Worksheets50-100
Total questions: 46
Worksheet time: 23mins
Name
Class
Date
1.
Using the definitions in the IASB Conceptual Framework for Financial Reporting, which two of the following are examples of 'expenses'?
a)
A decrease in economic benefits during the accounting period
b)
A decrease in equity arising from a distribution to equity participants
c)
A reduction in income for the accounting period
d)
A loss on the disposal of a non-current asset
2.
According to IAS 12 Income taxes, deferred tax assets are the amounts of income taxes recoverable in future periods in respect of deductible permanent differences.”
a)
True
b)
False
3.
In a period of rising purchase costs, FIFO usually gives a lower taxable income than AVCO and therefore, yields a tax advantage
a)
True
b)
False
4.
A truck held for resale should be considered as a non-current asset in the statement of financial position.
a)
True
b)
False
5.
Candy Plc received an invoice on 31 March 20X9 for maintenance work done on one of its machines. £21,000 of the cost is actually for a machine upgrade, which will improve the machine’s efficiency. However, the accountant charged the whole amount of the invoice to maintenance costs. This machine is depreciated at 20% per annum on a straight-line basis, with a proportional charge in the years of acquisition and disposal. Which amount will be understated in respect of Candy Plc’s profit for the year ended at 30 June 20X9?
a)
£16,800
b)
£21,000
c)
£19,950
d)
£19,600
6.
According to IAS 36, an asset is impaired if:
a)
Its carrying amount equals the amount to be recovered through use (or sale) of the asset
b)
If it has been damaged
c)
Its carrying amount exceeds the amount to be recovered through use (or sale) of the asset
d)
The amount to be recovered through use (or sale) of the asset exceeds its carrying amount
7.
Which of the following is NOT classified as inventory?
a)
Raw materials
b)
An office building
c)
Work in progress
d)
Finished goods
8.
A contingent liability is not recognised in the statement of financial position
a)
True
b)
False
9.
According to IAS 36, carrying amount is the amount at which an asset is recognised __________.
a)
After deducting any accumulated depreciation (amortization)
b)
After deducting accumulated impairment losses, if any
c)
Before deducting accumulated impairment losses, if any
d)
A and B
e)
A and C
10.
A contract is, or contains, a lease if the contract conveys the right __________ an identified asset for a period of time in exchange for consideration.
a)
To use
b)
To control the use of
c)
To obtain economic benefits from
d)
To recognise depreciation changes of
11.
According to IAS 12 Income taxes, “The tax base for a machine for tax purposes is greater than the carrying amount in the financial statements up to the end of the reporting period. This will give rise to a deferred tax asset.”
a)
True
b)
False
12.
According to IAS 38 Intangible assets, expenditure during the development phase of a project may sometimes be capitalised as an intangible asset.
a)
True
b)
False
13.
Under IAS 36, for impairment testing, a cash-generating unit is
a)
The lowest aggregation of assets that can generate independent cash inflows
b)
Any unit that generates cash
c)
Corporate assets
d)
The highest aggregation of assets that can generate independent cash inflows
14.
Which of the following statements is true with regards to an investment property?
a)
An investment property generates cash flows largely independently of the other assets held by an entity
b)
The value in use of investment property is significantly higher than of owner-occupied property
c)
An investment property unlike owner-occupied property shall not be depreciated over its useful life
d)
An investment property unlike owner-occupied property shall always be measured at its historical cost
15.
Flappy Co entered into a 4-year lease agreement on 1 January 20X5. The agreement meets the definition of a lease in accordance with IFRS 16. An initial payment of $160,000 was made on 1 January 20X5 followed by three annual payments on 1 January of $150,000 each. The rate implicit in the lease is 10%. Flappy Co incurred initial direct costs of $20,000 to set up the lease. What amount will be charged to the statement of profit or loss in respect of this asset for the year ended at 31 December 20X6?
a)
$138,257
b)
$159,290
c)
$164,290
d)
$175,560
16.
The Grand Company placed an order with The Little Company for new specialist machinery. The order was non-cancellable once signed and Grand agreed to pay for the machinery at the time the order was signed on 1 February 20X9. Little held the machinery to Grand's order from 1 June 20X9, the date on which it was completed. Grand commenced using the machinery on 1 August 20X9 when Little completed the installation process. Little had staff on standby to deal with any operating problems until the warranty period ended on 1 November 20X9. Under IFRS 15 Revenue from contracts with customers, Little should recognise the revenue from the sale of this specialist machinery on:
a)
1 Nov X9
b)
1 Aug X9
c)
1 Jun X9
d)
1 Feb X9
17.
The lease payments shall be discounted using __________, if that rate can be readily determined.
a)
The lessee’s incremental borrowing rate
b)
Benchmark interest rate
c)
Interest rate implicit in the lease
d)
Weighted average cost of capital rate
e)
Internal rate of return
18.
The definition of an intangible asset comprises: (i) Identifiability; (ii) Control over a resource; (iii) Existence of future benefits; (iv) Residual value
a)
and (ii)
b)
and (iii)
c)
(ii) and (iii)
d)
(ii), (iii) and (iv)
19.
A company's financial statements must disclose the accounting policies used in measuring inventories.
a)
True
b)
False
20.
According to IAS 38 Intangible assets, intangible assets with a finite useful life should be measured at cost and tested annually for impairment.
a)
True
b)
False
21.
Candy Plc is being sued by a customer for $2 million for breach of contract over a cancelled order. Candy Plc has obtained legal opinion that there is a 20% chance that Candy Plc will lose the case. The unrecoverable legal costs of defending the action are estimated at $100,000. The case will not go to court until next year. What is the amount of the provision that should be made by Candy Plc in accordance with IAS 37 Provisions, contingent liabilities and contingent assets?
a)
100,000
b)
500,000
c)
400,000
d)
2,000,000
22.
Under IAS 16, in the case of an exchange of assets, if it is impossible to identify the fair value of the acquired asset
a)
The residual value is used
b)
The asset cannot be capitalized
c)
The cost of the exchanged asset is used
d)
The fair value of the exchanged asset is used with adjustments of cash received or paid
23.
According to IAS 36, costs of disposal are:
a)
Incremental costs, directly attributable to the disposal of an asset (or cash-generating unit), plus finance costs and income tax expense
b)
Incremental costs, directly attributable to the disposal of an asset, excluding finance costs and income tax expense
c)
Incremental costs, directly attributable to the disposal of an asset (or cash-generating unit), plus finance costs, but excluding income tax expense
d)
Incremental costs, directly attributable to the disposal of an asset (or cash-generating unit), plus tax expense, but excluding finance costs
24.
Flappy Co entered into a 4-year lease agreement on 1 January 20X5. The agreement meets the definition of a lease in accordance with IFRS 16. An initial payment of $160,000 was made on 1 January 20X5 followed by three annual payments on 1 January of $150,000 each. The rate implicit in the lease is 10%. Flappy Co incurred initial direct costs of $20,000 to set up the lease. Which of the following entries could fully reflect the event at 1 January 20X5?
a)
Debit right-of-use asset $553,028, Credit Lease liability $553,028
b)
Debit right-of-use asset $533,028, Credit Lease liability $533,028
c)
Debit right-of-use asset $553,028, Credit Lease liability $393,028, Credit Cas $160,000
d)
Debit right-of-use asset $533,028, Credit Lease liability $373,028, Credit Cash $160,000
25.
It may be acceptable for inventories to be valued at selling price less estimated profit margin.
a)
True
b)
False
26.
The __________ of an asset is the estimated amount that an entity would currently obtain from disposal of the asset, after deducting the estimated costs of disposal, if the asset were already of the age and in the condition expected at the end of its useful life.
a)
Residual value
b)
Value in use
c)
Cost to sell
d)
Deemed cost
27.
Which one of the following terms best describes the removal of an asset from an entity’s statement of financial position?
a)
Write-off
b)
Depreciation
c)
Impairment
d)
Derecognition
28.
Which of the following shall be accounted in accordance with IAS 38?
a)
Motion picture films
b)
Patents and copyrights
c)
Manuscripts
d)
All of the above
29.
Under IAS 40 Investment Property, companies have a choice to use either the cost model or the fair value model. Which one of the following disclosures should be made when the fair value model has been adopted?
a)
Useful lives or depreciation rates used
b)
The amount of impairment losses recognised
c)
Net gains or losses from fair value adjustments
d)
Depreciation methods used
30.
At the commencement date, a lessee shall measure the right-of-use asset at __________.
a)
Cost
b)
Fair value
c)
Present value
d)
Value in use
31.
An entity shall not recognise a contingent liability __________.
a)
Unless an entity has a present liability as a result of a past event
b)
Unless it is probable that an outflow of resources embodying economic benefits will be required to settle this liability
c)
Unless a reliable estimate can be made of the amount of this liability
d)
None of the above
32.
A contingent asset should be disclosed by note if an inflow of economic benefits is probable. Tài sản tiềm tàng phải được trình bày rõ ràng nếu có thể mang lại lợi ích kinh tế.
a)
True
b)
False
33.
Contingent assets must not be recognised in financial statements unless an inflow of economic benefits is virtually certain to arise.
a)
True
b)
False
34.
Which ONE of the following statements best describes the term 'going concern'?
a)
When current liabilities of an entity exceed current assets
b)
The ability of the entity to continue in operation for the foreseeable future
c)
The potential to contribute to the flow of cash and cash equivalents to the entity
d)
The expenses of an entity exceed its income
35.
In a period of rising prices, applying the FIFO method in measuring cost of inventories would result in a lower gross profit figure than the AVCO method.
a)
True
b)
False
36.
Which of the following is not an example of directly attributable costs according to IAS 16?
a)
Costs of employee benefits arising directly from the construction or acquisition of the item of property, plant and equipment
b)
Costs of site preparation
c)
Costs of conducting business in a new location or with a new class of customer
d)
Initial delivery and handling costs
e)
Professional fees
37.
The cost of a property interest held under a lease should be valued at:
a)
Fair value
b)
The higher of fair value and PV of minimum lease payments
c)
The lower of fair value and PV of minimum lease payments
d)
The present value of the minimum lease payments
38.
According to IFRS 16 Leases, any initial direct costs incurred by a lessee are added to the amount of the asset recognised in the statement of financial position.
a)
True
b)
False
39.
According to IAS 36, value-in-use is
a)
The amount at which an asset is recognized in the statement of financial position
b)
The discounted present value of future cash flows arising from use of the asset and from its disposal.
c)
The higher of an asset’s fair value less cost to sell and its market value.
d)
The market value.
40.
Deferred tax assets are the amount of income taxes recoverable in future periods in respect of:
a)
Permanent differences
b)
Taxable temporary differences
c)
Deductible temporary differences
41.
Which ONE of the following terms best describes the amount of cash or cash equivalents that could currently be obtained by selling an asset in an orderly disposal?
a)
Fair value
b)
Realisable value
c)
Residual value
d)
Value in use
42.
The closing inventory of Jaycoon Ltd amounted to £203,000 at cost at year end of 30 September 20X4. This total figure includes the following items: (1) 600 items which had cost £25 each. These items were found defective and remedial work in October 20X4 cost £5 per item. They were sold in October 20X4 for £35 with total selling expenses of £600. (2) 1,000 items which had cost £20 each and normally sold for £30. These items were found damaged and will require rectification work costing £10 per unit before they can be sold. Selling expenses are £1 per item. What amount should be shown in the Jaycoon Ltd’s statement of financial position for inventory at 30 September 20X4?
a)
£199,000
b)
£203,000
c)
£202,000
d)
£200,000
43.
According to IAS 40, transfer to or from investment property should only be made when there is a change in their use which of the following statements is true provided that the lease transfers ownership of the underlying asset to the lessee by the end of the lease term?
a)
True
b)
False
44.
The existence of which of the following in the entity’s internal reporting does indicate that an asset may be impaired?
a)
Cash flows for acquiring the asset, or subsequent cash needs for operating or maintaining it, that are significantly lower than those originally budgeted
b)
Actual net cash flows or operating profit or loss flowing from the asset that are significantly worse than those budgeted
c)
A significant decline in budgeted net cash flows or operating profit, or a significant increase in budgeted loss, flowing from the asset
d)
A and B
e)
B and C
45.
According to IAS 36, goodwill should be tested for impairment
a)
Only if there is an indication of impairment.
b)
Every five years
c)
Annually
d)
On the acquisition of a subsidiary
46.
According to IAS 36, which of the following is the best evidence of an asset's fair value less costs to sell?
a)
The carrying value of the asset
b)
An asset that is traded in an active market
c)
The price in a binding sale agreement
d)
The disposal value of the asset in an arm’s length transaction
100 %
