Question 1

Where a market has both a bid and an ask process, the price used in measuring fair value is:

Accepted Answer

A)  the average of the bid-ask prices over a 3 month period. 
B)  the most representative price for the transaction. 
C)  the ask price. 
D)  the bid price. 
A)  the average of the bid-ask prices over a 3 month period. 
B)  the most representative price for the transaction. 
C)  the ask price. 
D)  the bid price.

Question 2

Appendix A of AASB 13 Fair Value Measurement defines fair value as:

Accepted Answer

A)  The amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm's length transaction. 
B)  The price that would be paid to purchase an asset or transfer a liability. 
C)  A transaction that assumes exposure to the market for a period before the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets or liabilities; it is not a forced transaction (e.g. a forced liquidation or distress sale). 
D)  The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. 
A)  The amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm's length transaction. 
B)  The price that would be paid to purchase an asset or transfer a liability. 
C)  A transaction that assumes exposure to the market for a period before the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets or liabilities; it is not a forced transaction (e.g. a forced liquidation or distress sale). 
D)  The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Question 3

The fair value of an asset is based on its:

Accepted Answer

A)  highest and best use. 
B)  current use. 
C)  proposed use. 
D)  value in use. 
A)  highest and best use. 
B)  current use. 
C)  proposed use. 
D)  value in use.

Question 4

Which type of input is the primary measurement basis for trademarks?

Accepted Answer

A)  Level 1 inputs. 
B)  Level 2 inputs. 
C)  Level 3 inputs. 
D)  Level 4 inputs. 
A)  Level 1 inputs. 
B)  Level 2 inputs. 
C)  Level 3 inputs. 
D)  Level 4 inputs.

Question 5

When measuring the fair value of a liability, it is assumed that:

Accepted Answer

A)  the liability will be settled by the market participant. 
B)  the liability will not be settled. 
C)  the liability will be settled by the holder. 
D)  the liability is settled with the counterparty on measurement date. 
A)  the liability will be settled by the market participant. 
B)  the liability will not be settled. 
C)  the liability will be settled by the holder. 
D)  the liability is settled with the counterparty on measurement date.

Question 6

All of the following statements are key reasons given by the IASB for issuing a standard on fair value measurement except for:

Accepted Answer

A)  To require the use of fair value when accounting for all non-financial assets. 
B)  To establish a single source of guidance for all fair value measurements required or permitted by IFRSs to reduce complexity and improve consistency in their application. 
C)  To clarify the definition of fair value and related guidance in order to communicate the measurement objective more clearly. 
D)  To enhance disclosures about fair value to enable users of financial statements to assess the extent to which fair value is used and to inform them about the inputs used to derive those fair values. 
A)  To require the use of fair value when accounting for all non-financial assets. 
B)  To establish a single source of guidance for all fair value measurements required or permitted by IFRSs to reduce complexity and improve consistency in their application. 
C)  To clarify the definition of fair value and related guidance in order to communicate the measurement objective more clearly. 
D)  To enhance disclosures about fair value to enable users of financial statements to assess the extent to which fair value is used and to inform them about the inputs used to derive those fair values.

Question 7

The following are examples of an inactive market except for:

Accepted Answer

A)  Price quotations vary substantially over time. 
B)  Price quotations vary substantially among market-makers. 
C)  Price quotations are based on current market information. 
D)  There are few recent transactions. 
A)  Price quotations vary substantially over time. 
B)  Price quotations vary substantially among market-makers. 
C)  Price quotations are based on current market information. 
D)  There are few recent transactions.

Question 8

Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date are an example of:

Accepted Answer

A)  a Level 1 input. 
B)  a Level 2 input. 
C)  a Level 3 input. 
D)  a Level 4 input. 
A)  a Level 1 input. 
B)  a Level 2 input. 
C)  a Level 3 input. 
D)  a Level 4 input.

Question 9

Which of the following disclosures are required under AASB 13:

Accepted Answer

A)  The valuation techniques used to measure fair value. 
B)  Non-recurring fair value measurements. 
C)  Changes in the inputs used to measure fair value. 
D)  All of the options are correct. 
A)  The valuation techniques used to measure fair value. 
B)  Non-recurring fair value measurements. 
C)  Changes in the inputs used to measure fair value. 
D)  All of the options are correct.

Exam 3: Fair Value Measurement

Where a market has both a bid and an ask process, the price used in measuring fair value is:

Appendix A of AASB 13 Fair Value Measurement defines fair value as:

The fair value of an asset is based on its:

Which type of input is the primary measurement basis for trademarks?

When measuring the fair value of a liability, it is assumed that:

All of the following statements are key reasons given by the IASB for issuing a standard on fair value measurement except for:

The following are examples of an inactive market except for:

Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date are an example of:

Which of the following disclosures are required under AASB 13:

Accounting Regulation and the Conceptual Framework

Application of Accounting Theory

Inventories

Property, Plant and Equipment

Intangible Assets

Impairment of Assets

Provisions, Contingent Liabilities and Contingent Assets

Employee Benefits

Leases

Financial Instruments

Income Taxes

Share Capital and Reserves

Share Based Payment

Revenue

Presentation of Financial Statements

Statement of Cash Flows

Accounting Policies and Other Disclosures

Earnings Per Share

Operating Segments

Related Party Disclosures

Sustainability and Corporate Social Responsibility Recording

Foreign Currency Transactions and Forward Exchange Contracts

Translation of Foreign Currency Financial Statements

Business Combinations

Consolidation: Controlled Entities

Consolidation: Wholly Owned Entities

Consolidation: Intragroup Transactions

Consolidation: Non-Controlling Interest

Consolidation: Other Issues

Associates and Joint Ventures

Joint Arrangements

Insolvency and Liquidation

Accounting for Mineral Resources

Agriculture

Filters