Wrong questions Flashcards
(158 cards)
Which of the following is the proper treatment of the cost of equipment used in research and development activities that will have alternative future uses?
Capitalized and depreciated over its estimated useful life.
In non-monetary exchanges with cash how is gain recognized?
Gain is recognized as the proportionate percentage of the cash paid. If the cash is 20% of the transaction, 20% of the gain over book value is reported.
A balance arising from the translation or remeasurement of a subsidiary’s foreign currency financial statements is reported in the consolidated income statement when the subsidiary’s functional currency is
The US dollar, not foreign currency.
When the subsidiary’s functional currency is the foreign currency, financial statements will be translated into US dollars and the translation adjustment is reported in other comprehensive income, not on the income statement. When the functional currency is the US dollar, the financial statements are remeasured and the remeasurement adjustment is included in income.
Realization is:
the conversion of an item or service into cash or a claim to cash as would be the case when equipment is sold for a note receivable. Realization occurs at the time that an entity converts goods or services into accounts receivable, and not necessarily when the receivable is collected.
Faithful Representation
Free from error, Neutrality, Completeness
Roger is never on the FENCe
Under IFRS the equity method of accounting is used for both joint operations and joint ventures. Joint ventures involve both shared control and rights to the arrangement’s net assets. Joint operations involve shared control but no rights to the arrangement’s net assets, and are accounted for with an equity method approach known as
The equity method accounting approach used for joint operations under IFRS is known as the proportionate consolidation approach.
Under book value method, for conversion of bonds into stock, which bond value is used to compute APIC?
Carrying value
The market price of a bond issued at a discount is the present value of its principal amount at the market (effective) rate of interest plus:
the present value of future interest payments, calculated using the market rate of interest
What is the maximum amount of interest that may be capitalized under GAAP.
The maximum amount of interest that may be capitalized under GAAP is based on the weighted average cumulative expenditures for the year.
When USD is functional and reporting currency but not local currency, when preparing statements
Remeasure from local currency to USD.
Appropriate methods for recognizing expenses are:
Cause and effect, such as charging inventory to cost of goods sold
Systematic and rational allocation, such as depreciation of property and equipment
Immediate recognition, such as recognizing salaries expense as it is incurred.
What does comprehensive income include?
Comprehensive income includes all changes to equity other than owner-related items.
Recognition is;
Booking an item in the financial statements.
Recognize when it meets the definition of an element, can be measured in monetary terms, item is relevant and faithfully represented.
Realization is:
Converting non-cash to cash or cash claim
How is inventory valued in IFRS?
Under IFRS, all inventory is valued at the lower of cost or net realizable value.
Accumulated other comprehensive income is reported in which of the following financial statements?
The statement of financial position.
What are the Statements of Financial Accounting Concepts intended to establish?
The objectives and concepts for use in developing standards of financial accounting and reporting.
According to the FASB conceptual framework, comprehensive income includes:
Comprehensive income includes all changes to equity other than owner-related items.
According to the FASB conceptual framework, which of the following is an enhancing quality that relates to both relevance and faithful representation?
The enhancing qualitative characteristics of financial reporting relate to both relevance and faithful representation. They are (Roger is CUT-V – CUT like a V) comparability, understandability, timeliness, and verifiability.
How is fair value determined when there is no principle market?
When there is no principle market, the value is determined using observable market data from the most advantageous market, which is the market in which the entity’s proceeds, net of transaction and transportation costs, is the greatest.
What are the objectives of financial reporting?
The objectives of financial reporting include providing information that is useful to investors and creditors, providing information about an entity’s resources and claims against them, reporting changes in the entity’s economic resources and claims, reporting performance measured using accrual accounting, measuring financial performance in terms of cash flows, and reporting changes in economic resources and claims from sources other than the entity’s financial performance. Indirectly providing information about management’s performance regarding its stewardship responsibility is an additional objective.
What are the 3 basic elements of financial reporting?
assets, liabilities, and equity or net assets. Revenues, expenses, gains, and losses are elements of comprehensive income, which is a component of equity
What are appropriate methods for recognizing expenses?
cause and effect, such as charging inventory to cost of goods sold; systematic and rational allocation, such as depreciation of property and equipment; and immediate recognition, such as recognizing salaries expense as it is incurred.
In order for an item to qualify for recognition on the financial statements, it should:
meet the definition of an element of financial statements; be measurable with reasonable reliability; be relevant to users; and is based on information that is representationally faithful, verifiable, and neutral.
