Question 1

Identify the quantitative thresholds in AASB 8 for determining whether an operating segment is a reportable segment.

Accepted Answer

AASB 8 specifies quantitative thresholds to be used in determining whether an operating segment,or aggregated segment,is a reportable segment for which required information is to be disclosed (para.11).The quantitative thresholds are expressed as follows (para.13): An entity shall report separately information about an operating segment that meets any of the following quantitative thresholds: a()its reported revenue,including both sales to external customers and intersegment sales or transfers,is 10 per cent or more of the combined revenue,internal and external,of all operating segments; b()the absolute amount of its reported profit or loss is 10 per cent or more of the greater,in absolute amount,of c()its assets are 10 per cent or more of the combined assets of all operating segments.Operating segments that do not meet any of the quantitative thresholds may be considered reportable,and separately disclosed,if management believes that information about the segment would be useful to users of the financial statements.

Question 2

Explain the importance of related party disclosures.

Accepted Answer

Relationships and transactions between an entity and related parties,including directors,director related entities and other related entities (including persons),may be of interest to financial report users.In particular,these relationships and transactions may,or may have the capability to,significantly affect (either positively or negatively)the results and financial position of the reporting entity.AASB 124 paras 5 and 6 takes the position that,while related party relationships (including activities conducted through subsidiaries,joint ventures and associates)are a normal feature of commerce and business,these relationships could have an effect on the profit or loss and financial position of the entity.Related parties may enter into transactions that unrelated parties would not,and these transactions may not be entered into on the same terms as they would be with unrelated parties.Related parties may expose an entity to risks,or provide opportunities,that would not have otherwise existed.

Question 3

Explain the AASB 108 requirements for the selection and application of accounting policies..

Accepted Answer

AASB 108 requires the application of any accounting policy or policies specified in any relevant Australian accounting standard where appropriate (para.7).That is,for any particular transaction,other event or condition covered by an accounting standard,the requirements of that standard must be followed.In the absence of a specific accounting standard,management must use its judgment in developing and applying an accounting policy that results in information that is reliable and relevant to the economic decision making needs of users (para.10).The latter requires the financial report to: -represent faithfully the financial position,financial performance and cash flows of the entity; -reflect the economic substance of transactions,other events and conditions,and not merely the legal form; -be neutral (that is,free from bias); -be prudent; and -be complete in all material respects.When it is necessary to make decisions on applicable accounting policies in the absence of a specific accounting standard,management is required to consider,first,the requirements and guidelines in other Australian accounting standards dealing with similar and related issues and,second,the definitions,recognition criteria and measurement concepts for assets,liabilities,income and expenses contained in the AASB Framework (para.11).The entity's management may also consider the most recent pronouncements of other accounting standard setting bodies that use a similar conceptual framework to develop accounting standards,other accounting literature and accepted industry practices,provided these do not conflict with the other Australian accounting standards dealing with similar or related issues or with the Framework (para.12).As a general rule,accounting policies must be applied consistently for similar transactions,other events and conditions (para.13).If an Australian standard requires or permits categorisation of items for which different policies may be applicable,an appropriate accounting policy must be selected and applied consistently to each category (para.13).For example,Chapter 6 highlighted the alternative cost and revaluation models pursuant to AASB 116: Property,Plant and Equipment.An entity is allowed,under appropriate circumstances,to apply the cost model to some classes of assets and the revaluation model to others.The effect of AASB 108 is to require the consistent application of the respective measurement rules for each class of asset.For comparability purposes,consistency in the selection and application of accounting policies is required.This is to satisfy the need of financial statement users to "be able to compare the financial statements of an entity over time to identify trends in its financial position,financial performance and cash flows" (para.15).However,changes of accounting policies are allowed where the change (a)is required by an Australian accounting standard or (b)results in the financial report providing reliable and more relevant information about the effects of transactions,other events or conditions on the entity's financial position,performance or cash flows (para.14).

Question 4

The gross inflow of economic benefits during the period arising from ordinary activities which result in increases in equity other than contributions from equity holders is known as:

Accepted Answer

A) asset 
B) liability 
C) revenue 
D) expense 
A) asset 
B) liability 
C) revenue 
D) expense

Question 5

Which of the following is not one of the quantitative thresholds in AASB 8 for determining whether an operating segment is a reportable segment?

Accepted Answer

A) its reported revenue,including both sales to external customers and intersegment sales or transfers,is 10 per cent or more of the combined revenue,internal and external,of all operating segments 
B) the absolute amount of its reported profit or loss is 10 per cent or more of the greater,in absolute amount,of (i)the combined reported profit of all operating segments that did not report a loss and (ii)the combined reported loss of all operating segments that reported a loss 
C) its reported revenue,including sales to external customers but excluding intersegment sales or transfers,is 10 per cent or more of the combined revenue of all operating segments 
D) its assets are 10 per cent or more of the combined assets of all operating segments 
A) its reported revenue,including both sales to external customers and intersegment sales or transfers,is 10 per cent or more of the combined revenue,internal and external,of all operating segments 
B) the absolute amount of its reported profit or loss is 10 per cent or more of the greater,in absolute amount,of (i)the combined reported profit of all operating segments that did not report a loss and (ii)the combined reported loss of all operating segments that reported a loss 
C) its reported revenue,including sales to external customers but excluding intersegment sales or transfers,is 10 per cent or more of the combined revenue of all operating segments 
D) its assets are 10 per cent or more of the combined assets of all operating segments

Question 6

A person or entity that is related to the entity preparing its financial statements is referred to as a/an:

Accepted Answer

A) financial party 
B) related party 
C) unrelated party 
D) none of the above 
A) financial party 
B) related party 
C) unrelated party 
D) none of the above

Question 7

Which of the following statements is correct regarding the quantitative guidelines for materiality in AASB 1031?

Accepted Answer

A) if the particular item is equal to or greater than 20% of the appropriate base amount,it would be presumed to be material unless there is evidence or convincing argument to the contrary 
B) amounts equal to or greater than 5% of the base amount would be presumed to be material unless there is evidence or convincing argument to the contrary 
C) if the particular item is less than 10% of the appropriate base amount,it would be presumed to be material unless there is evidence or convincing argument to the contrary 
D) if the particular item is equal to or greater than 10% of the appropriate base amount,it would be presumed to be material unless there is evidence or convincing argument to the contrary 
A) if the particular item is equal to or greater than 20% of the appropriate base amount,it would be presumed to be material unless there is evidence or convincing argument to the contrary 
B) amounts equal to or greater than 5% of the base amount would be presumed to be material unless there is evidence or convincing argument to the contrary 
C) if the particular item is less than 10% of the appropriate base amount,it would be presumed to be material unless there is evidence or convincing argument to the contrary 
D) if the particular item is equal to or greater than 10% of the appropriate base amount,it would be presumed to be material unless there is evidence or convincing argument to the contrary

Question 8

Explain the purpose of and rational for a statement of cash flows.

Accepted Answer

AASB 107: Statement of Cash Flows requir

Question 9

Identify the conditions in AASB 118 to be satisfied for revenue to be recognised in the case of the sale of goods.

Accepted Answer

In the case of the sale of goods,AASB 11

Question 10

For the purpose of AASB 108,which of the following is not considered to represent a change in an accounting policy?

Accepted Answer

A) the change from the use of straight- line depreciation to reducing- balance depreciation 
B) the application of a new accounting policy for transactions,other events or conditions that did not occur previously or were immaterial 
C) the application of an accounting policy for transactions,other events or conditions that differ in substance from those previously occurring 
D) both B and C 
A) the change from the use of straight- line depreciation to reducing- balance depreciation 
B) the application of a new accounting policy for transactions,other events or conditions that did not occur previously or were immaterial 
C) the application of an accounting policy for transactions,other events or conditions that differ in substance from those previously occurring 
D) both B and C

Question 11

According to AASB 124,an entity is related to a reporting entity if which of the following conditions applies:

Accepted Answer

A) one entity is a joint venture of a third entity and the other entity is an associate of the third entity 
B) both entities are joint ventures of the same third party 
C) the entity and the reporting entity are members of the same group 
D) all of the above 
A) one entity is a joint venture of a third entity and the other entity is an associate of the third entity 
B) both entities are joint ventures of the same third party 
C) the entity and the reporting entity are members of the same group 
D) all of the above

Question 12

Which of the following is not one of the conditions in AASB 118 when revenue from the sale of goods should be recognised?

Accepted Answer

A) the entity retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold 
B) it is probable that the economic benefits associated with the transaction will flow to the entity 
C) it is possible that the economic benefits associated with the transaction will flow to the entity 
D) the entity has transferred to the buyer the significant risks and rewards of ownership of the goods 
A) the entity retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold 
B) it is probable that the economic benefits associated with the transaction will flow to the entity 
C) it is possible that the economic benefits associated with the transaction will flow to the entity 
D) the entity has transferred to the buyer the significant risks and rewards of ownership of the goods

Question 13

Discuss the AASB 101 requirements regarding the structure and content of financial statements.

Accepted Answer

AASB 101 requires financial statements t

Question 14

Explain the likely contents of the discussion and analysis in concise financial reports as required by AASB 1039.

Accepted Answer

The concise financial report of entities

Question 15

Which of the following is the name given to an abbreviated financial report derived from and consistent with the full financial report but excluding much of the detailed disclosures commonly found in the notes?

Accepted Answer

A) mini- financial report 
B) concise financial report 
C) short- form financial report 
D) none of the above 
A) mini- financial report 
B) concise financial report 
C) short- form financial report 
D) none of the above

Question 16

According to AASB 101,a complete set of financial statements comprises:

Accepted Answer

A) a statement of changes in equity for the period 
B) a statement of comprehensive income for the period 
C) a statement of cash flows for the period 
D) all of the above 
A) a statement of changes in equity for the period 
B) a statement of comprehensive income for the period 
C) a statement of cash flows for the period 
D) all of the above

Question 17

AASB 133 requires the basic and diluted EPS figures to be:

Accepted Answer

A) presented in the statement of financial position 
B) presented in the statement of changes in equity 
C) disclosed in the notes to the financial statements 
D) presented in the statement of comprehensive income 
A) presented in the statement of financial position 
B) presented in the statement of changes in equity 
C) disclosed in the notes to the financial statements 
D) presented in the statement of comprehensive income

Question 18

Adjusting events after the reporting period:

Accepted Answer

A) reveal for the first time a condition that existed at reporting date 
B) provide additional evidence that assists in determining the amount of an item which was uncertain at reporting date 
C) both A and B 
D) involve the creation of new conditions that did not exist at reporting date 
A) reveal for the first time a condition that existed at reporting date 
B) provide additional evidence that assists in determining the amount of an item which was uncertain at reporting date 
C) both A and B 
D) involve the creation of new conditions that did not exist at reporting date

Question 19

The denominator for the basic EPS calculation is the:

Accepted Answer

A) operating profit before tax 
B) operating profit after tax 
C) weighted average number of ordinary shares 
D) number of ordinary share issued as at the end of the year 
A) operating profit before tax 
B) operating profit after tax 
C) weighted average number of ordinary shares 
D) number of ordinary share issued as at the end of the year

Question 20

AASB 8 suggests that an entity should consider whether a practical limit to the number of reportable segments has been achieved when that number exceeds:

Accepted Answer

A) 10 segments 
B) 50 segments 
C) 5 segments 
D) 20 segments 
A) 10 segments 
B) 50 segments 
C) 5 segments 
D) 20 segments

Exam 11: Additional Accounting Standards and Disclosures

Identify the quantitative thresholds in AASB 8 for determining whether an operating segment is a reportable segment.

Explain the importance of related party disclosures.

Explain the AASB 108 requirements for the selection and application of accounting policies..

The gross inflow of economic benefits during the period arising from ordinary activities which result in increases in equity other than contributions from equity holders is known as:

Which of the following is not one of the quantitative thresholds in AASB 8 for determining whether an operating segment is a reportable segment?

A person or entity that is related to the entity preparing its financial statements is referred to as a/an:

Which of the following statements is correct regarding the quantitative guidelines for materiality in AASB 1031?

Explain the purpose of and rational for a statement of cash flows.

Identify the conditions in AASB 118 to be satisfied for revenue to be recognised in the case of the sale of goods.

For the purpose of AASB 108,which of the following is not considered to represent a change in an accounting policy?

According to AASB 124,an entity is related to a reporting entity if which of the following conditions applies:

Which of the following is not one of the conditions in AASB 118 when revenue from the sale of goods should be recognised?

Discuss the AASB 101 requirements regarding the structure and content of financial statements.

Explain the likely contents of the discussion and analysis in concise financial reports as required by AASB 1039.

Which of the following is the name given to an abbreviated financial report derived from and consistent with the full financial report but excluding much of the detailed disclosures commonly found in the notes?

According to AASB 101,a complete set of financial statements comprises:

AASB 133 requires the basic and diluted EPS figures to be:

Adjusting events after the reporting period:

The denominator for the basic EPS calculation is the:

AASB 8 suggests that an entity should consider whether a practical limit to the number of reportable segments has been achieved when that number exceeds:

The Nature and Environment of Companies

Company Formation, Share Capital and Debt Securities

Reserves and Profit Distribution

Published Financial Statements

Accounting for Company Income Tax

Property, Plant and Equipment

Leases

Intangible Assets

Business Combinations

Impairment of Assets

Principles of Consolidation

Consolidation: Intragroup Transactions

Consolidation: Non-Controlling Interests

Consolidation: Indirect Non-Controlling Interests

Accounting for Associates

Accounting for Joint Ventures

Accounting for Foreign Currency

Capital Reorganisation

External Administration, Including Liquidation

Key Issues in Australian Corporate Governance

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