeasured in U.S. dollars, then restated according to PAS 29 and consolidated.

The subsidiary’s financial statements should be deconsolidated and not included in the consolidated financial statements.

An entity is trying to determine which assets and which liabilities are monetary and nonmonetary. Which of the following assets or liabilities are nonmonetary?

Accrued expenses and other payables

These are those presented in addition to consolidated financial statements or the financial statements of an entity with an investment in associate or joint venture that is accounted for using equity method in accordance with PAS 28.

Individual financial statements

Consolidate financial statements

According to PAS 27, which of the following is required to present separate financial statements?

An entity with an investment in associate

According PAS 27, investments in subsidiaries , associates or joint venture are accounted for in the separate financial statements

Any of these, as a matter of accounting policy choice.

In accordance with PFRS 9 Financial Instruments

Using the equity method under PAS 28 Investments in Associates and Joint Ventures

When an entity issue both consolidated and separate financial statements, the EPS information is required

Only for consolidated financial statements

For both sets of financial statements

In neither set of financial statements

Only for separate financial statements

In computing for basic earnings per share, if the preference shares are cumulative, the amount that should be deducted as an adjustment to the numerator is the

Preference dividends in arrears

Preference dividends paid during the year

If new issue of shares for cash is made between the year-end and the date that the financial statements are authorized for issue

The EPS for both the current and the previous year are adjusted.

The EPS for the current year only is adjusted.

If assets are to be disposed of

The recoverable amount is the value-in-use.

The recoverable amount is the fair value less costs to sell.

The recoverable amount is the carrying value.

Which of the following is not true with regard to impairment?

The impairment test compares the carrying amount of the asset with the lower of fair value less cost of disposal and value in use.

If impairment indicators are present, the entity must conduct an impairment test.

If the recoverable amount is lower than its carrying amount an impairment loss is recognized.

If the recoverable amount is higher than carrying amount no impairment loss is recognized.

When calculating the estimates of future cash flows, which of the following cash flows should not be included?

Cash flows from the sale of assets produced by the asset.

Cash outflows on the maintenance of the asset.

What is the allocation of an impairment loss recognized for a cash generating unit?

First, to any goodwill, and the balance to the other assets prorate based on carrying amount.

Across the assets of the unit based on carrying amount.

Across the assets of the unit based on fair value.

First, to any goodwill, and the balance to the other assets prorate based on fair value.

The reversal of an impairment loss results to

a gain and an adjustment to the depreciation charges in subsequent periods.

a gain, but no adjustment to the depreciation charges in subsequent periods.

a loss and an adjustment to the depreciation charges in subsequent periods.

a loss, but no adjustment to the depreciation charges in subsequent periods.

When can a “provision” be recognized in accordance with PAS 37?

When there is a constructive obligation as a result of a past (obligating) event, the outflow of resources is probable, and a reliable estimate can be made of the amount of the obligation.

When there is a legal obligation arising from a past (obligating) event, the probability of the outflow of resources is more than remote (but less than probable), and a reliable estimate can be made of the amount of the obligation.

When there is a possible obligation arising from a past event, the outflow of resources is probable, and an approximate amount can be set aside toward the obligation.

When management decides that it is essential that a provision be made for unforeseen circumstances and keeping in mind this year the profits were enough but next year there may be losses.

An entity has been served a legal notice at year-end by the Department of Environment and Natural Resources to fit smoke detectors in its factory on or before middle of the next year. The cost of fitting smoke detector can be measured reliably. How should the entity treat this in the financial statements at year-end?

No provision is recognized at year-end because there is no present obligation for the future expenditure since the entity can avoid the future expenditure by changing the method of operations, but disclosure is required.

Recognize a provision for the current year equal to the estimated amount.

Recognize a provision for the current year equal to one-half only of the estimated amount.

What is the proper treatment of a patent infringement case of the plaintiff with probable favorable outcome and a measurable settlement?

No reporting is required at this time

A gain for the minimum settlement

A gain for the probable settlement

A competitor has sued an entity for unauthorized use of its patented technology. The amount that the entity may be required to pay to the competitor if the competitor succeeds in the lawsuit is determinable with reliability, and according to the legal counsel it is less than probable (but more than remote) that an outflow of the resources would be needed to meet the obligation. The entity that was sued should at yearend:

Make a disclosure of the possible obligation in footnotes to the financial statements.

Recognize a provision for this possible obligation.

Make no provision or disclosure and wait until the lawsuit is finally decided and then expense the amount paid on settlement, if any.

Set aside, as an appropriation, a contingency reserve, an amount based on the best estimate of the possible liability.

According to PAS 38, which of the following may be recognized as cost of intangible asset?

Purchase cost of an externally acquired publishing title

Research costs incurred in self-generating an intangible asset

Costs of an internally generated customer lists

Abnormal amount of wasted labor in self-generating an intangible asset

Which of the following items qualify as an intangible asset under PAS 38?

Legal costs paid to intellectual property lawyers to register a patent.

Advertising and promotion on the launch of a huge product.

College tuition fees paid to employees who decide to enroll in an executive M.B.A. program at Asian Institute of Management while working with the company.

Operating losses during the initial stages of the project.

The recognition criteria for an intangible asset include which condition?

It is probable that future economic benefit will arise from use and cost can be measured reliably.

The intangible asset must be measured at cost.

The cost can be measured reliably.

It is probable that future economic benefit will arise.

An activity that would be expensed currently as research and development costs is

Testing in search for or evaluation of product or process alternative.

Engineering follow-though in an early phase of commercial production.

Legal work in connection with patent application and the licensing of patent.

Adaptation of an existing capability to a particular requirement or customer need as a part of continuing commercial activity.

An entity has recently completed a highly publicized research and development project. Which statement is the most accurate?

Costs incurred during the development phase can be capitalized if criteria such as technical feasibility of the project being established are met.

Costs incurred during the research phase can be capitalized.

Training costs of technicians used in research can be capitalized.

Designing of jigs and tools would qualify as research activities.

Quiz No. 1 (Finals) BSA 1B

Authored by Jay Molina

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MULTIPLE CHOICE QUESTION

1 min • 1 pt

In rare circumstances, when a retirement benefit plan has attributes of both defined contribution and defined benefit plans, according to PAS 26 it is deemed

Defined benefit plan.

Defined contribution plan.

Neither a defined benefit nor a defined contribution plan.

For aspects of the hybrid plan that are similar to a defined benefit plan: provisions of PAS 26 applicable to such plans are to be applied; for aspects of the hybrid plan that are similar to a defined contribution plan, provisions of IAS 26 that apply to such plans are to be applied.

MULTIPLE CHOICE QUESTION

1 min • 1 pt

In defined benefit plan, if the actuarial present value of promised retirement benefits exceeds the net assets available for benefits, there is

Excess

Deficit

Retirement benefits

Income

MULTIPLE CHOICE QUESTION

1 min • 1 pt

The financial statement of a retirement benefit plan, whether defined contribution plan or defined benefit plan, does not include which of the following?

Statement of cash flows

Net assets available for benefits

Statement of changes in net assets available for benefits

Note disclosures

MULTIPLE CHOICE QUESTION

1 min • 1 pt

In the case of a defined benefit plan, PAS 26

Makes it incumbent upon the plan to obtain an actuarial valuation.

Does not make it incumbent upon the plan to obtain an actuarial valuation.

Allows the plan to estimate the present value of future benefits based on valuations done by other similar plans.

Allows the plan to add a percentage based on consumer price index to the previous year’s valuation of actuarial valuation.

MULTIPLE CHOICE QUESTION

1 min • 1 pt

What is the main difference between the financial statements of a defined contribution plan and a defined benefit plan?

The financial statements of defined contribution plan include a statement of net assets available for benefits.

The financial statements of defined benefit plan include a statement of changes in net assets available for benefits.

The financial statements of defined contribution plan show information on the actuarial present value of promised retirement benefits.

The financial statements of defined benefit plan show information on the actuarial present value of promised retirement benefits.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

An entity is preparing interim financial statements for six months ended June 30, 2023. In the interim financial statements, for six months, a statement financial position on June 30, 2023, a statement of comprehensive income for six months ended June 30, 2023 and a statement of cash flows for six months ended June 30, 2023 shall be presented. In addition, all of the following shall be presented, except

Statement of financial position on June 30, 2022

Statement of financial position on December 31, 2022

Statement of comprehensive income for six months ended June 30, 2022

Statement of cash flows for six months ended June 30, 2022

MULTIPLE CHOICE QUESTION

1 min • 1 pt

For interim reporting, an inventory loss from a market decline in the second quarter shall be recognized

In the fourth quarter

Proportionately in each of the second third and fourth quarters.

proportionately in each of the first quarter, second, third, and fourth quarters.

In the second quarter

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