Question 1

Which of the following does Whittington (2008) see as a main feature of the fair value view?

Accepted Answer

A)  Stewardship, defined as accountability to present shareholders, is a distinct objective, ranking equally with decision usefulness. 
B)  Reliability is less important and is better replaced by representational faithfulness, which implies a greater concern for capturing economic substance, and less with statistical accuracy. 
C)  Present shareholders of the holding company have a special status as users of financial statements. 
D)  Future cash flows may be endogenous: feedback from shareholders and markets in response to accounting reports may influence management decisions. 
A)  Stewardship, defined as accountability to present shareholders, is a distinct objective, ranking equally with decision usefulness. 
B)  Reliability is less important and is better replaced by representational faithfulness, which implies a greater concern for capturing economic substance, and less with statistical accuracy. 
C)  Present shareholders of the holding company have a special status as users of financial statements. 
D)  Future cash flows may be endogenous: feedback from shareholders and markets in response to accounting reports may influence management decisions.

Question 2

Unobservable inputs for the asset or liability are an example of:

Accepted Answer

A)  a Level 1 input 
B)  a Level 2 input 
C)  a Level 3 input 
D)  a Level 4 input 
A)  a Level 1 input 
B)  a Level 2 input 
C)  a Level 3 input 
D)  a Level 4 input

Question 3

Which of the following is not one of the key reasons given by the IASB for issuing a standard on fair value measurement?

Accepted Answer

A)  to establish a single source of guidance for all fair value measurements required or permitted by IFRSs to reduce complexity and improve consistency in their application; 
B)  to clarify the definition of fair value and related guidance in order to communicate the measurement objective more clearly; 
C)  to require the use of fair value when accounting for all non-financial assets 
D)  to enhance disclosures about fair value to enable users of financial statements to assess the extent to which fair value is used and to inform them about the inputs used to derive those fair values. 
A)  to establish a single source of guidance for all fair value measurements required or permitted by IFRSs to reduce complexity and improve consistency in their application; 
B)  to clarify the definition of fair value and related guidance in order to communicate the measurement objective more clearly; 
C)  to require the use of fair value when accounting for all non-financial assets 
D)  to enhance disclosures about fair value to enable users of financial statements to assess the extent to which fair value is used and to inform them about the inputs used to derive those fair values.

Question 4

An entity holding both financial assets and liabilities is allowed to offset and determine fair value on the net position as long as:
I they hold a net long position
II they hold a net short position
III they have a documented risk management strategy
IV the manage the group of net financial assets and liabilities on a net exposure basis
v. transactions are conducted in an orderly market

Accepted Answer

A)  I and III 
B)  II and IV 
C)  III and IV 
D)  II and V 
A)  I and III 
B)  II and IV 
C)  III and IV 
D)  II and V

Question 5

At which date is fair value determined?

Accepted Answer

A)  the measurement date 
B)  the settlement date 
C)  the transaction date 
D)  the exchange date 
A)  the measurement date 
B)  the settlement date 
C)  the transaction date 
D)  the exchange date

Question 6

When determining the fair value of an asset its fair value is based on its:

Accepted Answer

A)  Current use 
B)  Proposed use 
C)  Highest and best use 
D)  Value in use 
A)  Current use 
B)  Proposed use 
C)  Highest and best use 
D)  Value in use

Question 7

Which are the two most common measures used in Accounting Standards?

Accepted Answer

A)  fair value less costs to sell and cost 
B)  value in use and cost 
C)  cost and fair value 
D)  net realisable value and fair value. 
A)  fair value less costs to sell and cost 
B)  value in use and cost 
C)  cost and fair value 
D)  net realisable value and fair value.

Question 8

When measuring the fair value of a liability, which of the following is assumed?

Accepted Answer

A)  the liability is settled by the holder 
B)  the liability will be settled by the market participant 
C)  the liability will not be settled 
D)  the liability is settled with the counterparty on measurement date 
A)  the liability is settled by the holder 
B)  the liability will be settled by the market participant 
C)  the liability will not be settled 
D)  the liability is settled with the counterparty on measurement date

Question 9

Which of the following is not an example of a level 2 input?

Accepted Answer

A)  a financial forecast of cash flow or earnings 
B)  quoted prices for identical or similar assets or liabilities in markets that are not active 
C)  inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves, volatilities, prepayment speeds, and credit risks 
D)  inputs that are derived from or corroborated by observable market data by correlation or other means. 
A)  a financial forecast of cash flow or earnings 
B)  quoted prices for identical or similar assets or liabilities in markets that are not active 
C)  inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves, volatilities, prepayment speeds, and credit risks 
D)  inputs that are derived from or corroborated by observable market data by correlation or other means.

Question 10

Where a market has both a bid and an ask process, the price used in measuring fair value is:

Accepted Answer

A)  the bid price 
B)  the ask price 
C)  the bid-ask spread 
D)  the most representative price for the transaction. 
A)  the bid price 
B)  the ask price 
C)  the bid-ask spread 
D)  the most representative price for the transaction.

Which of the following does Whittington (2008) see as a main feature of the fair value view?

Unobservable inputs for the asset or liability are an example of:

Which of the following is not one of the key reasons given by the IASB for issuing a standard on fair value measurement?

At which date is fair value determined?

When determining the fair value of an asset its fair value is based on its:

Which are the two most common measures used in Accounting Standards?

When measuring the fair value of a liability, which of the following is assumed?

Which of the following is not an example of a level 2 input?

Where a market has both a bid and an ask process, the price used in measuring fair value is:

The Conceptual Framework of the Iasb

Shareholders Equity: Share Capital and Reserves

Revenue

Provisions, Contingent Liabilities and Contingent Assets

Income Taxes

Financial Instruments

Share-Based Payments

Inventories

Employee Benefits

Property, Plant and Equipment

Leases

Intangible Assets

Business Combinations

Impairment of Assets

Accounting for Mineral Resources

Agriculture

Financial Statement Presentation

Statement of Cash Flows

Earnings Per Share

Operating Segments

Operating Segments

Consolidation: Controlled Entities

Consolidation: Wholly Owned Subsidiaries

Consolidation: Intragroup Transactions

Consolidation: Non-Controlling Interest

Consolidation: Other Issues

Translation of the Financial Statements of Foreign Entities

Associates and Joint Ventures

Joint Arrangements

Filters

Exam 3: Fair Value Measurement

Which of the following does Whittington (2008) see as a main feature of the fair value view?

Unobservable inputs for the asset or liability are an example of:

Which of the following is not one of the key reasons given by the IASB for issuing a standard on fair value measurement?

At which date is fair value determined?

When determining the fair value of an asset its fair value is based on its:

Which are the two most common measures used in Accounting Standards?

When measuring the fair value of a liability, which of the following is assumed?

Which of the following is not an example of a level 2 input?

Where a market has both a bid and an ask process, the price used in measuring fair value is:

The Conceptual Framework of the Iasb

Shareholders Equity: Share Capital and Reserves

Revenue

Provisions, Contingent Liabilities and Contingent Assets

Income Taxes

Financial Instruments

Share-Based Payments

Inventories

Employee Benefits

Property, Plant and Equipment

Leases

Intangible Assets

Business Combinations

Impairment of Assets

Accounting for Mineral Resources

Agriculture

Financial Statement Presentation

Statement of Cash Flows

Earnings Per Share

Operating Segments

Operating Segments

Consolidation: Controlled Entities

Consolidation: Wholly Owned Subsidiaries

Consolidation: Intragroup Transactions

Consolidation: Non-Controlling Interest

Consolidation: Other Issues

Translation of the Financial Statements of Foreign Entities

Associates and Joint Ventures

Joint Arrangements

Filters