Question 1

Which of the following is not a characteristic of a market participant under AASB 13:

Accepted Answer

A)  Buyers and sellers that are able to enter into a transaction for the asset or liability. 
B)  Buyers and sellers that are willing to enter into a transaction for the asset or liability. 
C)  Buyers and sellers that are dependent on each other. 
D)  Buyers and sellers that are knowledgeable, having a reasonable understanding about the asset or liability and the transaction using all available information. 
A)  Buyers and sellers that are able to enter into a transaction for the asset or liability. 
B)  Buyers and sellers that are willing to enter into a transaction for the asset or liability. 
C)  Buyers and sellers that are dependent on each other. 
D)  Buyers and sellers that are knowledgeable, having a reasonable understanding about the asset or liability and the transaction using all available information. C

Question 2

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. C

Question 3

Non-performance risk refers to the risk that:

Accepted Answer

A)  a market participant will not fulfil an obligation. 
B)  the holder of the liability will not fulfil an obligation. 
C)  the counterparty will not fill an obligation. 
D)  the holder of a corresponding asset will not fulfil an obligation. 
A)  a market participant will not fulfil an obligation. 
B)  the holder of the liability will not fulfil an obligation. 
C)  the counterparty will not fill an obligation. 
D)  the holder of a corresponding asset will not fulfil an obligation. B

Question 4

Which of the following steps is not relevant when valuing liabilities:

Accepted Answer

A)  The particular liability that is the subject of the measurement. 
B)  The valuation premise that is appropriate for the measurement. 
C)  The principal (or most advantageous) market for the liability. 
D)  The valuation technique(s) appropriate for the measurement, considering the availability of data with which to develop inputs that represent the assumptions that market participants would use when pricing the asset or liability and the level of the fair value hierarchy within which the inputs are categorised. 
A)  The particular liability that is the subject of the measurement. 
B)  The valuation premise that is appropriate for the measurement. 
C)  The principal (or most advantageous) market for the liability. 
D)  The valuation technique(s) appropriate for the measurement, considering the availability of data with which to develop inputs that represent the assumptions that market participants would use when pricing the asset or liability and the level of the fair value hierarchy within which the inputs are categorised.

Question 5

In which circumstance will it be necessary to determine the fair value of an entity's own equity instruments?

Accepted Answer

A)  Where the entity is preparing for listing. 
B)  Where the entity undertakes a business combination and issues its own equity instruments in exchange for a business. 
C)  Where the entity undertakes a share buy-back. 
D)  Where there is a change in the shareholding of the entity. 
A)  Where the entity is preparing for listing. 
B)  Where the entity undertakes a business combination and issues its own equity instruments in exchange for a business. 
C)  Where the entity undertakes a share buy-back. 
D)  Where there is a change in the shareholding of the entity.

Question 6

Valuation techniques that convert future amounts to a single current amount and determines the fair value on the basis of the value indicated by current market expectations about those future amounts is an example of:

Accepted Answer

A)  the fair value approach. 
B)  the income approach. 
C)  the cost approach. 
D)  the market approach. 
A)  the fair value approach. 
B)  the income approach. 
C)  the cost approach. 
D)  the market approach.

Question 7

Which of the following is not assumed when measuring the fair value of an equity instrument:

Accepted Answer

A)  The market participant transferee will take on the rights and responsibilities associated with the instrument. 
B)  An entity's own equity instruments are transferred to a market participant at transfer date. 
C)  An entity's own equity instrument would remain outstanding. 
D)  The instrument would not be cancelled or otherwise extinguished on the measurement date. 
A)  The market participant transferee will take on the rights and responsibilities associated with the instrument. 
B)  An entity's own equity instruments are transferred to a market participant at transfer date. 
C)  An entity's own equity instrument would remain outstanding. 
D)  The instrument would not be cancelled or otherwise extinguished on the measurement date.

Question 8

The fair value of an equity instrument is based on determining a/an _________ price which may relate to the price paid for an entity to repurchase its shares.

Accepted Answer

A)  transfer 
B)  settlement 
C)  entry 
D)  exit 
A)  transfer 
B)  settlement 
C)  entry 
D)  exit

Question 9

The market with the greatest volume and level of activity for the asset or liability is defined as the:

Accepted Answer

A)  active market. 
B)  principal market. 
C)  liquid market. 
D)  most advantageous market. 
A)  active market. 
B)  principal market. 
C)  liquid market. 
D)  most advantageous market.

Question 10

Which of the following disclosures are not required under AASB 13:

Accepted Answer

A)  The valuation techniques used to measure fair value. 
B)  The inputs used to measure fair value. 
C)  The level of the fair value hierarchy within which the fair value measurements are categorised. 
D)  Quantitative information about all unobservable inputs used in the fair value measurement. 
A)  The valuation techniques used to measure fair value. 
B)  The inputs used to measure fair value. 
C)  The level of the fair value hierarchy within which the fair value measurements are categorised. 
D)  Quantitative information about all unobservable inputs used in the fair value measurement.

Question 11

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 12

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 13

Trademarks would be measured primarily using which type of inputs?

Accepted Answer

A)  Level 1 inputs. 
B)  Level 2 inputs. 
C)  Level 3 inputs. 
D)  Level 4 inputs. 
A)  Level 1 inputs. 
B)  Level 2 inputs. 
C)  Level 3 inputs. 
D)  Level 4 inputs.

Question 14

Where a liability is held as a corresponding asset by another entity the fair value of the liability is determined by:

Accepted Answer

A)  applying a present value technique to measure the liability. 
B)  applying the cost approach to valuing the liability. 
C)  measuring the fair value of the corresponding asset. 
D)  determining the amount required to settle the present obligation. 
A)  applying a present value technique to measure the liability. 
B)  applying the cost approach to valuing the liability. 
C)  measuring the fair value of the corresponding asset. 
D)  determining the amount required to settle the present obligation.

Question 15

Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date are an example of:

Accepted Answer

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

Question 16

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 17

Which of the following disclosures are required under AASB 13:

Accepted Answer

A)  The valuation techniques used to measure fair value. 
B)  The level of the fair value hierarchy within which the fair value measurements are categorised. 
C)  Quantitative information about the significant unobservable inputs used in the fair value measurement. 
D)  All of the options are correct. 
A)  The valuation techniques used to measure fair value. 
B)  The level of the fair value hierarchy within which the fair value measurements are categorised. 
C)  Quantitative information about the significant unobservable inputs used in the fair value measurement. 
D)  All of the options are correct.

Question 18

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.

Question 19

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 20

Which of the following is an indication of an active market:

Accepted Answer

A)  There are few recent transactions. 
B)  Price quotations vary substantially over time. 
C)  Price quotations vary substantially among market-makers. 
D)  Price quotations are based on current market information. 
A)  There are few recent transactions. 
B)  Price quotations vary substantially over time. 
C)  Price quotations vary substantially among market-makers. 
D)  Price quotations are based on current market information.

Exam 3: Fair Value Measurement

Which of the following is not a characteristic of a market participant under AASB 13:

Non-performance risk refers to the risk that:

Which of the following steps is not relevant when valuing liabilities:

In which circumstance will it be necessary to determine the fair value of an entity's own equity instruments?

Valuation techniques that convert future amounts to a single current amount and determines the fair value on the basis of the value indicated by current market expectations about those future amounts is an example of:

Which of the following is not assumed when measuring the fair value of an equity instrument:

The fair value of an equity instrument is based on determining a/an _________ price which may relate to the price paid for an entity to repurchase its shares.

The market with the greatest volume and level of activity for the asset or liability is defined as the:

Which of the following disclosures are not required under AASB 13:

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

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

Trademarks would be measured primarily using which type of inputs?

Where a liability is held as a corresponding asset by another entity the fair value of the liability is determined by:

Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date are an example of:

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

Which of the following disclosures are required under AASB 13:

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

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

Which of the following is an indication of an active market:

Accounting Regulation and the Conceptual Framework

Application of Accounting Theory

Inventories

Property, Plant and Equipment

Intangible Assets

Impairment of Assets

Provisions, Contingent Liabilities and Contingent Assets

Employee Benefits

Leases

Financial Instruments

Income Taxes

Share Capital and Reserves

Share-Based Payment

Revenue

Presentation of Financial Statements

Statement of Cash Flows

Accounting Policies and Other Disclosures

Earnings Per Share

Operating Segments

Related Party Disclosures

Sustainability and Corporate Social Responsibility Reporting

Foreign Currency Transactions and Forward Exchange Contracts

Translation of Foreign Currency Financial Statements

Business Combinations

Consolidation: Controlled Entities

Consolidation: Wholly Owned Entities

Consolidation: Intragroup Transactions

Consolidation: Non-Controlling Interest

Consolidation: Other Issues

Associates and Joint Ventures

Joint Arrangements

Insolvency and Liquidation

Accounting for Mineral Resources

Agriculture

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