Question 1

Which statement describes the "revaluation model"?

Accepted Answer

A) A model which keeps the carrying value of an asset and adjusts for depreciation and impairment. 
B) A model which restates the value of an asset at each measurement date. 
C) A model which restates the carrying value of an asset to the asset's fair value on the date of revaluation. 
D) A model which values the asset based on its productive capacity. 
A) A model which keeps the carrying value of an asset and adjusts for depreciation and impairment. 
B) A model which restates the value of an asset at each measurement date. 
C) A model which restates the carrying value of an asset to the asset's fair value on the date of revaluation. 
D) A model which values the asset based on its productive capacity.

Question 2

Grover Inc wishes to use the revaluation model for this property:   The fair value for the property is $100,000. What amount would be booked to the "accumulated depreciation" account if Grover chooses to use the elimination method to record the revaluation?

Accepted Answer

A) $20,000 credit 
B) $40,000 debit 
C) $40,000 credit 
D) $80,000 debit 
A) $20,000 credit 
B) $40,000 debit 
C) $40,000 credit 
D) $80,000 debit

Question 3

Which statement is not correct?

Accepted Answer

A) Agricultural activity involves growth, degeneration and reproduction. 
B) Agricultural activity includes processing into the final product. 
C) Revenue recognition for agricultural produce is covered under the requirements of IAS 18. 
D) Inventory valuation for agricultural produce is covered under the requirements of IAS 2. 
A) Agricultural activity involves growth, degeneration and reproduction. 
B) Agricultural activity includes processing into the final product. 
C) Revenue recognition for agricultural produce is covered under the requirements of IAS 18. 
D) Inventory valuation for agricultural produce is covered under the requirements of IAS 2.

Question 4

How is "discontinued operations" information presented in the financial statements?

Accepted Answer

A) Summary information is presented as well as a subsequent provision of more extensive breakdowns of revenues, expenses, taxes, and financing cash flow figures. 
B) A single amount is presented for discontinued operations on the balance sheet. 
C) The net profit from discontinued operations is presented separately. 
D) The net gain or loss from disposal of discontinued operations is presented separately. 
A) Summary information is presented as well as a subsequent provision of more extensive breakdowns of revenues, expenses, taxes, and financing cash flow figures. 
B) A single amount is presented for discontinued operations on the balance sheet. 
C) The net profit from discontinued operations is presented separately. 
D) The net gain or loss from disposal of discontinued operations is presented separately.

Question 5

What is a "component" of an entity?

Accepted Answer

A) A division of an entity that either has been disposed of or is classified as held for sale. 
B) A group of assets and liabilities to be disposed of together in a single transaction. 
C) A component with operations and cash flows distinguishable from the rest of the entity. 
D) A group of non-current assets that have been disposed or are classified as held for sale. 
A) A division of an entity that either has been disposed of or is classified as held for sale. 
B) A group of assets and liabilities to be disposed of together in a single transaction. 
C) A component with operations and cash flows distinguishable from the rest of the entity. 
D) A group of non-current assets that have been disposed or are classified as held for sale.

Question 6

Which of the following is correct with respect to the "impairment loss"?

Accepted Answer

A) It is defined as the carrying amount plus recoverable amount under IFRS. 
B) It is defined as the carrying amount less fair value under ASPE. 
C) Under IFRS, it is defined as the sum of the undiscounted cash flows expected from use of the asset. 
D) Under ASPE, it is defined as the sum of the undiscounted cash flows expected from use of the asset. 
A) It is defined as the carrying amount plus recoverable amount under IFRS. 
B) It is defined as the carrying amount less fair value under ASPE. 
C) Under IFRS, it is defined as the sum of the undiscounted cash flows expected from use of the asset. 
D) Under ASPE, it is defined as the sum of the undiscounted cash flows expected from use of the asset.

Question 7

Which of the following is correct with respect to when the impairment test must be performed?

Accepted Answer

A) An annual test is required for definite lived assets under IFRS. 
B) An annual test is required for definite lived assets under ASPE. 
C) An annual test is required for indefinite lived assets under IFRS. 
D) An annual test is required for indefinite lived assets under ASPE. 
A) An annual test is required for definite lived assets under IFRS. 
B) An annual test is required for definite lived assets under ASPE. 
C) An annual test is required for indefinite lived assets under IFRS. 
D) An annual test is required for indefinite lived assets under ASPE.

Question 8

The following information is available about Fred Inc's discontinued operations:   What single amount will be presented on Fred's statement of comprehensive income?

Accepted Answer

A) $1,400,000 
B) $1,500,000 
C) $1,600,000 
D) $1,700,000 
A) $1,400,000 
B) $1,500,000 
C) $1,600,000 
D) $1,700,000

Question 9

Adam's Bikes produces specialized bicycle frames. The production process uses two machines, which together form a cash generating unit (CGU). The following information is relevant to the evaluation of impairment for these machines.
   Required:
a. Assume that the welding machine has a fair value less costs to sell of $420,000. Determine the amount of impairment that should be recorded for the cash generating unit and for each of the two machines.
b. Assume that the welding machine has a fair value less costs to sell of $455,000. Determine the amount of impairment that should be recorded for the cash generating unit and for each of the two machines.

Accepted Answer

a. The total impairment in the cash gene

Question 10

Where are gains and losses on agricultural activity reported in the financial statements?

Accepted Answer

A) Gains are recorded through profit and loss, but losses should be recorded in other comprehensive income. 
B) Losses are recorded through profit and loss, but gains should be recorded in other comprehensive income. 
C) Gains and losses are recorded through profit and loss, and nothing should be recorded in other comprehensive income. 
D) Gains and losses are recorded in other comprehensive income, and nothing should be recorded through profit and loss. 
A) Gains are recorded through profit and loss, but losses should be recorded in other comprehensive income. 
B) Losses are recorded through profit and loss, but gains should be recorded in other comprehensive income. 
C) Gains and losses are recorded through profit and loss, and nothing should be recorded in other comprehensive income. 
D) Gains and losses are recorded in other comprehensive income, and nothing should be recorded through profit and loss.

Question 11

The following information is available about George Inc's discontinued operations:   What single amount will be presented on George's statement of comprehensive income?

Accepted Answer

A) $1,400,000 
B) $1,500,000 
C) $1,600,000 
D) $1,700,000 
A) $1,400,000 
B) $1,500,000 
C) $1,600,000 
D) $1,700,000

Question 12

Which is an exception to the rule: "test for impairment only if there are indicators for impairment"?

Accepted Answer

A) Intangible assets with indefinite lives. 
B) Intangible assets with definite lives. 
C) Internally generated goodwill. 
D) Tangible assets with definite lives. 
A) Intangible assets with indefinite lives. 
B) Intangible assets with definite lives. 
C) Internally generated goodwill. 
D) Tangible assets with definite lives.

Question 13

Smith Inc wishes to use the revaluation model for this property:   The fair value for the property is $150,000. Using straight-line depreciation and assuming that the property has a remaining depreciable life of 5 years, how much would be booked to accumulated depreciation in the year subsequent to the revaluation?

Accepted Answer

A) $12,000 debit 
B) $12,000 credit 
C) $30,000 credit 
D) $30,000 debit 
A) $12,000 debit 
B) $12,000 credit 
C) $30,000 credit 
D) $30,000 debit

Question 14

What is "fair value"?

Accepted Answer

A) The present value of the future cash flows expected to be derived from an asset. 
B) The amount obtainable from the sale of an asset in an arm's-length transaction less the costs of disposal. 
C) The higher of an asset's fair value less costs to sell and its value in use. 
D) The amount obtainable from the sale of an asset in an arm's-length transaction between knowledgeable, willing parties. 
A) The present value of the future cash flows expected to be derived from an asset. 
B) The amount obtainable from the sale of an asset in an arm's-length transaction less the costs of disposal. 
C) The higher of an asset's fair value less costs to sell and its value in use. 
D) The amount obtainable from the sale of an asset in an arm's-length transaction between knowledgeable, willing parties.

Question 15

Explain how non-current assets such as definite lived intangibles, indefinite lived intangibles and goodwill are tested for impairment under IFRS.

Accepted Answer

•An enterprise should annually search fo

Question 16

Based on the following information, what is the impairment amount to be recorded?

Accepted Answer

A) $90,000 
B) $125,000 
C) $130,000 
D) $220,000 
A) $90,000 
B) $125,000 
C) $130,000 
D) $220,000

Question 17

Explain the accounting for assets related to the agricultural industry.

Accepted Answer

•Agricultural activities include acquisi

Question 18

What impairment, if any, exists on these product lines?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 19

Wallace Inc wishes to use the revaluation model for this property:   The fair value for the property is $60,000. What amount would be booked to the "accumulated depreciation" account if Wallace chooses to use the proportional method to record the revaluation?

Accepted Answer

A) $0 
B) $10,000 debit 
C) $10,000 credit 
D) $20,000 debit 
A) $0 
B) $10,000 debit 
C) $10,000 credit 
D) $20,000 debit

Question 20

Wright Now Limited (WNL)was incorporated on January 1, 2011 when the sole shareholder invested $7,500,000. This is the only financing the firm needed. WNL used $1,200,000 of the funds to purchase land. The company has a single project that it developed over four years. Below are details of the four years of operations. At the end of 2014 the land was sold for its fair value.
   Required:
Complete the following table, assuming that WNL uses the revaluation model of measurement. OCI refers to other comprehensive income.

Accepted Answer

The answer of Wright Now Limited (WNL)was incorporated on January...

Which statement describes the "revaluation model"?

Grover Inc wishes to use the revaluation model for this property: The fair value for the property is $100,000. What amount would be booked to the "accumulated depreciation" account if Grover chooses to use the elimination method to record the revaluation?

Which statement is not correct?

How is "discontinued operations" information presented in the financial statements?

What is a "component" of an entity?

Which of the following is correct with respect to the "impairment loss"?

Which of the following is correct with respect to when the impairment test must be performed?

The following information is available about Fred Inc's discontinued operations: What single amount will be presented on Fred's statement of comprehensive income?

Where are gains and losses on agricultural activity reported in the financial statements?

The following information is available about George Inc's discontinued operations: What single amount will be presented on George's statement of comprehensive income?

Which is an exception to the rule: "test for impairment only if there are indicators for impairment"?

What is "fair value"?

Explain how non-current assets such as definite lived intangibles, indefinite lived intangibles and goodwill are tested for impairment under IFRS.

Based on the following information, what is the impairment amount to be recorded?

Explain the accounting for assets related to the agricultural industry.

What impairment, if any, exists on these product lines?

Wallace Inc wishes to use the revaluation model for this property: The fair value for the property is $60,000. What amount would be booked to the "accumulated depreciation" account if Wallace chooses to use the proportional method to record the revaluation?

Fundamentals of Financial Accounting Theory

Conceptual Frameworks for Financial Reporting

Accrual Accounting

Revenue Recognition

Cash and Receivables

Inventories

Financial Assets

Property, Plant, and Equipment

Intangible Assets, Goodwill, Mineral Resources, and Government Grants

Filters

Exam 10: Applications of Fair Value to Non-Current Assets

Which statement describes the "revaluation model"?

Grover Inc wishes to use the revaluation model for this property: The fair value for the property is $100,000. What amount would be booked to the "accumulated depreciation" account if Grover chooses to use the elimination method to record the revaluation?

Which statement is not correct?

How is "discontinued operations" information presented in the financial statements?

What is a "component" of an entity?

Which of the following is correct with respect to the "impairment loss"?

Which of the following is correct with respect to when the impairment test must be performed?

The following information is available about Fred Inc's discontinued operations: What single amount will be presented on Fred's statement of comprehensive income?

Where are gains and losses on agricultural activity reported in the financial statements?

The following information is available about George Inc's discontinued operations: What single amount will be presented on George's statement of comprehensive income?

Which is an exception to the rule: "test for impairment only if there are indicators for impairment"?

What is "fair value"?

Explain how non-current assets such as definite lived intangibles, indefinite lived intangibles and goodwill are tested for impairment under IFRS.

Based on the following information, what is the impairment amount to be recorded?

Explain the accounting for assets related to the agricultural industry.

What impairment, if any, exists on these product lines?

Wallace Inc wishes to use the revaluation model for this property: The fair value for the property is $60,000. What amount would be booked to the "accumulated depreciation" account if Wallace chooses to use the proportional method to record the revaluation?

Fundamentals of Financial Accounting Theory

Conceptual Frameworks for Financial Reporting

Accrual Accounting

Revenue Recognition

Cash and Receivables

Inventories

Financial Assets

Property, Plant, and Equipment

Intangible Assets, Goodwill, Mineral Resources, and Government Grants

Filters