Chapter 11 - Quizlet

41. The most recent FASB-IASB convergence projects include: A) Leases, Research and Development, Revenue Recognition, and Fair Value Measurement. B) Leases, Revenue Recognition, Fair Value Measurement, and Joint Ventures. C) Insurance Contracts, Post-Employment Benefits, Income Taxes and Impairment D) Insurance Contracts, Income Taxes, Leases, and Revenue Recognition. E) Revenue Recognition, Leases, Insurance Contracts, and Income Taxes.

B) Leases, Revenue Recognition, Fair Value Measurement, and Joint Ventures.

Bugs, Inc., a wholly owned subsidiary of the U.S.-based company, Pillows Ltd., was notified of a loss contingency with an estimated cost ranging between $50,000 and $150,000. Bugs, Inc. hired an expert appraiser who assessed that all possible dollar amounts of liability in this range are equally likely. Management of Bugs, Inc. has estimated that there is a 60 percent chance that this contingency will result in an actual loss. According to U.S. GAAP, what is the amount recognized by Bugs, Inc. as a provision for loss contingency? A) No amount will be recorded but an amount will be disclosed in the notes to the financial statements. B) $50,000 C) $60,000 D) $100,000 E) $150,000

A) No amount will be recorded but an amount will be disclosed in the notes to the financial statements.

ARE:

Actuarial gains and losses for defined benefit plans are recognized immediately. Goodwill is amortized over its useful life. All borrowing costs are expensed as incurred. All development costs are expensed as incurred.

of the following IFRS, which was the most recently issued? A) First-Time Adoption of IFRS B) Leases C) Revenue from Contracts with Customers D) Insurance Contracts E) Financial Instruments: Disclosures

B) Leases

All of the following are true regarding IASB members except:

Part-time members must sever employment relationships with former employers.

When measuring assets and liabilities recognized on the opening balance sheet in accordance with first-time adoption of IFRS, the reporting company must: A) Use its current valuation method and disclose the method in the notes to the financial statements. B) Retrospectively apply applicable IASB standards to each asset and liability reported on the opening balance sheet. C) Prospectively apply applicable IASB standards to each asset and liability reported on the opening balance sheet. D) Recognize the difference in measurement, and disclose it in the notes to the financial statements as a change in accounting estimate. E) Retrospectively apply applicable IASB standards to each asset and liability reported on the opening balance sheet and recognize the amount of change in the income statement.

B) Retrospectively apply applicable IASB standards to each asset and liability reported on the opening balance sheet.

which of the following is not a problem caused by diversity in accounting practices across countries? A) Comparing companies in the same industry that are headquartered in different countries. B) Translating foreign currency balances into U.S. dollars. C) Converting local GAAP financial statements into U.S. GAAP for consolidation purposes. D) Maintaining separate accounting records in both the local and U.S. GAAP. E) Identifying and retaining personnel who are competent to prepare financial statements in both international and domestic accounting standards.

B) Translating foreign currency balances into U.S. dollars.

Bugs, Inc., a wholly owned subsidiary of the U.S.-based company, Pillows Ltd., was notified of a loss contingency with an estimated cost ranging between $50,000 and $150,000. Bugs, Inc. hired an expert appraiser who assessed that all possible dollar amounts of liability in this range are equally likely. Management of Bugs, Inc. has estimated that there is a 60 percent chance that this contingency will result in an actual loss. In the conversion from U.S. GAAP financial statements to IFRS financial statements, what is the amount of adjustment needed to adjust for the difference in accounting for a provision for loss contingency? A) $0 B) $50,000 C) $100,000 D) $150,000 E) $200,000

C) $100,000

A foreign subsidiary of a U.S.-based company has been notified of a loss contingency with an estimated cost ranging between $220,000 and $250,000 which is probable of resulting in an actual loss. Each dollar amount within this range of cost is equally likely of being the actual outcome. According to U.S. GAAP, what is the amount recognized as a provision for loss contingency? A) No amount will be recorded but an amount will be disclosed in the notes to the financial statements. B) $110,000 C) $220,000 D) $235,000 E) $250,000

C) $220,000 ( 235000 if it mention IFRS, 15000 if there is consolidation, and Contingency Liability payable account Debit - To Contingent Loss Credit)

Barrel of Oats (BOA), a U.S. company, was acquired by an international company and BOA has a transition date of January 1, 2018 for first-time adoption of IFRS. BOA has a new cereal brand that is ready to be marketed but the company has not yet received copyright approval for the brand's logo. All costs for development of the copyright were expensed prior to IFRS January 1, 2018. BOA and its new international parent both have December 31 year-end accounting years. What should BOA do to prepare financial statements for the first time in accordance with IFRS? A) Debit development expense and credit copyright for the year ended December 31, 2018. B) Debit copyright and credit copyright expense at January 1, 2018. C) Debit copyright and credit research and development expense for the year ended December 31, 2017. D) Debit copyright and credit stockholders' equity at January 1, 2018. E) Debit stockholders' equity and credit research and development expense at January 1, 2018.

D) Debit copyright and credit stockholders' equity at January 1, 2018.

The FASB-IASB convergence project on leases resulted in the following: A) Lease accounting will be the same under IFRS and under U.S. GAAP in that lessors and lessees will capitalize all leases as finance leases and treat them as such in the measurement of income. B) Lessor and lessee accounting will be the same under IFRS and under U.S. GAAP in that lessors will capitalize all leases and lessees will capitalize some leases as finance leases but treat others as operating leases. C) Lease accounting will differ in that under IFRS lessees will capitalize some leases as finance leases and others as operating leases, while under U.S. GAAP lessees will capitalize all leases as finance leases but treat them as traditional operating leases in the measurement of net income. D) Lease accounting will be similar under IFRS and U.S. GAAP for lessees but will differ for lessors in their treatment of the measurement of net income. E) Lease accounting will differ for lessees in that, under IFRS, all leases will be treated as finance leases both on the balance sheet and in the measurement of net income, and under U.S. GAAP lessees will capitalize operating leases on the balance sheet similar to finance leases but will treat them as traditional operating leases in the measurement of income.

E) Lease accounting will differ for lessees in that, under IFRS, all leases will be treated as finance leases both on the balance sheet and in the measurement of net income, and under U.S. GAAP lessees will capitalize operating leases on the balance sheet similar to finance leases but will treat them as traditional operating leases in the measurement of income.

which statement is correct as it relates to diverse accounting practices across countries? A) Gaining access to foreign capital markets is relatively easy and inexpensive once the financial statements are converted to the local currency of the country where the financing is desired. B) U.S. GAAP is acceptable worldwide wherever IFRS has not been adopted. C) To have stock listed on a U.S. stock exchange, all financial statements submitted to the SEC must be prepared either using U.S. GAAP or using IFRS. D) Stock analysts specializing in industry coverage can compare financial statements regardless of various national or international accounting standards used by companies being compared. E) Translating financial statements of various currencies into one common currency for consolidation purposes does not resolve the problem of diversity of accounting practices across countries.

E) Translating financial statements of various currencies into one common currency for consolidation purposes does not resolve the problem of diversity of accounting practices across countries.

What international organization currently issues IFRS?

IASB

Which of the following is the organization that governs the IASB?

IFRS Foundation

Which of the following is not true about IFRS?

IFRS includes only pronouncements issued by the IASB.

Which of the following is a pronouncement originally issued by the IASC and is not a pronouncement originally issued by the IASB?

Interim Financial Reporting

Which of the following is not an authoritative pronouncement of International Financial Reporting Standards (IFRSs)?

International Accounting Principles

Which of the following is not a problem caused by diverse accounting practices across countries?

Lack of comparability of financial statements between companies in the same country

Of the following IFRS, which was the most recently issued?

Leases

Which of the following is not an example of IFRS simplified for SMEs?

There is a choice between using the cost model and the revaluation model for property, plant, and equipment.

Which statement is correct as it relates to diverse accounting practices across countries?

Translating financial statements of various currencies into one common currency for consolidation purposes does not resolve the problem of diversity of accounting practices across countries.