Question 1

If a derivative is not designated as a hedge:

Accepted Answer

A)  the change in market value must be recognized in net income when it changes. 
B)  the change in market value is not recognized in net income. 
C)  the change in fair value is not recognized in net income. 
D)  the change in fair value must be recognized in net income when it changes. 
A)  the change in market value must be recognized in net income when it changes. 
B)  the change in market value is not recognized in net income. 
C)  the change in fair value is not recognized in net income. 
D)  the change in fair value must be recognized in net income when it changes. D

Question 2

With respect to post-employment medical benefits, U.S. GAAP:

Accepted Answer

A)  does not recognize the concept of post-employment medical benefits. 
B)  has considerably less guidance than IAS 19. 
C)  follows the guidance of IAS 19. 
D)  has considerably more guidance than IAS 19. 
A)  does not recognize the concept of post-employment medical benefits. 
B)  has considerably less guidance than IAS 19. 
C)  follows the guidance of IAS 19. 
D)  has considerably more guidance than IAS 19. D

Question 3

Under IAS 19, Employee Benefits, which of the following benefits are covered?

Accepted Answer

A)  Compensated absences and bonuses 
B)  Post-employment benefits 
C)  Deferred compensation and disability benefits 
D)  All of the above 
A)  Compensated absences and bonuses 
B)  Post-employment benefits 
C)  Deferred compensation and disability benefits 
D)  All of the above D

Question 4

According to IAS 37, with respect to onerous contracts, a provision should be recognized for "unavoidable costs of the contract", which is:

Accepted Answer

A)  the intrinsic value of the contract. 
B)  the lower of cost or market value of the contract. 
C)  the lower of cost of fulfillment or the penalty from non-fulfillment of the contract. 
D)  None of the above 
A)  the intrinsic value of the contract. 
B)  the lower of cost or market value of the contract. 
C)  the lower of cost of fulfillment or the penalty from non-fulfillment of the contract. 
D)  None of the above

Question 5

IAS 32 defines a financial instrument as:

Accepted Answer

A)  the currency of a foreign country in which the enterprise does business. 
B)  a certified check. 
C)  any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. 
D)  a recognized stock exchange. 
A)  the currency of a foreign country in which the enterprise does business. 
B)  a certified check. 
C)  any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. 
D)  a recognized stock exchange.

Question 6

How does U.S. GAAP differ from IFRS with respect to cash-settled share-based payments?

Accepted Answer

A)  U.S. GAAP always treats such payments as a liability. 
B)  U.S. GAAP offers the option to treat such payments as either a liability or equity. 
C)  IFRS and U.S. GAAP follow the same approach with respect to such payments. 
D)  U.S. GAAP, under certain circumstances, may treat such payments as equity. 
A)  U.S. GAAP always treats such payments as a liability. 
B)  U.S. GAAP offers the option to treat such payments as either a liability or equity. 
C)  IFRS and U.S. GAAP follow the same approach with respect to such payments. 
D)  U.S. GAAP, under certain circumstances, may treat such payments as equity.

Question 7

What is the journal entry required to recognize a deferred tax asset of $50,000?

Accepted Answer

A)  Dr. Deferred Tax Asset $50,000, Cr. Income Tax Benefit $50,000 
B)  Dr. Deferred Tax Asset $50,000, Cr. Equity $50,000 
C)  Dr. Income Tax Expense $50,000, Cr. Deferred Tax Asset $50,000 
D)  Dr. Deferred Tax Asset $50,000, Cr. Deferred Tax Liability $50,000 
A)  Dr. Deferred Tax Asset $50,000, Cr. Income Tax Benefit $50,000 
B)  Dr. Deferred Tax Asset $50,000, Cr. Equity $50,000 
C)  Dr. Income Tax Expense $50,000, Cr. Deferred Tax Asset $50,000 
D)  Dr. Deferred Tax Asset $50,000, Cr. Deferred Tax Liability $50,000

Question 8

How should stock options be accounted for under IASB standard on stock options (IFRS 2)?

Accepted Answer

A)  Since their value is not determinable until a future date, they are not recorded, but only disclosed in the notes to the financial statements. 
B)  A compensation expense is recorded based on the value of the options expected to vest as of the date the options are granted. 
C)  An expense is recorded only if a market value for the options exists on the date the options are granted. 
D)  The options are recorded as a liability for the value of the stock at the exercise date. 
A)  Since their value is not determinable until a future date, they are not recorded, but only disclosed in the notes to the financial statements. 
B)  A compensation expense is recorded based on the value of the options expected to vest as of the date the options are granted. 
C)  An expense is recorded only if a market value for the options exists on the date the options are granted. 
D)  The options are recorded as a liability for the value of the stock at the exercise date.

Question 9

Under IAS 32, which of the following is a financial asset?

Accepted Answer

A)  Investment in equity instruments accounted for under the equity method 
B)  Investment in special-purpose entities 
C)  A 30% investment in a subsidiary 
D)  Loans to other entities 
A)  Investment in equity instruments accounted for under the equity method 
B)  Investment in special-purpose entities 
C)  A 30% investment in a subsidiary 
D)  Loans to other entities

Question 10

Why is it difficult to compare IFRS15/ASC606, Revenue, to U.S. GAAP?

Accepted Answer

A)  The IASB definition of revenue is very complicated, whereas the definition of revenue under U.S. GAAP is straightforward. 
B)  Revenue is not defined under U.S. GAAP. 
C)  There is no single standard in U.S. GAAP that deals solely with revenue. 
D)  Under U.S. GAAP, revenue is defined in terms of cash, whereas IAS 18 defines revenue in terms of a variety of resources. 
A)  The IASB definition of revenue is very complicated, whereas the definition of revenue under U.S. GAAP is straightforward. 
B)  Revenue is not defined under U.S. GAAP. 
C)  There is no single standard in U.S. GAAP that deals solely with revenue. 
D)  Under U.S. GAAP, revenue is defined in terms of cash, whereas IAS 18 defines revenue in terms of a variety of resources.

Question 11

Under IFRS 9, under what circumstances will derecognition of a financial liability occur?

Accepted Answer

A)  When the obligation has been discharged 
B)  When the obligation has been canceled 
C)  When the obligation has expired 
D)  All of the above 
A)  When the obligation has been discharged 
B)  When the obligation has been canceled 
C)  When the obligation has expired 
D)  All of the above

Question 12

Which of the following is a difference between IAS 37 and U.S. GAAP with respect to restructuring provisions?

Accepted Answer

A)  U.S. GAAP does not allow recognition of a restructuring provision until a liability has been incurred. 
B)  There is no difference between IAS 37 and U.S. GAAP with respect to restructuring provisions. 
C)  IAS 37 does not allow recognition of a restructuring provision until a liability has been incurred. 
D)  A restructuring provision and related loss is more likely to occur later under IAS 37 than under U.S. GAAP. 
A)  U.S. GAAP does not allow recognition of a restructuring provision until a liability has been incurred. 
B)  There is no difference between IAS 37 and U.S. GAAP with respect to restructuring provisions. 
C)  IAS 37 does not allow recognition of a restructuring provision until a liability has been incurred. 
D)  A restructuring provision and related loss is more likely to occur later under IAS 37 than under U.S. GAAP.

Question 13

Under IAS 12, current and deferred taxes are measured on the basis of:

Accepted Answer

A)  rates that have been enacted or substantively enacted by the balance sheet date. 
B)  current rates and rates anticipated when temporary differences reverse. 
C)  rates anticipated when temporary differences reverse. 
D)  rates prevailing when the entity provided goods or services. 
A)  rates that have been enacted or substantively enacted by the balance sheet date. 
B)  current rates and rates anticipated when temporary differences reverse. 
C)  rates anticipated when temporary differences reverse. 
D)  rates prevailing when the entity provided goods or services.

Question 14

How does U.S. GAAP require the prior service cost related to retirees to be recognized?

Accepted Answer

A)  Amortize over the average remaining working lives of active employees 
B)  Recognize immediately 
C)  Don't recognize at all 
D)  Amortize over remaining expected life of the retirees 
A)  Amortize over the average remaining working lives of active employees 
B)  Recognize immediately 
C)  Don't recognize at all 
D)  Amortize over remaining expected life of the retirees

Question 15

Under IAS 1, Presentation of Financial Statements, which of the following is NOT a criterion in the definition of a current liability?

Accepted Answer

A)  It is a liability that is expected to be settled in an entity's normal operating cycle. 
B)  It is a liability primarily held for the purpose of trading. 
C)  It is a liability that does not have the right to defer until 18 months after the balance sheet date. 
D)  It is a liability that is expected to be settled within 12 months of the balance sheet date. 
A)  It is a liability that is expected to be settled in an entity's normal operating cycle. 
B)  It is a liability primarily held for the purpose of trading. 
C)  It is a liability that does not have the right to defer until 18 months after the balance sheet date. 
D)  It is a liability that is expected to be settled within 12 months of the balance sheet date.

Question 16

Under IAS 32, which of the following is a financial liability?

Accepted Answer

A)  A payable 
B)  A bank loan 
C)  An intercompany loan payable 
D)  All of the above 
A)  A payable 
B)  A bank loan 
C)  An intercompany loan payable 
D)  All of the above

Question 17

Which of the following statements is true of IAS 19?

Accepted Answer

A)  It establishes guidance for measuring onerous contract. 
B)  It requires all past service costs to be recognized in net income in a subsequent period in which the benefit plan is changed. 
C)  Its revised version became effective in the year 2013. 
D)  It covers all employee benefits including share-based compensation. 
A)  It establishes guidance for measuring onerous contract. 
B)  It requires all past service costs to be recognized in net income in a subsequent period in which the benefit plan is changed. 
C)  Its revised version became effective in the year 2013. 
D)  It covers all employee benefits including share-based compensation.

Question 18

Zenith Company, a calendar-year entity, amends its defined benefit pension plan on January 1, 2019 and must recognize the increase in past service costs of its vested and non-vested employees as of that date in the calculation of its net 2019 pension expense (or revenue). The pertinent facts as of January 1, 2019 are:   Calculate the past service costs included in 2019 net pension expense (or revenue) under U.S GAAP.

Accepted Answer

A)  $5,100 
B)  $5,400 
C)  $600 
D)  $7,000 
A)  $5,100 
B)  $5,400 
C)  $600 
D)  $7,000

Question 19

Which of the following is NOT a condition that must be met in order for a contract with a customer to be within the scope of IFRS 15?

Accepted Answer

A)  The contract has been approved by the parties to the contract. 
B)  The contract does not identify each party's rights in relation to the goods or services to be transferred. 
C)  The contract has commercial substance. 
D)  The payment terms for the goods or services to be transferred can be identified. 
A)  The contract has been approved by the parties to the contract. 
B)  The contract does not identify each party's rights in relation to the goods or services to be transferred. 
C)  The contract has commercial substance. 
D)  The payment terms for the goods or services to be transferred can be identified.

Question 20

Under IFRS 9, Financial Instruments, which of the following is NOT a category into which a financial asset must be classified?

Accepted Answer

A)  Property, plant, and equipment 
B)  Bonds held to maturity 
C)  Loans and receivables 
D)  Available-for-sale financial assets 
A)  Property, plant, and equipment 
B)  Bonds held to maturity 
C)  Loans and receivables 
D)  Available-for-sale financial assets

If a derivative is not designated as a hedge:

With respect to post-employment medical benefits, U.S. GAAP:

Under IAS 19, Employee Benefits, which of the following benefits are covered?

According to IAS 37, with respect to onerous contracts, a provision should be recognized for "unavoidable costs of the contract", which is:

IAS 32 defines a financial instrument as:

How does U.S. GAAP differ from IFRS with respect to cash-settled share-based payments?

What is the journal entry required to recognize a deferred tax asset of $50,000?

How should stock options be accounted for under IASB standard on stock options (IFRS 2)?

Under IAS 32, which of the following is a financial asset?

Why is it difficult to compare IFRS15/ASC606, Revenue, to U.S. GAAP?

Under IFRS 9, under what circumstances will derecognition of a financial liability occur?

Which of the following is a difference between IAS 37 and U.S. GAAP with respect to restructuring provisions?

Under IAS 12, current and deferred taxes are measured on the basis of:

How does U.S. GAAP require the prior service cost related to retirees to be recognized?

Under IAS 1, Presentation of Financial Statements, which of the following is NOT a criterion in the definition of a current liability?

Under IAS 32, which of the following is a financial liability?

Which of the following statements is true of IAS 19?

Which of the following is NOT a condition that must be met in order for a contract with a customer to be within the scope of IFRS 15?

Under IFRS 9, Financial Instruments, which of the following is NOT a category into which a financial asset must be classified?

Introduction to International Accounting

Worldwide Accounting Diversity

International Convergence of Financial Reporting

International Financial Reporting Standards: Part I

Foreign Currency Transactions and Hedging Foreign Exchange Risk

Translation of Foreign Currency Financial Statements

International Taxation

International Transfer Pricing

Management Accounting Issues in Multinational Corporations

Auditing and Corporate Governance: An International Perspective

International Sustainability Reporting

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Exam 5: International Financial Reporting Standards: Part II

If a derivative is not designated as a hedge:

With respect to post-employment medical benefits, U.S. GAAP:

Under IAS 19, Employee Benefits, which of the following benefits are covered?

According to IAS 37, with respect to onerous contracts, a provision should be recognized for "unavoidable costs of the contract", which is:

IAS 32 defines a financial instrument as:

How does U.S. GAAP differ from IFRS with respect to cash-settled share-based payments?

What is the journal entry required to recognize a deferred tax asset of $50,000?

How should stock options be accounted for under IASB standard on stock options (IFRS 2)?

Under IAS 32, which of the following is a financial asset?

Why is it difficult to compare IFRS15/ASC606, Revenue, to U.S. GAAP?

Under IFRS 9, under what circumstances will derecognition of a financial liability occur?

Which of the following is a difference between IAS 37 and U.S. GAAP with respect to restructuring provisions?

Under IAS 12, current and deferred taxes are measured on the basis of:

How does U.S. GAAP require the prior service cost related to retirees to be recognized?

Under IAS 1, Presentation of Financial Statements, which of the following is NOT a criterion in the definition of a current liability?

Under IAS 32, which of the following is a financial liability?

Which of the following statements is true of IAS 19?

Which of the following is NOT a condition that must be met in order for a contract with a customer to be within the scope of IFRS 15?

Under IFRS 9, Financial Instruments, which of the following is NOT a category into which a financial asset must be classified?

Introduction to International Accounting

Worldwide Accounting Diversity

International Convergence of Financial Reporting

International Financial Reporting Standards: Part I

Foreign Currency Transactions and Hedging Foreign Exchange Risk

Translation of Foreign Currency Financial Statements

International Taxation

International Transfer Pricing

Management Accounting Issues in Multinational Corporations

Auditing and Corporate Governance: An International Perspective

International Sustainability Reporting

Filters