Exam 2: Objectives of Company Reporting, Conceptual Elements and Terminology

A monetary asset is an asset for which its value in use is:

During 20X4, a large shareholder of Seremban Ltd donated some inventory to Seremban Ltd with a fair value of $1 million.This $1 million is an asset and:

The Framework was first produced by the AASB and AARF.

Current cost accounting is a method of measuring asset values based on historical costs that do not change over time.

'Income' is a headline term, but is not distinguished clearly from revenue or gains.

A reporting entity is defined by SAC 1 as: ...all entities ...in respect of which it is reasonable to expect the existence of users dependent on special purpose financial reports for information which will be useful to them for making and evaluating decisions about the allocation of scarce resources.(SAC 1.40)

In the period up until the 1890s, the main objective of audits was the prevention of fraud and error.

The following are quotations that concern a company's accounting policies. I. $\quad$ 'I think this item will change the judgement of one or two people but not the judgement of a reasonable person.' II. $\quad$ 'Different firms must disclose their accounting policies and methods because that makes the financial reports of those firms more useful to report users.' III. $\quad$ 'When estimating the useful life of a piece of equipment one should use some caution in the estimation because of uncertainties that exist.' IV. $\quad$ 'Under a contract of sale, one entity sold an asset to another entity and made a loss on sale.However, the vendor entity retained use of the asset and enjoys the benefits of ownership of the asset.' -Which one of the statements refers mainly to the comparability doctrine?

Which of the following statements about AASB 1031 Materiality is/are correct? I. $\quad$ Qualitative factors may be the primary reason that an item is classified as material. II. $\quad$ Materiality means that accounting standards only have to be applied to an item if the amount of the item is greater than or equal to 10 per cent of the relevant base amount. III. $\quad$ An accounting standard's provisions may have to be applied to an item even when that item is less than 1 per cent of the relevant base amount. IV. $\quad$ Materiality applies to accounting measurement and policies but not to disclosure.

Which of the following are intangible assets under AASB 138? I. $\quad$ Masthead II. $\quad$ Deferred tax asset III. $\quad$ Goodwill arising from a business combination IV. $\quad$ Patent