CFAS Qiuz - Finals

Which of the following is considered a government grant under PAS 20?

• Award of major government contracts

• Cancellation of an existing loan from the government

• Free technical advice

• Public improvements

Which of the following is not considered a government grant under PAS 20?

• Financial aid

• Benefit of subsidized loans

• Tax breaks

• Forgivable loans

The main concept used in recognizing income from government grants is

• capital approach

• historical cost

• matching

• materiality

In 20x1, Entity A proposes an environmental clean-up project for a river. The government supports this project and gives Entity A a ₱1M monetary grant conditioned that the money will only be spent on the proposed project. The proposed project is expected to take about 2 years to complete. Entity A starts the clean-up project in 20x2. How should Entity A recognize income from the government grant?

• in full when Entity A receives the grant

• over 2 years starting in 20x1

• over the period of the project as expenses are incurred

• the grant is not recognized as income

According to PAS 20, a government grant that becomes repayable is accounted for

• retrospectively.

• prospectively.

• a or b

• not accounted for

You are an auditor. ABC Philippines Co., your client, is not sure on what to disclose in its financial statements as its functional currency. Relevant information follows: ABC Philippines Co. is a branch of ABC U.S. Co. ABC Philippines operates in a Philippine Economic Zone Authority (PEZA) Special Economic Zone. ABC Philippines is engaged in the apparel business. All of its raw materials are imported from the main office in the U.S. and all of its finished products are exported directly to U.S. customers. The U.S. customers remit payments to the U.S. main office. The U.S. main office will then provide the Philippine branch its working capital needs. None of ABC Philippines Co.s' finished products are sold in the Philippines. The raw materials imported and finished goods exported are denominated in U.S. dollars. What is ABC Philippines Co.'s functional currency?

• Philippine peso

• U.S. dollar

• a or b

• none of these

Based on the previous question, ABC Philippines Co. is required to file audited financial statements with the Philippine Securities and Exchange Commission (SEC) and the Bureau of Internal Revenue (BIR). What is the presentation currency for the financial statements to be filed with the said government agencies?

• Philippine peso

• U.S. dollar

• a or b

• none of these

These are those which do not give rise to a right to receive (or an obligation to deliver) a fixed or determinable amount of money.

• Monetary items

• Non-monetary items

• Financial items

• Non-financial items

On December 1, 20x1, you imported a machine from a foreign supplier for $100,000, due for settlement on January 6, 20x2. Your functional currency is the Philippine peso. When preparing the December 31, 20x1 statement of financial position, which of the following will you translate to the closing rate?

• machine

• accounts payable

• a and b

• none of these

On December 1, 20x1, you imported a machine from a foreign supplier for $100,000, due for settlement on January 6, 20x2. Your functional currency is the Philippine peso.

The relevant exchange rates are as follows:

Dec. 1, 20x1 Dec. 31, 20x1 Jan. 6, 20x2

₱50:$1 ₱52:$1 ₱47:$1

How much foreign exchange gain (loss) will you recognize on December 31, 20x1?

• 200,000

• c. 100,000

• (200,000)

• d. (100,000)