FAR
PAS 8 addresses changes of accounting policy arising from three sources. Which ahall require retrospective application?
-The initial application of a PFRS which does not contain specific transactional provisions -Voluntary changes in accounting policy.
(be) The entry debiting the accounts receivables and crediting allowance for doubtful accounts is made when
A previously defaulted customer pays the outstanding balance
(be) Once the total compensation for share options is measured at the date of grant
An entity is permitted to adjust the number of share options expected to the actual number of instruments vested
(be) In computing basic EPS, if the preference share are cumulative, the amount that should be deducted as an adjustment to the numerator is the
Annual preference dividend
(be) Impairment loss of an intangible asset is the difference between
Carrying amount and recoverable amount
(be) In a debt settlement in which the modification is substantial, a gain should be recognized when
Carrying amount of the debt is greater than the present value of the future cash flows
(be) Which is a financing activity in the statement of cash flows?
Cash purchase of treasury shares
(be) How does an entity treat share issue costs when incurred?
Deduction from share premium
GAAP
Derived their credibility and authority from general recognition and acceptance by the accounting profession.
(be) All of the ff topics are addressed in PFRS for SME, except
Earnings per share
(be) When an entity has acquired a passive interest in another entity, the acquiring entity should account for the investment by using the
Fair value method
(BE) General-purpose financial statements are the product of
Financial accounting
The second level in the Conceptual Framework
Identifies recognition, measurement and disclosure concepts used in establishing and applying accounting standards.
The economic entity assumption?
Is applicable to all forms of business organization
(be) All of the ff are considered research and development costs, except
Marketing research for a new product
PFRS requires changes in accounting principles to be reported
On retrospective basis.
(BE) The International Accounting Standards Board
Promotes the use of high quality and understandable global accounting standards
Change in depreciation
Prospectively
To qualify as generally accepted, accounting principle must
Receive substantial authoritative support
(be) Gains and losses on cash flow hedge derivatives are
Recorded in other comprehensive income
(BE) What is the quality of information that is capable of making a difference in a decision?
Relevance
(be) When an entity amends a pension plan, past service cost should be
Reported as an expense in the period the plan is amended
RA 9298 is officially known as?
The Philippine Accountancy Act of 2004
Under section 5 of RA 9298, who shall appoint the members of the Professional Regulatory Board of Accountancy?
The President of the Republic of the Philippines
In respect to information included in financial statements, the accountancy concept of prudence ensures that
The degree of caution in the exercise of judgements about estimates is made.
(be) Which statement is not true about the fair value option?
The fair value option must be elected for all equity investment
(BE) Which statement about discontinued operation is true?
The result of operation of a discontinued component should be reported below income from continuing operation
(be) What is the effect of an overstatement of ending inventory in the current period in the income of the next period?
Understated
Events that occur after the end of the reporting period but before the financial statements are authorized for issue and provide additional evidence about conditions that existed at the end of the reporting period that affects the realizability of accounts receivable should be
Used to record an adjustment to doubtful accounts
(be)
be recorded as a reduction of the bond issue amount and amortized over the life of the bonds
