Accounting Expert Answers & Study Resources : Page 25

1. Provisions in relation to which of the following balances are within the scope of AASB 137? a. warranties b. employee benefits c. financial instruments d. operating leases 2. The uncertainty that exists in relation to provisions is one of a. timing b. amount c. timing and amount d. timing or amount 3. Which of the following is an example.

  THE FOLLOWING INFORMATION RELATES TO QUESTIONS 16-18 Viola Ltd has granted each of its 10 senior executives a choice between receiving a cash payment equivalent to 1000 shares or receiving 1200 share. The grant is conditional on the completion of three years service with the company. If the share alternative is.

71) Which of the following is the amount capitalised as goodwill? A) The excess of the cost of an acquired company over the sum of the market value of its net assets B) The excess of the cost of an acquired company over the sum of the carrying amount of its net.

  21. Which of the following items are defined in AASB 118? a. Income b. Revenue c. Gains d. All of the above 22. Easter Pty Ltd operates a facility making chocolate Easter eggs. Easter has a policy that all unsold chocolate eggs can be returned for a full refund within 1 week of Easter Sunday. .

11) A company purchased a used machine for $22,000. The machine required installation costs of $2000 and insurance while in transit of $900. At which of the following amounts would the machine be recorded? A) $24,900 B) $22,900 C) $22,000 D) $24,000 12) Acer Investments plans to develop a shopping centre. In the first quarter,.

  6. Provisions shall be recognised when: I an entity has a present obligation II it is possible that an outflow of resources will be required to settle the obligation III the amount of the obligation can be reliably estimated IV there has been a past event a. I, II and III b. II, III and IV c..

  21. A share–based payment transaction in which the entity receives goods or services as consideration for equity instruments of the entity is classified in AASB 2 Share-based Payment as a. an equity-settled share-based payment transaction b. a cash-settled share-based payment transaction c. a liability-settled share-based payment transaction d. an “other” share-based payment transaction 22. Salt.

  16. At balance sheet date, Raschella Limited was awaiting the final details of a court case for damages awarded in its favour. The amount and possible receipt of damages is unknown and will not be decided until the court sits again in several months time. How is this event dealt.

21) Which of the following depreciation methods allocates an equal amount of depreciation to each year? A) Reducing-balance method B) Sum-of-years digits method C) Units-of-production method D) Straight-line method 22) Which of the following depreciation methods allocates a fixed amount of depreciation to kilometres driven, hours used or some other measure of the asset's utilisation? A).

16) Expenditures that extend the life of an asset or increase its productive capacity should be expensed. 17) Normal expenditures for repairs and maintenance should be capitalised. MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 18) Which of the following items should be depreciated? A) Intangible property B).

26) Cost of an asset is $1,070,000 and its residual value is $220,000. Estimated useful life of the asset is five years. Calculate depreciation for the first year using the reducing-balance method of depreciation. A) $340,000 B) $214,000 C) $428,000 D) $170,000 27) Iverycoast Ltd purchased a van on 1 January 2016 for $840,000. Estimated.

1. The Appendix to AASB 118 contains illustrative examples which: a. are not part of the standard itself. b. in some cases contradicts the requirements within the body of AASB 118. c. in some cases is inconsistent with the principles within the Conceptual  Framework d. all of the options are correct. 2. The two elements.

  11. Special Limited is in the business of producing and distributing special screenings on various topics. On 1 January 2014, Special granted a license to TV 101 for $250 000 in relation to a special titled “The Big Ice”.  The following conditions were attached to the license: ??TV 101 was allowed to.

  16. Balchin Limited had the following deferred tax balances at reporting date: ??Deferred tax assets $12 000 ??Deferred tax liabilities $30 000 Effective from the first day of the next financial period, the company rate of income tax was reduced from 40% to 30%. The adjustment to income tax expense to recognise the.

  26. Contingent liabilities are: a. recognised in the financial statements unless the possibility of an outflow in settlement is remote. b. recognised in the notes to the financial statements unless the possibility of an outflow in settlement is remote. c. recognised in the notes to the financial statements because the possibility of an.

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..

  16. Which of the following is not assumed when measuring the fair value of an equity instrument? 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.

  6. According to AASB 132 Financial Instruments: Presentation, which of the following items would be regarded as a financial liability? a. ordinary shares held in another entity; b. a contract that is a non-derivative for which the entity is obliged to deliver a variable number of its own equity instruments; c. a contractual.

  21. Which of the following is not within the scope of AASB 137? a. The treatment of future operating losses b. The treatment of contingent assets c. The treatment of restructuring provisions arising from a business combination d. The treatment of onerous contracts 22. An example of where an entity has a present obligation is: a..

  6. On 1 July 2013 Pepper Limited granted 500 share options to each of its 100 employees. Each grant is conditional on the employee working for the company for the next two years. The fair value of each option is estimated to be $3.00. Pepper estimates that 8% of its.

  21. Callas Corporation Limited buys an option that entitles it to purchase 2000 shares in Maria Limited at $5 per share at any time in the next 3 months. The derivative financial instrument in this transaction is the: a. shares in Callas Corporation Limited; b. shares in Maria Limited; c. price of the.

31) When an asset is fully depreciated, no further depreciation expense is recorded. 32) If an asset is fully depreciated, but it can continue to be used, the asset account and accumulated depreciation balance remain on the books and no further depreciation is recorded. MULTIPLE CHOICE. Choose the one alternative that best.

TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 81) Tangible assets are assets with no physical form that have value because of the special rights they carry. 82) Goodwill is NOT amortised—but evaluated—each year for a decline in value. 83) If goodwill decreases, the company records.

TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 41) A loss on the sale of an item of property, plant and equipment is recorded when the sale price exceeds the carrying amount. 42) If assets are scrapped before being fully depreciated, there is a loss.

  16. When accounting for a cash flow hedge, AASB 139 Financial Instruments: Recognition and Measurement, requires that hedge ineffectiveness is: a. recorded in profit or loss; b. separately recorded in equity; c. recorded separately as a financial liability; d. capitalised as a deferred asset. 17. Under AASB 139 Financial Instruments: Recognition and Measurement, when a.

1. Generally, when considering the differences between the accounting treatment and the income tax treatment of a particular item the accounting treatment is based on: a. cash flows b. cash flows adjusted for depreciation charges c. accrual accounting and is subject to the requirements of accounting standards d. the income tax legislation. 2. The following.

  6. When consideration is deferred and there is a below-market rate of interest charged the fair value of the consideration should be determined: a. as the nominal amount of the cash receivable b. by discounting all future receipts using an imputed rate of interest c. by discounting all future receipts using the interest.

76) The decline in value of a trademark is accounted for by: A) depreciation. B) amortisation. C) deterioration. D) depletion. 77) Which of the following assets is NOT an intangible asset? A) Goodwill B) Patent C) Building D) Trademark 78) The type of intangible asset related to the rights of original music and media is: A) a patent. B) a copyright. C) goodwill. D).

  11. Malarky Limited accrued $30 000 for employees’ long service leave in the year ended 30 June 2013. This item will not be tax deductible until it is paid in approximately 10 years’ time. If the company tax rate is 30% Malarky Limited must record the following tax effect as.

  26. On 1 July 2013 Pearl Pty Ltd granted 800 share options with an exercise price of $35 to the CFO, conditional on the CFO remaining in employment with the company until 30 June 2016. The fair value of Pearl’s shares at that time were assessed to be $40. The.

  26. Which of the following is within the scope of AASB 139? a. a lease obligation to which AASB 117 applies b. a lease renewal option within a lease agreement c. a contract for contingent consideration payable in a business combination covered by AASB 3 d. a share option issued under an employee share.

  11. AASB 139 Financial Instruments: Recognition and Measurement, requires that ‘Held-to-maturity’ investments be initially measured at: a. fair value; b. fair value plus transaction costs; c. discounted future cash outflows; d. discounted future net cash flows. 12. The formal documentation of a hedging relationship must include identification of:   a. I; b. II; c. III; d. IV. 13. To be regarded.

  26. Which of the following is an example of a liability where there is no corresponding asset? a. a provision for decommissioning b. a debenture issued by a listed company c. a loan owing to a financial institution d. a provision for warranties. 27. In measuring an equity instrument at fair value the objective is.

51) When an asset is exchanged between knowledgeable willing parties in an arm's length transaction, the resulting value is called: A) the present value. B) the current value. C) the fair value. D) the replacement value. 52) Sterling Company wishes to revalue some equipment with an original cost of $200 000 and accumulated depreciation of.

  26. Which of the following is incorrect in relation to consignment sales? a. A consignment sale is one where the owner transfers possession of the goods but not legal title to a third party (agent). b. On sale of an item held on consignment, the agent remits the proceeds to the owner.

56) The most common asset to revalue downwards is land. 57) Plant and equipment are more likely to decrease in value than increase. 58) Revaluation increases and decreases must always be offset against each other. 59) A revaluation increment will always be credited to revenue account. 60) A revaluation decrement will always be debited.

66) A coal mine cost $1,007,000 and is estimated to hold 56,000 tonnes of coal. There is no residual value. 16,000 tonnes are extracted and sold during the first year of operations. Calculate depletion expense for the first year. A) $100,700 B) $151,050 C) $287,714.29 D) $201,400 67) Steel Rolling Company purchased a mine on.

1) Which of the following is included in the cost of land? A) The cost of clearing the land B) The cost of fencing C) The cost of paving D) The cost of outdoor lighting 2) Which of the following asset categories would include the cost of clearing land and removing unwanted buildings? A) Machinery and.

  The following information relates to questions 16 and 17 TelCo provides a bundled service offering to a customer for $3000 upfront.  The services provided are as follows: ??Upfront advice ??‘on-call’ advice ??Database access for a 2-year period If TelCo were to charge a separate fee for each service if sold separately the fee would be: Up-front.

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 61) Which of the following items should be depleted? A) Natural resources B) Land C) Intangible property D) Tangible property, plant and equipment, other than land 62) Which of the following is the expense resulting from a decline in the utility.

  11. On 1 July 2014 Luca Ltd grants 200 options to each of its 75 employees conditional on the employee remaining in service over the next two years. The fair value of each option is estimated to be $7. Luca estimates that 8 employees will leave over the two year.

46) When an item of property, plant and equipment is sold, if the carrying amount is higher than the sales price, there will be a loss on sale. 47) If the sales price of an item of property, plant and equipment is lower than the carrying amount, there will be a.

1. When first issued, AASB 139 was: a. More rule-based than other AASB standards b. Less rule-based than other AASB standards c. Wider in scope that other AASB standards d. Narrower in scope that other AASB standards 2. Which of the following is NOT an example of a derivative financial instrument? a. A forward exchange contract b..

1. A share –based payment transaction in which the entity acquires goods or services by incurring liabilities to the supplier for amounts that are based on the value of the entity’s shares or other equity instruments of the entity is classified in AASB 2 Share-based Payment as a. an equity-settled share-based.

6) A company's accountant capitalises a payment that should be recorded as an expense. Which of the following is TRUE? A) Assets are overstated. B) Expenses are overstated. C) Liabilities are overstated. D) Revenue is overstated. 7) A company's accountant capitalises a payment that should be recorded as an expense. Which of the following is.

  21. Which of the following is the definition of exit price per AASB 13? a. A transaction that assumes exposure to the market for a period before the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets or liabilities; it is not a.

  6. Which of the following is not a valuation technique prescribed by AASB 13? a. the fair value approach b. the income approach c. the cost approach d. the market approach 7. 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..

  11. Trademarks would be measured primarily using which type of inputs? a. Level 1 inputs b. Level 2 inputs c. Level 3 inputs d. Level 4 inputs 12. Which of the following steps in not relevant when valuing liabilities? a. the particular liability that is the subject of the measurement b. the valuation premise that is appropriate.

  11. A railway company is required, under law, to overhaul its rail-tracks every three years as a safety measure. The appropriate treatment of this event for the purposes of preparing financial statements is: a. recognise as a provision for future maintenance costs; b. estimate the future maintenance costs and charge as depreciation.

  6. CTT Limited has an asset which cost $300 and against which depreciation of $100 has accumulated. The accumulated depreciation for tax purposes is $180 and the company tax rate is 30%. The tax base of this asset is: a. $120 b. $220 c. $80 d. $20 7. Deferred tax accounting adjustments are recorded at.