Problem 30-1 Multiple choice (IFRS) information for years 2019 and 2018.

The
opening IFRS statement of financial position
This is defined as the first annual should be prepared on
financial statements in which an
entity adopts PFRS by an explicit and January 1, 2018
unreserved statement of compliance
with PFRS

First PFRS financial statements The statement of financial position at the

date of transition to PFRS is best described as

Opening IFRS statement of financial

position
An entity that presents first annual
financial statement that conform with
PFRS is known as

A first time adopter 6 Under which of the following circumstances

would an entity's current year financial
statements not qualify as first PFRS financial
statements?
What is the date of transition to PFRS?
d. The entity prepared its financial
The beginning of the earliest period
statements in the previous year in
for which an entity presents full
conformity with all requirements of
comparative information under PFRS
PFRS and contained an explicit and

An entity is a first time adopter of PETS.

The most recent financial statements it
presented under previous GAAP were on
December 31, 2019. The entity adopted
PFRS for the first time and intended to
present the first PFRS financial
statements on December 31, 2020. The
entity plans to present a two-year
comparative
unreserved statement of
compliance with PFRS.
Which is not a required adjustment in
an opening PERS statement of financial
Under what condition would an entity's position?
current year financial statements
qualify as first PFRS financial Disclose as comparative information
statements? all figures under previous GAAP
alongside figures for the current year
All of these conditions would qualify presented under PFRS
the current year financial statements
of an entity as first PFRS financial
statements.
How should a first time adopter of
IFRS recognize the adjustments All of the adjustments should be
required to present the opening PFRS recognized directly in retained
statement of financial position? earnings or, if appropriate, in another
category of equity.

Which of the following would be included in

the first PFRS financial statements?

All of these statements would

be included in the first IFRS
financial statements

Problem 31-7 Multiple choice (PFRS 2)

Share options are what type of share-based

payment transaction?

Equity-settled share-based
payment transaction
When issuing share options to employees,
which of the following factors is most relevant
in determining the accounting treatment?
The total compensation expense in a
share option plan is measured at
Whether the share options are issued
in lieu of salary
Fair value of share options on date
of grant

It is the difference between the fair For transactions with employees, the fair
value of the shares to which the value of the share options is measured on
counterparty has the right to
subscribe and the price the Grant date
counterparty is required to pay for
those shares.
It is a contract that gives the employees the
Intrinsic value
right, but not the obligation to subscribe to the
entity's shares at a fixed or determinable price
for a specified period of time.
The date on which total
compensation expense is computed
in a share option plan is the Share option

Date of grant
In what circumstances is compensation
expense immediately recognized under a share
option plan?
 c. In circumstances when the options
are granted for prior service and the
options are immediately exercisable.
A cash settled share-based payment
transaction increases which of the following?

Compensation expense resulting from a A liability

share option plan is generally

Allocated to the periods benefited

by the employee's required service. What is the measurement date for a share-
based payment to employees that is classified
as a liability?

If there is an acceleration of vesting, The settlement date

any payment made to the employees
on the cancelation or settlement of
the grant shall be For share appreciation rights, the
measurement date for computing
Accounted for as repurchase of compensation is the
equity interest and any excess
payment over the balance of share Date of exercise
options outstanding shall be
recognized as expense.
In accounting for share appreciation rights,
compensation expense is generally
Problem 31-8 Multiple choice (IFRS)
Allocated over the service period of
Share appreciation rights are what employees
type of share-based payment
transaction?
Problem 32-4 Multiple choice (IFRS 5)
Cash settled share-based
payment transaction It is group of assets to be disposed of by sale
or otherwise, together as a group in a single
transaction, and liabilities directly associated
with those assets that will be transferred in the For the sale of a non current asset
transaction. to be highly probable, which of
the following statements is
Disposal group incorrect?

The sale is expected to qualify for

An entity shall classify a noncurrent recognition as a completed sale within
asset or disposal group as held for two years from the date of classification
sale when of the asset as held for sale.

The carrying amount of the asset or

disposal group is recovered through a
An entity shall measure a noncurrent
sale transaction.
asset or disposal group classified as
held for sale at
 Lower of carrying amount and fair
value
less cost of disposal.

Noncurrent asset classified as held for sale

shall be presented as

Current asset

If fair value less cost of disposal is lower than the

carrying amount of a noncurrent asset classified
as held for sale, the difference is

Accounted for as an impairment loss.

What is the treatment of any gain on a

subsequent increase in the fair value less cost of
disposal of a noncurrent asset classified as held
for sale?

The gain shall be recognized but not in

excess of the cumulative impairment
loss previously recognized.

A noncurrent asset that is to be abandoned

shall not be classified as held for sale because

The carrying amount is recovered

principally through continuing use.

How should the assets and liabilities of a

disposal group classified as held for sale
be reported in the statement of financial
position?

The assets of the disposal group shall

be reported separately under current
assets and the liabilities of the disposal
group shall be reported separately
under current liabilities.
 An entity classified a noncurrent asset
accounted for under the cost model as
held for sale at the current year-end. Problem 33-5 Multiple choice (IFRS)
Because no offers were received at an
acceptable price, the entity decided at
the end of next year not to sell the
asset but to continue to use it. 1 Which criterion does not have to be met
in order for an operation to be classified
The asset shall be measured at the end of next discontinued?
year at what amount?
The operation must be sold within
three months after the end of
reporting period.
The lower of carrying amount on
the basis that the asset had never
been classified as held for sale and
recoverable amount What is the presentation of the results from
discontinued operation in the income
statement?

The entity shall disclose a single amount

on the face of the income statement
below the income from continuing
operations.
Which statement is incorrect concerning When a component of a business has been
the presentation of the discontinued discontinued during the year, the loss on
operation in the statement of financial discontinued operations should
position?
Include operating loss of the current
Depreciable assets of the period.
component held for sale shall be
depreciated

When a component of a business has been

discontinued during the year, the operating loss
4 When a component of an entity was of the component for the current period should
discontinued during the current year, the loss be included in
on discontinued operation should
Income statement as part of the loss
Include associated on
employee termination cost. the discontinued operation

When an entity decided to sell a When an entity discontinued an operation and

business component, the gain on the disposed of the discontinued operation, the
disposal should be transaction should be reported in the income
statement as
Netted against the loss from
operations An amount after income from
of the component as a part continuing operations and before
net income
Problem 34-5 Multiple choice (IFRS)
Which measurement model applies to
Exploration and evaluation expenditures are
incurred exploration and evaluation asset subsequent to
initial recognition?
When the legal right to explore a Cost model and revaluation model
specific area has been obtained but the
technical feasibility and commercial
viability of extracting a mineral
resource are not yet demonstrable Which type of expenditure is included in
exploration and evaluation of mineral
resources?

When is an entity required to None of these should be included

recognize exploration and evaluation in exploration and evaluation
expenditure as an asset? expenditures

When required by the entity's

accounting policy for Problem 35-5 Multiple choice (IFRS 8)
recognizing
exploration and evaluation asset

If a financial report contains both the

consolidated financial statements of a parent
Which of the following expenditures and the parents separate financial statements,
would never qualify as an exploration segment information is required in
and evaluation asset?
b. The consolidated financial
Expenditures related to the statements only
development of mineral resource

An operating segment is a component

of an entity

All of these characterize an

operating segment.

Which quantitative threshold is

not a requirement in qualifying
a reportable segment?

The segment assets are 20% or more

of the combined assets of all
operating segments.
An operating segment is considered reportable May be considered reportable and
when any of the following conditions is met, separately disclosed if management
except believes that information about the
Segment liabilities are 10% or more of segment would be useful to the
statement users.
the combined liabilities of all segments

Which statement is true concerning the 75%

Operating segments that do not meet any of
overall size test for reportable segments?
the quantitative thresholds

c. The total external revenue of all Revenue test, asset test and profit or
reportable segments is 75% or more loss test
of
the entity's external revenue.

The approach used in segment reporting is

known as
The term chief operating decision maker
Management approach
Refers to a function of allocating
resources to the operating segments
and assessing their performance. Information about intersegment sales

Which statement is not true with Which statement is true about major
respect to a chief operating decision customer disclosure?
maker?
All of these statements are true
The chief internal auditor who reports about major customer disclosures.
to the board of directors usually plays a
very important role and would
generally qualify as chief operating
decision maker. In financial reporting for operating segments,
an entity shall disclose all of the following,
except

Problem 35-6 (IFRS)

For segment reporting, which tests

must be applied to determine if an
operating segment is reportable?

Depending on the business model for

The title of the chief operating
decision maker managing financial assets, an entity
shall classify financial assets subsequent
to initial recognition at

Problem 36-5 Multiple choice (PFRS 9) All of these are used in

measuring financial assets
 C. Held for trading and held to profit
from price changes
Which of the following is a
characteristic of a financial asset held
for trading?
All of the following shall be measured at
All of these are correct. FVPL, except

Debt investment at amortized cost

Under IFRS, the presumption is that
equity investments are
Equity investments irrevocably accounted for at
fair value through other comprehensive income
are

Nontrading investments of less than

20%.

6 Entities are required to measure financial

asset based on all of the following, except

Whether the financial asset is a debt

or an equity investment.

Debt investments that meet the business

model and contractual cash flow tests are
reported at

Amortized cost

When the business model is to collect

contractual cash flows that are solely
Debt investments not held for payments of principal and interest
collection are reported at and also to sell the financial asset
Fair value

Problem 37-1 Multiple choice (IFRS)

Debt investments reported at

amortized cost are
1. Fair value of an asset should be based upon
Held for collection debt investments
The price that would be received to sell
the asset at the measurement date.

A debt investment shall be measured

at fair value through other
comprehensive income
 The price should be adjusted for cost
to transport the asset to the principal
market.
Which of the following describes a principal
market for establishing fair value of an asset?

The market that has the greatest Which of the following is an assumption used in
volume and level of activity for fair value measurement?
the asset
The asset is in the highest and best use

Which statement is true for measuring an

asset at fair value? Which of the following would meet the
qualifications as market participants?
An independent entity that is Prices and other relevant information
knowledgeable about the asset of transactions from identical or
comparable assets

The fair value at initial recognition is

Which of the following would be considered a
The price paid to acquire the asset. Level 2 input for fair value measurement?

Which of the following is not a Quoted market price available from

valuation technique used in fair a business broker for a similar asset
value measurement?

Residual value approach

Problem 38-10 Multiple choice (PFRS 15)

1. Which is within the scope of PFRS 15?

Valuation techniques for fair value that
include the Black-Scholes formula, a All of these are beyond the scope
binomial model, or discounted cash of PFRS 15
flow are examples of which valuation
technique?
What is the core principle of PFRS 15?
Income approach
Revenue is recognized in a manner that
depicts the transfer of good or service
The market approach for measuring fair to a customer and the revenue
value requires which of the following? reflects the consideration to which an
entity expects to be entitled.

The revenue recognition in

accordance with the core principle is Which statement is true about a contract?
applied following
All of these statements are true about
Five-step model a contract.
 7. The transaction price
A contract with a customer must All of these describe a transaction
meet all of the following criteria, price.
except

d. It is not probable that the

consideration will be The transaction price is allocated to the
collected. performance obligations based on relative

Stand-alone selling price

A performance obligation is

A promise to deliver a distinct good in When shall an entity recognize revenue from
a contract with a customer?
contract with a customer.
When or as the entity satisfies the
performance obligation by
transferring control of a good or
service to a
customer.

Revenue shall be recognized at a point

in time under all of the following, except

c. The entity has not transferred the

significant risk and reward of
ownership
the ship at the port. When should the
revenue be recognized by the entity?
Problem 38-11 Multiple choice (IFRS)
When the machine is loaded at the
Sales in which the buyer is not yet port.
ready to take delivery but does take
title are known as

Bill and hold sales A manufacturer sells merchandise to

a retailer which in turn sells the
goods to the public. The retailer
An entity is a large manufacturer of purchases from the manufacturer
machines. A major customer has under a consignment contract.
placed an order for a special machine When should revenue from the sale
for which it has given a deposit to the of merchandise to the retailer be
recognized by the manufacturer?
entity. The parties have agreed on a
price for the machine. As per the terms When goods are sold by the retailer.
of the sale agreement, it is free on
board contract and the title passes to
the buyer when goods are loaded into
 1. Under IFRS, a lessee is required to recognize

An entity has come out with an offer of right Right of use asset and lease liability
of return within one month after the sale if the
customer is not satisfied with the product.
When should the entity recognize the revenue?
2 The lessee may apply the operating lease
model under what condition?
Only if goods are not returned by the
customer after the period of one month
c. Both short-term lease and low
value lease

Problem 39-7 Multiple choice (IFRS 16)

A short-term lease is defined as

Twelve months or less

Which statement is true about low A lessee with a lease containing a purchase option
value lease? that is reasonably certain to be exercised should
depreciate the right of use asset over
All of these statements are true
about low value lease. Useful life of the asset

A right of use asset is initially measured at A lease liability is measured at

Cost The present value of lease payments

The cost of right of use asset The lease payments include all of the
comprises all, except following, except

d. Estimated cost of dismantling and Leasehold improvement

restoring the underlying asset for which
the lessee has no present obligation
Problem 39-8 Multiple choice (AICPA Adapted)

The right of use asset is reported as Rent received in advance by the lessor in an
operating lease should be recognized as
Noncurrent as separate line stem revenue

o d. In the period specified by the lease

When should a lessor recognize in
income a nonrefundable lease bonus
paid by a lessee on signing an Lease payments under an operating
operating lease? lease shall be recognized as rent
income by the lessor on
Over the lease term
 Straight line basis over the lease
term unless another systematic Problem 39-9 Multiple choice (IAA)
basis is representative of the time
pattern of the user's benefit.
Which statement is correct regarding the
lease capitalization criteria?
Which statement characterizes an
operating lease? The lease term is equal to at least
75% of the economic life of the
The lessor records depreciation underlying asset.
and rent revenue.

Which of the following conditions would

The lessor should report the underlying require lease capitalization?
asset in an operating lease as which of
the following? The present value of the lease
payments is significantly more than
Reported according to nature of the fair value of the underlying asset.
the asset

One criterion for a finance lease specifies that

the lease term be equal to or greater than

c. 75 percent of the life of the

underlying asset.
One criterion for a finance lease is that with any changes in the carrying amount of the
the present value at the beginning of dividend payable recognized
the lease term of the lease payments
Directly in retained earnings
equals or exceeds

90 percent of the fair value of the

underlying asset
When an entity settles the property
dividend payable, it shall recognize the
difference between the carrying
Problem 40-6 Multiple choice (IFRIC 17) amount of the asset distributed and
the carrying amount of the dividend
An entity shall measure a liability to payable as
distributed asset as dividend to the
owners at

Fair value of the asset distributed

2 An entity shall adjust the carrying amount of

the dividend payable at the end of each
reporting period and at the date of settlement
 Gain or loss on distribution of property 1 An entity shall initially measure equity
dividend instrument issued to extinguish a financial
liability at

Fair value of the equity

An entity shall measure a noncurrent asset instrument issued
classified as held for distribution to owners at

Lower between carrying amount

and fair value less cost to distribute If the fair value of the equity instrument
issued cannot be reliably measured, the equity
instrument issued to extinguish a financial
liability shall be measured at
Problem 40-7 Multiple choice (IFRIC 19)
Fair value of the liability extinguished
If both the fair value of the equity Present value
instrument issued and the fair value of
the financial liability extinguished
cannot be measured reliably, the equity The decommissioning liability is
instrument issued shall be measured at
Capitalized as cost of the mining facility
Carrying amount of the
liability extinguished

Members' shares in cooperative entities are

classified as
The gain or loss from extinguishment
of a financial liability by issuing equity Either equity or liability depending
instrument is presented as on the terms and conditions of the
financial instrument
Separate line item in the income
statement

Members' shares in cooperative entities are

classified as equity when
Problem 40-8 Multiple choice (IFRS)
The entity has an unconditional right
It is an obligation to dismantle, to refuse redemption of the members'
remove and or contract item of shares
property, plant and equipment as
required by

Decommissioning liability o

The decommissioning liability is

initially recognized at