Chaper 8,11,12

Betsy Kirkland, Inc. incurred a flood loss during the first quarter of 2018 that is deemed both unusual and not expected to recur again in the near future. The loss is considered immaterial to the twelve-month period, but is material in amount relative to the first quarter. The proper accounting treatment in the first quarter interim statement is to:

Ignore the loss

How should discontinued operations be reported in an interim report?

Include as discontinued operations, net of tax, if the component of the business is classified as held-for-sale or is discontinued in the interim period.

What is not an authoratative pronouncement of IFRS?

International Accounting Principles

For companies that provide quarterly reports, how is the fourth quarter reported?

a fourth quarter report is not required

Which of the following costs require similar treatment to Property Tax Expense in an interim financial report? 1) Annual major repairs. 2) Advertising expense. 3) Bonus expense, if estimable. 4) Quantity discounts based on annual sales.

1, 2, 3, and 4

Which one of the following items must be disclosed for all reportable operating segments in the notes to financial statements? (I.) Revenue from external customers. (II.) Total Segment Assets (III.) Revenues from foreign customers, identified by country.

(I.) and (II.) only

What is true in determining reportable segments?

3 tests are applied and only one must be met

In countries of Latin America

Accounting standards previously emphasized accounting highly inflationary economics

How should a change from one GAAP to another accepted principle be handled in a third-quarter income statement?

Adjust financial statements for each prior period presented to reflect the effects of the new principles in those periods

Which is not a way for a country to use IFRS

All the answers are correct

What is the criterion for determining whether an operating segment is separately reportable?

An operating segments assets are 10 percent or more of combined segment assets

What is true regarding the identifying factors used to determine which components of a business are operating segments?

An organizational unit can be an operating segment even if all of its revenues or expenses result from transaction with other segments

What is not true for an operating segment according to U.S GAAP?

An organizational unit cannot be an operating segment if all of its operating transaction are only with other segments of the organization

What is not a background or qualification requirement for full-time IASB members?

Attain 10 years of auditing experience

Which of the following is reported using the integral approach?

Bonus Expense

What is not a required disclosure in an interim financial statement?

Cash flow information or Gross Profit

What is false regarding a countrys legal system?

Common Law originated in the Rome jus civile

The types of differences that exist between IFRS and U.S GAAP would not include..

Compatibility differences

GAAP requires US companies to disclose which disaggregated information for each operating segment, except:

Cost of Goods Sold

Which of the following is reported using the discrete approach?

Discontinued Operations

In the U.S, foreign companies filing annual reports with the SEC that are not prepared in accordance with U.S GAAP?

Either use IFRS, or otherwise use foreign GAAP with reconciliation U.S GAAP

What is false concerning the number of operating segments that should be disclosed?

Even if the segment has been reportable in the past and is of continuing significance, it must meet at least one of the three reporting tests to report separately in the year

What is not a likely step to furthering convergence of FASB and IFRS?

FASB and IASB issuing an identical standard

The following items are required to be disclosed for each operating segment except

Factors used to allocate company-wide pension expense

Foreign companies whose stock is listed on a U.S. stock exchange and using foreign GAAP other than IFRS must file their annual report with the SEC on:

Form 20-F

A U.S. company has many foreign subsidiaries and wants to convert its consolidated financial statements from U.S. GAAP to IFRS. Which of the following items is not one of the likely accounting issues to resolve for the opening IFRS balance sheet?

Goodwill calculation from acquisition of a subsidiary

What is not a factor influencing a countrys financial reporting practices?

Gross National Product

According to authoritive accounting literature, which of the following are required to be disclosed in interim reports?

Gross Revenue

Which of the following items of information are required to be included in interim reports for each operating segment? (I.) Revenues from external customers (II.) Segment profit or loss (III.) Reconciliation of segment profit or loss to the enterprise's total income before taxes (IV.) Intersegment revenues

I, II, III, and IV

What international organization currently issues IFRS?

IASB

Convergence of accounting standards would not occur by

IASB issuing new standards

Which of the following is false with regard to accounting standards for segment reporting according to International Financial Reporting Standards (IFRS) and U.S. GAAP?

IFRS and U.S. GAAP both require disclosure of intangible assets attributable to geographic segments.

What is not true about IFRS

IFRS includes only pronouncements issued by the IASB

What is a pronouncement originally issued by the IASC and is not a pronouncement originally issued by the IASB?

Interim financial reporting

What is not a problem cause by diverse accounting practices across countries?

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

What operating segment disclosure is not required by U.S GAAP?

Liabilities

A U.S. company has many foreign subsidiaries and is converting its consolidated financial statements from U.S. GAAP to IFRS. Which of the following items is not one of the likely accounting issues to resolve for the conversion?

Measuring salary expense

What is not true regarding IASB members

Part time members must server employment relationships with former employers

Vapor Co. has a fan products operating segment. Which is Vapor not required to report for this segment?

Research and Development expense

Which test must a company use to determine which operating segments require separate disclosure?

Revenue test, Profit or Loss test, and Asset test

Which of the following statements is true regarding the reporting of revenues in an interim report?

Revenues should be recognized in interim periods in the same way as they are on an annual basis

How should revenues be recognized in interim periods?

Same way they are recognized on an annual basis

What is not required to be reported in interim financial statements with respect to material operating segments?

Segment assets

What is true according to U.S GAAP regarding operating segment disclosure?

Segment information does not need to be in accordance with GAAP

What is the appropriate treatment in an interim financial report for a LIFO liquidation?

The LIFO liquidation should only be reflected in gross profit on an interim income statement if it is determined that it will not be replaced by year-end.

If a company does not include a balance sheet and a statement of cash flows in an interim report, then what item must be desperately disclosed

The change in stockholders equity

What would be an acceptable grouping for a U.S company to provide information by geographic area?

United States, All other countries

According to U.S GAAP, which of the following would be an acceptable grouping by a U.S company for presentation of information by geographic area

United States, Canada, Mexico, Germany

According to International Financial Reporting Standards (IFRS), what is not a part of minimum components of interim financial reporting

a condensed statement of accumulated pension liability

The most relevant factor in determining the purpose of financial reporting is..

the nature of the country's financial system

What is not a way a country may use IFRS

A country may permit foreign companies listed on a foreign stock exchange to use foreign GAAP

How should seasonal revenues be reported?

Disclose the seasonal nature of business operations , and consider a report for the 12 month period ended at the interim date to supplement the interim report

What are the two approaches that can be followed in preparing interim reports?

Discrete and integral

What is not correct regarding inventory procedures reported in an interim financial statement

FIFO is remeasured using LIFO method

What is not required to be disclosed for each operating segment?

Factors used to allocate company-wide expenses

A company that generates reports by both geographic region and product line must consider additional criteria in identifying operating segments when there are multiple sets of reports. Which of the following statement(s) is correct? (I.) An operating segment has a segment manager who is directly accountable to the chief operating decision maker for its financial performance. (II.) If more than one set of organizational units exists, each organizational unit is considered an operating segment even if there is only one set for which segment managers are held responsible. (III.) If segment managers exist for two or more overlapping sets of organizational units, the nature of the business activities must be considered

I and III only

Which of the following must be disclosed by a geographic segment according to U.S GAAP?

Revenues from external customers

What is not an influence on the development of a countries financial reporting practices?

The country's cultural system

Which of the following is not one of the criteria management should consider in determining whether business activities and environments of an operating segment are similar?

The geographical location

What is the appropriate treatment in an interim report for inventory with a net realizable value below cost?

The loss should be recorded in the interim period in which net realizable value drops below costs if the loss is considered permanent

What information does U.S GAAP require to be disclosed to a major customer?

The operating segment reporting sales to the customer

When defining a reportable segment, which condition would be sufficient to allow a company to combine two operating segments for testing?

The segments may sell different products, but they have similar economic environment and similar business activities.

What is the appropriate treatment in an interim financial report for variances arising from the use of a standard costing system?

The variances expected to be absorbed by year-end should not be reflected in the interim statement

What is the appropriate treatment in an interim financial report for inventory that has cost below net realizable value?

There is no loss to report