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Study Resources (Accounting)

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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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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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.Which of the following statements is correct in relation to the recognition of expenses? a.Under the Conceptual Framework, the recognition of expenses is based on the matching process. b.The recognition of expenses is not subject to the same degree of regulation as revenue. c.Under the Conceptual Framework, recognition of expenses is not.
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Multiple-choice questions 1.According to the AASB’s Conceptual Framework an asset is defined as a/an: a. contingent item depending on another event occurs at some time in the future. b. resource controlled by the entity as a result of future events and from which future economic benefits are expected to flow to the entity. c..
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21.If the balance in a forfeited shares account is refundable to the owners of those shares, then the account is classified as a component of: a.revenue. b.liabilities. c.equity. d.expense. 22.The costs of issuing shares effectively: a.reduce the proceeds from the share issue. b.increase the proceeds from the share issue. c.are borne by the underwriters of the share issue. d.are.
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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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Multiple-choice questions 1.According to the ASX Corporate Governance Council, corporate governance influences all but which of the following? a.How risk is monitored and assessed. b.How the company determines the issue price of its shares. c.How performance is optimised. d.How the objectives of the company are set and achieved. 2.The theory that argues that the real power.
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Ex. 12-94Calculation of goodwill Great Corporation is interested in purchasing Big World Company Ltd.The total of Big World’s net income amounts over the last five years is $745,000.During one of those years, Big World reported a gain on discontinued operations of $93,000.The fair value of Big World’s net identifiable assets is.
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11.The main role of the trustee for debenture holders is to protect the interests of: a.suppliers. b.debenture holders. c.directors. d.employees. 12.Which of the following is not specifically excluded from the definition of a debenture under s. 9 of the Corporations Act 2001? a.Bank overdrafts in the ordinary course of business. b.Unsecured notes. c.Money orders. d.Cheques. 13.Which of the following.
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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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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.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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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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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.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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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. In respect to the issue of shares by companies, which of the following statements is incorrect? a.Companies can convert ordinary shares into preference shares. b.Companies can only issue ordinary shares. c.Companies can issue any specified number of shares at any price. d.Companies can issue both ordinary and preference shares. 2. According to the.
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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.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.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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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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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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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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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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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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41.An entity’s operating cycle cannot be greater than 12 months. 42.Nominal or face value is the most common method used for measuring liabilities. 43.There are no separate measurement methods for equity. 44.According to the Corporations Act, dividends can only be paid out of the profits earned by a company. 45.The Reserves accounts of a.
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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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21.People cannot be appointed as members of the AASB unless: a.they are a member of one of the accounting professional bodies. b.they are a registered company auditor. c.their knowledge and experience in business, accounting, law or government qualifies them for appointment. d.they have experience as a company director. 22.According to s. 224 of the ASIC.
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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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*Ex. 12-96Calculation of goodwill Waikiki Corp. expects excess earnings of $48,000 for each of the next eight years. Assume half of the excess is earned at the end of each six months. Calculate the estimated goodwill if it is based on the present value of excess earnings discounted at 10%, compounded.
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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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Multiple-choice questions 1.The advantages of a company over a partnership and sole trader do not include which of the following? a.Members are able to sell their shares at any time to another person without having to obtain permission from the other members. b.Members are liable for only a limited amount of the.
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41.In announcing that the AASB would adopt IASB accounting standards by 1 January 2005, the Financial Reporting Council (FRC) argued that a single set of high-quality accounting standards that are accepted in international capital markets would greatly help cross-border comparisons by investors. 42.Under the ASIC Act 2001 one of the key.
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Ex. 12-92Reporting a patent purchase Comox Corporation has a December 31 fiscal year end.Comox purchased a patent from Courtney Inc. for $400,000 on January 1, 2014.The patent expires on January 1, 2022.Comox has been amortizing it over its legal life.During 2017, Comox determined that the patent’s economic benefits would not last.
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Pr. 12-100Journal entries for impairment of intangible assets Patagonia Corp., a large, privately held company is preparing its year-end entries. As senior accountant, you have been asked to prepare the entries related to the company's intangible assets. Patagonia currently carries the following intangible assets* on its balance sheet: Trade name$125,000net of accumulated amortization.
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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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True/false questions 31.It is possible for a company to issue different types of preference shares provided that the rights of each type are specified in its constitution. 32.Prior to the allotment/issue of shares, the balance in the application account represents a liability of the company to the applicants. 33.If a company has.
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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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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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41.If a company makes a renounceable rights issue, the shareholders are not allowed to sell their rights, but must either accept or reject the offer to purchase additional shares in the company. 42.Section 124 of the Corporations Act places a restriction on the private placement of shares, limiting to 15% of.
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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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PROBLEMS Pr. 12-99Intangible assets The following transactions involving intangible assets of Falkland Corporation occurred on or near December 31, 2017. Complete the chart below by writing the journal entr(ies) needed at that date to record the transaction, and at December 31, 2018 to record any resultant amortization. If no entry is required.
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True/false questions 31.Members of a company are allowed to sell their shares at any time, provided they obtain permission from the other members. 32.Small proprietary companies must prepare audited accounts if requested by ASIC. 33.When determining whether a proprietary company is classified as small or large, the consolidated gross assets test is.
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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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21.In relation to a revaluation surplus, an entity: a.cannot use this surplus for the payment of future dividends. b.can transfer this surplus to retained earnings when the asset is derecognised or used. c.cannot transfer this surplus to any other reserve account. d.can transfer the surplus to the current period profit or loss when the.
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True/false questions 31.Items which have only sentimental or spiritual benefits are not assets for accounting purposes. 32.Constructive obligations are those that arise from legally binding contracts. 33.Under the Conceptual Framework, the settlement of a liability can be made in a number of ways, including by conversion of the obligation into equity. 34.The Conceptual.
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