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Multiple-choice questions 1.A business combination is defined in AASB 3 as a transaction: a.in which an acquiree obtains control of one or more businesses. b.in which one entity obtains significant influence over one or more other entities. c. or other event in which an acquirer obtains control of one or more businesses. d.or other event.
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11.In accordance with AASB 3 Business Combinations, if an intangible asset is acquired in a business combination, the cost of the asset is its: a.fair value at the combination date. b.fair value at the acquisition date. c.current replacement cost at the acquisition date. d.discounted present value at the acquisition date. 12.Paragraph 63 of AASB 138.
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11.Which of the following is an example of a contract-based intangible asset? a.Franchise agreements b.Patented technology c.Trademarks d.Pictures and photographs 12.The cost approach to determining fair value involves: a.determining an amount which reflects the amount currently needed to replace the service capacity of an asset. b.using prices generated by market transactions involving identical or comparable assets or.
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21.Lewis Limited was involved in a mining exploration business. It commenced a project to design more efficient gold-detecting equipment. The following expenditures occurred during the financial year ended 2014: researcher’s salary $5000, research consumables $3000, re-development of the detecting equipment $4000 and final adjustments to the detecting equipment $2500. The.
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41.The residual value of a non-current asset is the amount or consideration actually received by an entity at the date of the asset’s disposal. 42.The units-of-production method of recognising depreciation is only suitable for use by entities involved in manufacturing. 43.Once an entity has selected a depreciation method to use to depreciate.
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11. When changing from the revaluation to the cost model of measurement for non-current assets, the model must be applied: a. in the current and future accounting periods. b. only to assets acquired after date of changing to the cost model. c.retrospectively. d. prospectively. 12.Under the cost model, after initial recognition an item of property,.
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41.Where equity instruments are issued as part of the consideration in a business combination, any costs associated with issuing such equity instruments are included as part of the cost of the business combination. 42.At the date of acquisition, goodwill is measured as the excess of the consideration transferred over the net.
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21.The smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets is referred to as a/an: a.small-group unit. b.cash-generating unit. c.identifiable unit. d.independent unit. 22.Which of the following is not one of the guidelines in AASB 136 Impairment of Assets for.
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Multiple-choice questions 1.Which of the following statements is incorrect? a.The relevant accounting standard applied in translating financial statements into another currency is AASB 121 The Effects of Changes in Foreign Exchange Rates. b.The financial statements of an entity may be recorded in a foreign currency and translated into Australian dollars for the purpose.
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True/false questions 31.General purpose financial statements are prepared for users who depend on those reports for information to enable them to make decisions about the allocation of scarce resources. 32.The financial position of an entity as at reporting date is presented in a statement of comprehensive income. 33.A complete set of financial.
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11.Assets that are leased under an operating lease should be: a.depreciated by the lessee over the economic life of the asset. b.recognised by the lessee as an asset and depreciated according to the pattern of economic benefits from use. c.regarded as an operating activity by lessees and lease payments charged to profit and.
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21.The correction of a material error that occurred in a previous period must be accounted for by: a.disclosure in the notes to the financial statements. b.an adjustment in future accounting periods. c.a prospective adjustment to the financial statements. d.a retrospective restatement in the first financial statements issued after the discovery of the error. 22. Errors.
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11. The following information relating to Equipment was extracted from the records of Bright Skies Limited: Opening balance $360 000 Proceeds from sale of equipment $6000 Closing balance $400 000 Cost of equipment sold $40 000 Cost of new equipment $80 000 Carrying amount of equipment sold $ 10 000 The total cash flows from these investing.
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Multiple-choice questions 1.All the following items are ‘monetary items’ according to AASB 121 except: a. trade payable of ?50 000. b.borrowings €30 000. c.shares held in BHP Ltd listed on the ASX. d.trade receivable of US$12 000. 2.All of the following are foreign currency transactions for a company that has A$ as its functional currency,.
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11.The market with the greatest volume and level of activity for the asset or liability is defined as the: a.active market. b.principal market. c.liquid market. d.most advantageous market. 12.A valuation technique that reflects the amount that would be currently required to replace the service capacity of an asset is known as: a.the fair value approach. b.the income.
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Multiple-choice questions 1. The statement of cash flows is not used to: a. assess the ability of an entity to generate cash. b. help predict future cash flows. c. check the accuracy of past assessments of future cash flows. d. indicate significant changes in asset, liability and equity accounts for the year. 2. All of the.
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Multiple-choice questions 1.Which of the following is not one of the key reasons given by the IASB for issuing a standard on fair value measurement? 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..
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Multiple-choice questions 1. All of the following would be regarded as financial instruments except: a. cash on hand. b. bank overdraft. c. forward exchange contracts. d. property, plant and equipment. 2. Which of the following are regarded as financial instruments? IOrdinary shares IIRaw materials inventories IIIProperty, plant and equipment IVDeposits held by a financial institution VAccounts receivable.
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True/false questions 31.On initial recognition of property, plant and equipment, the cost only comprises the purchase price plus an initial estimate of dismantling and/or restoration costs. 32.Fair value is defined in AASB 116 Property, Plant and Equipment as the amount for which an asset can be exchanged between knowledgeable willing parties.
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Multiple-choice questions 1.The recognition of __________ provides more complete or relevant information for economic decision making than __________ . a.current tax and deferred tax; deferred tax alone b.current tax and deferred tax; current tax alone c.deferred tax alone; current tax and deferred tax combined d.current tax alone; current tax and deferred tax combined 2.The tax.
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True/false questions 31.For a group of assets to constitute a business, they must be capable of providing a return. 32.The acquirer in a business combination is the party that loses control of a business. 33.The acquisition date is the date on which the contract between the acquirer and acquire is signed. 34.The use.
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21.Which of the following is not one of the ASX Corporate Governance Council’s principles of good corporate governance? a.Recognise the interests of all stakeholders. b.Structure the board to add value. c.Safeguard integrity in financial reporting. d.Remunerate fairly and responsibly. 22.How many principles are contained within the ASX Corporate Governance Council’s principles of good corporate governance? a.7.
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Multiple-choice questions 1. The amount by which the carrying amount of an asset or a cash-generating unit exceeds its carrying amount is referred to as a/an: a. depreciation expense. b. amortisation cost. c. impairment loss. d. loss on disposal. 2.Under AASB 136 Impairment of Assets, which of the following assets are subject to impairment testing? I.II.III.IV. Financial assetsNoNoNoNo Biological.
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41.  The use of the stand-alone valuation premise is appropriate when the market participant to whom the asset is being transferred would use the asset in conjunction with other assets. 42.In the context of a liability, the fair value is the amount required to be paid to settle a liability. 43.AASB 13.
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41.Subsequent to initial recognition, AASB 138 Intangible Assets allows intangible assets to be measured under the cost model or revaluation model. 42.Where an intangible asset has an indefinite useful life, there is no amortisation expense recorded. 43.In general, the principles of amortisation of intangible assets are the same as those for.
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True/false questions 31.The requirements of AASB 101 Presentation of Financial Statements apply to both general purpose financial statements and condensed interim financial statements. 32.According to AASB 101 Presentation of Financial Statements, a complete set of financial statements only comprises a statement of financial position, statement of profit or loss and other.
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True/false questions 31.One of the key reasons for issuing AASB 13 Fair Value Measurement was 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. 32.Fair value under AASB 13 Fair Value Measurement is defined.
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True/false questions 31.Physical form is not essential to the existence of an asset. 32.Customer service capability does not qualify for recognition as an intangible asset because it does not meet the identifiability criterion. 33.If the cost of an intangible asset cannot be measured reliably but the fair value can be determined, under.
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11.Deferred tax accounting adjustments are recorded at what point in time? a.As each transaction arises or is incurred b.As the cash flows from each transaction occur c.At the end of each month d.At balance date 12.Silver Bullet Limited has a product warranty liability amounting to $12 000. The product warranty costs are not tax deductible.
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Multiple-choice questions 1.Which type of financial statements is prepared for users who depend on them for information to enable them to make decisions about the allocation of scarce resources? a.Management financial statements b.Short-term financial statements c.Specific purpose financial statements d.General purpose financial statements 2. Information about the financial position of an entity is largely contained in.
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True/false questions 31.Corporate governance deals with the way corporations are managed and governed. 32.Stakeholder theory refers to the concept of managers acting as agents of the owners of a business and arises due to the separation of ownership from control. 33.Agency theory focuses on providing value to all the company’s stakeholders as.
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41.Revenue arises from a company’s ordinary activities. 42.Items of income and expense can be disclosed as extraordinary items in the notes to the financial statements. 43.AASB 101 Presentation of Financial Statements requires a single statement approach be adopted in the preparation of the statement of profit or loss and other comprehensive income. 44.A.
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Multiple choice questions 1.Which of the following is included within the scope of AASB 117? a.Lease agreement for an oil refinery. b.Lease agreements for biological assets. c.Lease agreements to explore for minerals. d.Licensing agreements for motion picture films. 2.Which of the following is not an example of a risk of ownership of an asset? a.Uninsured damage. b.Idle capacity. c.Technical.
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21.Cockroaches Limited acquired the identifiable assets, liabilities and contingent liabilities of Inglis Limited for $268 000. The items acquired, stated at fair value, are: plant $144 000; inventory $80 000; accounts receivable $36 000; patents $20 000; and accounts payable $32 000. The difference on acquisition is: a.gain on bargain purchase.
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41.In addition to the annual financial statements, companies have the right to choose to prepare and distribute concise financial reports to members. 42.Disclosing entities must prepare a half year financial report in accordance with AASB 134 Interim Financial Reporting. 43.Companies must always disclose the fact that their financial statements are prepared using.
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Multiple-choice questions 1.The requirements of AASB 101 Presentation of Financial Statements apply to which of the following sets of financial statements? a.Condensed interim financial statements b.All purpose financial statements c.General purpose financial statements d.Special purpose financial statements 2.According to AASB 101 Presentation in Financial Statements, there must be consistency of presentation and classification of items in.
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21. Interest and other costs incurred by an entity in connection with borrowing funds are known as: a. extraordinary costs. b. distribution costs. c. borrowing costs. d. repayment costs. 22. Extraordinary items of income and expense: a. must be disclosed in the statement of profit or loss and other comprehensive income. b. were previously disclosed together with.
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Multiple-choice questions 1.Property, plant and equipment are assets that: a.are expected to be used up within the current financial period. b.are held for resale within the current period. c.are tangible in nature. d.have a remaining productive life of less than one financial year. 2.Property, plant and equipment includes items that are: a.intangible. b.held for resale. c.held for investment. d.used in.
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41.Hard regulations are also referred to as black letter law and result in legally enforceable obligations. 42.The Corporations Act definition of a director is very wide and can extend to an external advisor of the company who investigates a company’s affairs and makes suggestions as to the running of the company. 43.Under.
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21. Non-performance risk refers to the risk that: a. a market participant will not fulfil an obligation. b. the counterparty will not fill an obligation. c. the holder of a corresponding asset will not fulfil an obligation. d. the holder of the liability will not fulfil an obligation. 22.Which of the following statements regarding.
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True/false questions 31.Deferred tax assets are subject to annual impairment tests. 32.Intangible assets that are not yet available for use are not required to be tested for impairment. 33.A decrease in interest rates is an example of an external source of information that may indicate that an asset is impaired. 34.Higher cash outflows.
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Multiple-choice questions 1.An identifiable non-monetary asset without physical substance is known as a/an: a.tangible asset. b.intangible asset. c.non-physical asset. d.non-current asset. 2.For an asset to be defined as an identifiable intangible, AASB 138 Intangible Assets requires that it meet which of the following criteria? I.It arises from a contractual or legal right. II.Its fair value must be able.
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21.Which of the following is not an example of a separate class of property, plant and equipment? a.Office equipment b.Land and buildings c.Inventory d.Motor vehicles 22.A non-current property, plant and equipment asset is depreciated using the straight-line method over a 10 year useful life. The asset was revalued upwards after four years of use. There.
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11.Foreign exchange risk may relate to: a. recognised assets and liabilities. b. planned foreign currency transactions. c. unrecognised firm commitments. d. all of the above. 12.If an Australian company enters a forward exchange contract to buy US$15 000, then which of the following applies? a. The company’s contractual obligation (at the forward rate) and contractual right.
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