Question 1

The highest and best use concept values the asset based on the highest value that the market would place on the asset, considering all possible uses that are

Accepted Answer

A)  physically possible. 
B)  legally permissible. 
C)  financially feasible. 
D)  economically intolerable. 
A)  physically possible. 
B)  legally permissible. 
C)  financially feasible. 
D)  economically intolerable. C

Question 2

Use the following data to solve the following questions:
-Frontier Landscaping owns some equipment that is used in their operations. Management estimates that the equipment will last another three years and will generate the following future cash flows at the end of each year. $\begin{array}{llcc}
\text {Year 1}&\text {Year 2}&\text {Year 3}\
\hline \$ 4,000& \$ 6,000&\$ 7,000 
\end{array}$
 Calculate the present value of each of these future cash flows given a 4% discount rate.

Accepted Answer

A)  $15,617 
B)  $9,394 
C)  $18,135 
D)  $35,165 
A)  $15,617 
B)  $9,394 
C)  $18,135 
D)  $35,165 A

Question 3

Under the traditional discounted cash flow approach,

Accepted Answer

A)  the model is best used when cash flows are uncertain. 
B)  the stream of contracted cash flows is discounted. 
C)  the risk-free discount rate is used. 
D)  the method is best used when cash flows are variable. 
A)  the model is best used when cash flows are uncertain. 
B)  the stream of contracted cash flows is discounted. 
C)  the risk-free discount rate is used. 
D)  the method is best used when cash flows are variable. B

Question 4

The main difference in the accounting for measurement issues between IFRS and ASPE is that

Accepted Answer

A)  IFRS has a well-developed framework for measuring fair values (IFRS13), whereas ASPE does not. 
B)  there is no difference between accounting for measurement issues between these standards. 
C)  guidance under ASPE is concentrated in a single area of the ASPE body of knowledge. 
D)  IFRS requires explicit disclosure of fair value amounts, whereas these disclosures under ASPE are optional. 
A)  IFRS has a well-developed framework for measuring fair values (IFRS13), whereas ASPE does not. 
B)  there is no difference between accounting for measurement issues between these standards. 
C)  guidance under ASPE is concentrated in a single area of the ASPE body of knowledge. 
D)  IFRS requires explicit disclosure of fair value amounts, whereas these disclosures under ASPE are optional.

Question 5

Pearson Corporation makes an investment today (January 1, 2020). They will receive $9,000 every December 31 for the next six years (2020-2025). If Pearson wants to earn 12% on the investment, what is the most they should invest on January 1, 2020?

Accepted Answer

A)  $37,003 
B)  $41,443 
C)  $73,036 
D)  $81,801 
A)  $37,003 
B)  $41,443 
C)  $73,036 
D)  $81,801

Question 6

A fair value measure under IFRS 13 is based on which view of fair value?

Accepted Answer

A)  market participant view 
B)  shareholder view 
C)  fair value view 
D)  unbiased view 
A)  market participant view 
B)  shareholder view 
C)  fair value view 
D)  unbiased view

Question 7

Inputs under IFRS 13
There are three levels of inputs under IFRS 13. What type of inputs are used by Hood Company in exercise 3-85? As a result, what classification would be assigned to the specialized equipment?

Accepted Answer

Hood used unobservable internal company

Question 8

Under the expected cash flow approach,

Accepted Answer

A)  the model is best used where the element being measured does not have variable cash flows. 
B)  the projected cash flows reflect the certainty in terms of amount and timing. 
C)  the discount rate is adjusted to accommodate the riskiness of the cash flows. 
D)  the cash flow uncertainty is dealt with by using probabilities. 
A)  the model is best used where the element being measured does not have variable cash flows. 
B)  the projected cash flows reflect the certainty in terms of amount and timing. 
C)  the discount rate is adjusted to accommodate the riskiness of the cash flows. 
D)  the cash flow uncertainty is dealt with by using probabilities.

Question 9

In order to measure fair value under IFRS13, an entity must determine

Accepted Answer

A)  the item being measured, and how the item could or would be used. 
B)  the market the item would be (or is) bought and sold in. 
C)  which fair value model is being used to value the item. 
D)  all of the above 
A)  the item being measured, and how the item could or would be used. 
B)  the market the item would be (or is) bought and sold in. 
C)  which fair value model is being used to value the item. 
D)  all of the above

Question 10

Valuation under IFRS 13
Hood Company owns specialized equipment that was purchased in an acquisition of Riding Company. The equipment has a book value of $1,800,000, but according to IFRS, it is assessed for impairment on an annual basis. To perform this impairment test, Hood must estimate the fair value of the equipment. It has developed the following cash flow estimates related to the equipment based on internal information. Each cash flow estimate reflects Hood's estimate of annual cash flows over the next 7 years. The equipment is assumed to have no residual value after the 7 years. (Assume the cash flows occur at the end of each year.)
 $$\begin{array} { l l } 
\text { Year } & \text { Cash Flow Estimate } \
1 - 3 & \$ 240,000 \
4 - 6 & 365,000 \
7 & 425,000
\end{array}$$ Hood determines, using their own assumptions, that the appropriate discount rate for this estimation is 6%. To the nearest dollar, what is the estimated fair value of the equipment?

Accepted Answer

($240,000 x 2.67301) + ($365,0

Question 11

Calculate market price of a bond
On January 1, 2020 Lance Co. issued five-year bonds with a face value of $700,000 and a stated interest rate of 12% payable semi-annually on July 1 and January 1. The bonds were sold to yield 10%.
Calculate the issue price of the bonds.

Accepted Answer

The answer of Calculate market price of a bond
On January...

Question 12

Fiddler Company has a loan balance of $853.02 and must make equal payments of $100 at the end of each of the next 10 months. What is the monthly rate of interest that Fiddler Company is paying?

Accepted Answer

A)  2% 
B)  2.5% 
C)  3% 
D)  4% 
A)  2% 
B)  2.5% 
C)  3% 
D)  4%

Question 13

Use the following data to solve the following questions:
-Frontier Landscaping owns some equipment that is used in their operations. Management estimates that the equipment will last another three years and will generate the following future cash flows at the end of each year. $\begin{array}{llcc}
\text {Year 1}&\text {Year 2}&\text {Year 3}\
\hline \$ 4,000& \$ 6,000&\$ 7,000 
\end{array}$
 Assuming Frontier Landscaping's equipment has a carrying value of $16,000, how much of an impairment loss must Frontier record?

Accepted Answer

A)  none as there is no impairment. 
B)  $383 
C)  $6,606 
D)  $2,518 
A)  none as there is no impairment. 
B)  $383 
C)  $6,606 
D)  $2,518

Question 14

Use the following data to solve the following questions:
-Branson Company deposited $5,800 in an account paying 2.5% annual interest. How much simple interest would Branson earn in 3 years?

Accepted Answer

A) $5,945 
B)  $435 
C)  $145 
D)  $446 
A) $5,945 
B)  $435 
C)  $145 
D)  $446

Question 15

Valuation premise does not refer to

Accepted Answer

A)  the perceived value of the asset/liability. 
B)  the actual use of the asset/liability. 
C)  the highest and best use valuation in the market. 
D)  how the asset/liability is to be used. 
A)  the perceived value of the asset/liability. 
B)  the actual use of the asset/liability. 
C)  the highest and best use valuation in the market. 
D)  how the asset/liability is to be used.

Question 16

Which of the following is not a category to measure financial statement elements?

Accepted Answer

A)  cost-based measures. 
B)  hybrid measures. 
C)  cash flow measures. 
D)  current value measures. 
A)  cost-based measures. 
B)  hybrid measures. 
C)  cash flow measures. 
D)  current value measures.

Question 17

Blast from the Past issued 10-year bonds with a coupon rate of 3% paid semi-annually and a face value of $500,000.  The market interest rate is 5%.  
a)Calculate the present value of the bonds using PV tables assuming payments are made at the end of the period (round answer to the nearest dollar). 
b)Calculate the present value of the bonds using PV tables assuming payments are made at the beginning of the period (round answer to the nearest dollar).

Accepted Answer

a) Present value of the face value amoun

Question 18

The cost model attempts to reflect the amount that would be required to

Accepted Answer

A)  replace the asset's service capacity. 
B)  value older financial assets where there is no longer a market for the asset. 
C)  value the asset. 
D)  value older non-financial assets where there is a market for the asset. 
A)  replace the asset's service capacity. 
B)  value older financial assets where there is no longer a market for the asset. 
C)  value the asset. 
D)  value older non-financial assets where there is a market for the asset.

Question 19

Barkley Company will receive $400,000 in a future year. If the future receipt is discounted at an interest rate of 8%, its present value is $252,068. In how many years is the $400,000 received?

Accepted Answer

A)  5 years 
B)  6 years 
C)  7 years 
D)  8 years 
A)  5 years 
B)  6 years 
C)  7 years 
D)  8 years

Question 20

Level 1 inputs

Accepted Answer

A)  are the lowest-quality inputs but provide the best-quality fair value. 
B)  are used when level 3 inputs are not available. 
C)  are generally not observable in various markets. 
D)  are more objective. 
A)  are the lowest-quality inputs but provide the best-quality fair value. 
B)  are used when level 3 inputs are not available. 
C)  are generally not observable in various markets. 
D)  are more objective.

The highest and best use concept values the asset based on the highest value that the market would place on the asset, considering all possible uses that are

Under the traditional discounted cash flow approach,

The main difference in the accounting for measurement issues between IFRS and ASPE is that

Pearson Corporation makes an investment today (January 1, 2020). They will receive $9,000 every December 31 for the next six years (2020-2025). If Pearson wants to earn 12% on the investment, what is the most they should invest on January 1, 2020?

A fair value measure under IFRS 13 is based on which view of fair value?

Inputs under IFRS 13 There are three levels of inputs under IFRS 13. What type of inputs are used by Hood Company in exercise 3-85? As a result, what classification would be assigned to the specialized equipment?

Under the expected cash flow approach,

In order to measure fair value under IFRS13, an entity must determine

Calculate market price of a bond On January 1, 2020 Lance Co. issued five-year bonds with a face value of $700,000 and a stated interest rate of 12% payable semi-annually on July 1 and January 1. The bonds were sold to yield 10%. Calculate the issue price of the bonds.

Fiddler Company has a loan balance of $853.02 and must make equal payments of $100 at the end of each of the next 10 months. What is the monthly rate of interest that Fiddler Company is paying?

Use the following data to solve the following questions: -Branson Company deposited $5,800 in an account paying 2.5% annual interest. How much simple interest would Branson earn in 3 years?

Valuation premise does not refer to

Which of the following is not a category to measure financial statement elements?

The cost model attempts to reflect the amount that would be required to

Barkley Company will receive $400,000 in a future year. If the future receipt is discounted at an interest rate of 8%, its present value is $252,068. In how many years is the $400,000 received?

Level 1 inputs

The Canadian Financial Reporting Environment

Conceptual Framework Underlying Financial Reporting

Reporting Financial Performance

Financial Position and Cash Flows

Revenue Recognition

Cash and Receivables

Inventory

Investments

Property, Plant, and Equipment: Accounting Model Basics

Depreciation, Impairment, and Disposition

Intangible Assets and Goodwill

Accounting Information Systems and Adjusting Entries: A Comprehensive Guide

Filters

Exam 3: Measurement

The highest and best use concept values the asset based on the highest value that the market would place on the asset, considering all possible uses that are

Under the traditional discounted cash flow approach,

The main difference in the accounting for measurement issues between IFRS and ASPE is that

Pearson Corporation makes an investment today (January 1, 2020). They will receive $9,000 every December 31 for the next six years (2020-2025). If Pearson wants to earn 12% on the investment, what is the most they should invest on January 1, 2020?

A fair value measure under IFRS 13 is based on which view of fair value?

Inputs under IFRS 13 There are three levels of inputs under IFRS 13. What type of inputs are used by Hood Company in exercise 3-85? As a result, what classification would be assigned to the specialized equipment?

Under the expected cash flow approach,

In order to measure fair value under IFRS13, an entity must determine

Calculate market price of a bond On January 1, 2020 Lance Co. issued five-year bonds with a face value of $700,000 and a stated interest rate of 12% payable semi-annually on July 1 and January 1. The bonds were sold to yield 10%. Calculate the issue price of the bonds.

Fiddler Company has a loan balance of $853.02 and must make equal payments of $100 at the end of each of the next 10 months. What is the monthly rate of interest that Fiddler Company is paying?

Use the following data to solve the following questions: -Branson Company deposited $5,800 in an account paying 2.5% annual interest. How much simple interest would Branson earn in 3 years?

Valuation premise does not refer to

Which of the following is not a category to measure financial statement elements?

The cost model attempts to reflect the amount that would be required to

Barkley Company will receive $400,000 in a future year. If the future receipt is discounted at an interest rate of 8%, its present value is $252,068. In how many years is the $400,000 received?

Level 1 inputs

The Canadian Financial Reporting Environment

Conceptual Framework Underlying Financial Reporting

Reporting Financial Performance

Financial Position and Cash Flows

Revenue Recognition

Cash and Receivables

Inventory

Investments

Property, Plant, and Equipment: Accounting Model Basics

Depreciation, Impairment, and Disposition

Intangible Assets and Goodwill

Accounting Information Systems and Adjusting Entries: A Comprehensive Guide

Filters