[ACECFAS] HYPERINFLATION (TOA)
Assets and Liabilities whose amounts are fixed by contract or otherwise in terms of pesos regardless of price level change
For purposes of adjusting financial statements for changes in the general price level, monetary items consist of
All of these indicate hyperinflation
Hyperinflation is indicated by characteristics of the economic environment of a country which include all of the following, except
General price index
In a hyperinflationary economy, amounts in the statement of financial position not expressed in the measuring unit current at the end of reporting period are restated by applying the
are not restated because they are already expressed in terms of the measuring unit current at the end of reporting period
In a hyperinflationary economy, monetary items
Measuring unit current at the end of reporting period
The financial statments of an entity that reports in the currency of a hyperinflationary economy shall be stated in terms of
Profit or loss and separately disclosed
The gain or loss on the net monetary position in a hyperinflationary economy shall be included in
Allowance for doubtful accounts
When computing information on a constant peso basis, which of the following in classified as monetary?
Inventory
When computing information on a constant peso basis, which of the following in classified as nonmonetary?
Accumulated depreciation - equipment
When computing information on a constant peso basis, which of the following is classified as nonmonetary?
Monetary asset and monetary liability
purchasing power gain or loss results from
excess of depreciation on average current cost over depreciation on historical cost
the realized holding gain for depreciable asset is equal to
excess of current cost at the date of sale over historical cost
the realized holding gain for nondepreciable asset is equal to
excess of net current cost of asset over the carrying amount
the unrealized holding gain for depreciable asset is equal to
excess of current cost at year-end over historical cost
the unrealized holding gain for nondepreciable asset is equal to
current cost less accumulated depreciation based on current cost
what is the net current cost of depreciable asset?
The general purchasing power of the peso at the latest end of the reporting period
A general price level statement of financial position is prepared and presented in terms of
Obligation under warranty
When computing information on a constant peso basis, which of the following in classified as nonmonetary?
holding gains are recognized
in current cost financial statements
Average current cost
what is the basis of deprecaition unde current cost accounting?
Administration costs paid in cash
All of the following are monetary items, except
Inflation rates have exceeded interest rates inthree successive years
All of the following would indicate that hyperinflation exists, except
Assets are measured at current cost
An accountant who recommends the adjustment of financial statements for price level changes should not support the recommendation by stating that
The body of the financial statements
An entity wishes to present information about the effect of changing prices in a hyperinflatinary economy should report this information in
A purchasing power loss if the item is a monetary liability
During a period of deflation in which a liability account balance remains constant, which of the following occurs?
Cash
During a period of defltion, an entity would have the greatest gain in general purchasing power by holding
Monetary liability
During a period of inflation, an account balance remains constant. With respect to this account, a purchasing power gain will be recognized if the account is a
Monetary asset
During a period of inflation, an account balance remains constant. With respect to this account, a purchasing power loss will be recognized if the account is a
A purchasing power gain if the item is a monetary liability
During the period of inflation in which a liability account balance remains constant, which of the following occurs?
Excess of cost of goods sold at average current cost over cost of goods sold at historical cost
The relaized holding gain for inventory sold is equal to
Cost adjusted for purchasing power change
The restatements of historical peso financial statements to reflect the general price level change results in presenting assets at
Excess in ending inventory at current cost over ending inventory at historical cost
The unrealized holding gain for ending invetory is euqal to
Price level adjusted financial statmetns measure current value
Which of the following arguments in favor of price level adjusted financial statements is not valid?
Historical cost restated for change in the general price level
Which of the following methods of reporting attempts to eliminate the effect of the changing value of the peso?
People prefer to keep their wealth in nonmonetary assets or a stable foreign currency
Which of the following would indicate that hyperinflation exists?
number of units sold times average current cost of units during the year
an entity prepared financial statemtns on a current cost basis. How should the entity compute cost of goods sold on a current cost basis?
Goods sold and invetory
current cost financial statements should report holding gains during the period for which of the following?