TOA 2014 FC (2)

134. If there have been related-party transactions during the year, an entity needs to make, at a minimum, certain disclosures. Which of the following is not a required minimum disclosure under PAS 24? A. The amount of the related-party transactions B. The amount of the outstanding related party balances and their terms and conditions along with details of guarantees given and received C. The amounts of similar transactions with unrelated (third) parties to establish that comparable related-party transactions have been entered at arm's length D. Provisions for doubtful debts related to the amount of outstanding related-party balances and expense recognized during the year in respect of bad or doubtful debts due from related parties

C. The amounts of similar transactions with unrelated (third) parties to establish that comparable related-party transactions have been entered at arm's length

97. Which of the following is not a disclosure required by PFRS 6? A. Information about commercial reserve quantities. B. Accounting policies for exploration and evaluation expenditures, including the recognition of exploration and evaluation assets. C. The amounts of assets, liabilities, income and expense, and operating and investing cash flows arising from the exploration for and evaluation of mineral resources D. Information that identifies and explains the amounts recognized in the financial statements arising from the exploration for and evaluation of mineral resources

A. Information about commercial reserve quantities.

86. Which of these elements are taken into account when determining the discount rate to be used? A. Market yields at the statement of financial position date on high-quality corporate bonds B. Investment or actuarial risk C. Specific risk associated with the entity's business D. Risk that future experiences may differ from actuarial assumptions

A. Market yields at the statement of financial position date on high-quality corporate bonds

84. An entity contributes to an industrial pension plan that provides a pension arrangement for its employees. A large number of other employers also contribute to the pension plan, and the entity makes contributions in respect of each employee. These contributions are kept separate from corporate assets and are used together with any investment income to purchase annuities for retired employees. The only obligation of the entity is to pay the annual contributions. This pension scheme is a A. Multiemployer plan and a defined contribution scheme B. Multiemployer plan and a defined benefit scheme C. Defined contribution plan only D. Defined benefit plan only

A. Multiemployer plan and a defined contribution scheme

140. What should happen when the financial statements of an associate are not prepared to the same date as the investor's accounts? A. The associate should prepare financial statements for the use of the investor at the same date as those of the investor. B. The financial statements of the associate prepared up to a different accounting date will be used as normal. C. Any major transactions between the date of the financial statements of the investor and that of the associate should be accounted for. D. As long as the gap is not greater than three months, there is no problem.

A. The associate should prepare financial statements for the use of the investor at the same date as those of the investor

89. An entity uses Philippine Financial Reporting Standards to prepare its financial statements, but the defined benefit obligation has been calculated using assumptions that are different from PFRS. The financial statements of the entity also do not take into account unrecognized past service costs. How should the entity measure its net pension liability? A. The net present value of the defined benefit obligation less the fair value of the plan assets B. The net present value of the defined benefit obligation less the fair value of plan assets less the unrecognized past service costs C. The net present value of the defined benefit obligation less the fair value of the plan assets less the unrecognized past service costs. In addition, a review of the assumptions should be undertaken to remeasure the obligation D. The value in the entity's statement of financial position will simply be used in the consolidated financial statements.

A. The net present value of the defined benefit obligation less the fair value of the plan assets

148. If a stock option is converted on March 31, P, then A. The potential ordinary shares (stock option) are included in diluted EPS up to March 31, P, and in basic EPS from the date converted to the year-end (both weighted accordingly). B. The ordinary shares are not included in the diluted EPS calculation but are included in basic EPS. C. The ordinary shares are not included in the basic EPS but are included in diluted EPS. D. The effects of the stock option are included only in previous year's EPS calculation.

A. The potential ordinary shares (stock option) are included in diluted EPS up to March 31, P, and in basic EPS from the date converted to the year-end (both weighted accordingly).

98. PFRS 4 was introduced principally for what reason? A. To make limited improvements to the accounting for insurance accounting B. To completely overhaul insurance accounting C. As a response to recent scandals within the insurance industry D. Because of pressure from the financial services authorities in several countries

A. To make limited improvements to the accounting for insurance accounting

123. M Ltd, a new company manufacturing and selling consumable products, has come out with an offer to refund the cost of purchase within one month of sale if the customer is not satisfied with the product. When should M Ltd. recognize the revenue? A. When goods are sold to the customers B. After one month of sale C. Only if goods are not returned by the customers after the period of one month D. At the time of sale along with an offset to revenue of the liability of the same amount for the possibility of the return

A. When goods are sold to the customers

129. Which of these disclosures is not required by PAS 20? A. The accounting policy adopted for government grants, including methods of presentation adopted in the financial statements B. Unfulfilled conditions and other contingencies attaching to government assistance C. The names of the government agencies that gave the grants along with the dates of sanction of the grants by these government agencies and the dates when cash was received in case of monetary grants D. The nature and extent of government grants recognized in the financial statements and an indication of other forms of government assistance from which the entity has directly benefited

C. The names of the government agencies that gave the grants along with the dates of sanction of the grants by these government agencies and the dates when cash was received in case of monetary grants

127. In the case of grants related to an asset, which of these accounting treatments (statement of financial position presentation) is prescribed by PAS 20? A. Record the grant at a nominal value in the first year and write it off in the subsequent year. B. Either set up the grant as deferred income or deduct it in arriving at the carrying amount of the asset. C. Record the grant at fair value in the first year and take it to income in the subsequent year. D. Take it to the income statement and disclose it as an extraordinary gain.

B. Either set up the grant as deferred income or deduct it in arriving at the carrying amount of the asset.

79. Which one of the following does not qualify for an exemption allowed by PFRS 1? A. Business combinations that occurred before or prior to the date of transition to PFRS B. Financial instruments (other than compound financial instruments). C. Cumulative translation differences D. Cumulative unrecognized actuarial gains and losses under PAS 19.

B. Financial instruments (other than compound financial instruments)

81. PAS 26 deals with A. Employers' accounting for the cost of retirement benefits B. General-purpose financial statements of financial reports of retirement benefit plans C. Only defined contribution plans and not defined benefit plans D. Only defined benefit plans and not defined contribution plans

B. General-purpose financial statements of financial reports of retirement benefit plans

141. If the investor ceases to have significant influence over an associate, how should the investment be treated? A. It should still be treated using equity accounting. B. It should be treated in accordance with PAS 39. C. The investment should be frozen at the date at which the investor ceases to have significant influence D. The investment should be treated at cost.

B. It should be treated in accordance with PAS 39.

87. An entity operates a defined benefit plan that pays employees an annual benefit based on their number of years of service. The annual payment does allow the employer to vary the final benefit. Over the last five years the entity has used this flexibility to increase employees' pensions by the current growth in earnings per share. How will employees' benefit be calculated if they retire in the current period? A. It will be based on the existing plan rules with no additional award. B. It will be based on the existing plan rules plus the current rate of growth of earnings per share. C. It will be based on the plan rules plus the current rate of inflation. D. It will be based on the plan rules plus the increase in earnings per share anticipated over the remaining working lives of the employees.

B. It will be based on the existing plan rules plus the current rate of growth of earnings per share.

118. An entity is undertaking reorganization. Under the plan, part of the entity's business will be demerged and will be transferred to a separate entity, Entity Z. This also will involve a transfer of part of the pension obligation to Entity Z. Because of this, Entity Z will have a deductible temporary difference at its yearend of December 31, 2013. It is anticipated that Entity Z will be loss-making for the first four years of its existence, but thereafter it will become a profitable entity. The future forecasted profit is based on estimates of sales to intergroup companies. Should Entity Z recognize the deductible temporary difference as a deferred tax asset? A. The entity should recognize a deferred tax asset. B. Management should not recognize a deferred tax asset as future profitability is not certain. C. The entity should recognize a deferred tax asset if the authenticity of the budgeted profits can be verified. D. The entity should recognize a deferred tax asset if the intergroup profit in the budgeted profit is eliminated.

B. Management should not recognize a deferred tax asset as future profitability is not certain.

133. To enable financial statement users to form a view about the effects of the related-party transactions, PAS 24 requires certain disclosures to be made. Which of the following disclosures is not a mandated disclosure under PAS 24? A. Relationships between parents and subsidiaries irrespective of whether there have been transactions between those related parties B. Names of all the "associates" that an entity has dealt with during the year C. Name of the entity's parent and, if different, the ultimate controlling party D. If neither the entity's parent nor its ultimate controlling entity produces financial statements available for public use, then the name of the next most senior parent that does so

B. Names of all the "associates" that an entity has dealt with during the year

108. Which of the following information is not specifically a required disclosure of PAS 1? A. Name of the reporting entity or other means of identification, and any change in that information from the previous year B. Names of major/significant shareholders of the entity C. Level of rounding used in presenting the financial statements D. Whether the financial statements cover the individual entity or a group of entities

B. Names of major/significant shareholders of the entity

149. In calculating whether potential ordinary shares are dilutive, the profit figure used as the "control number" is A. Net profit after taxation (including discontinued operations). B. Net profit from continuing operations. C. Net profit before tax (including discontinued operations). D. Retained profit for the year after dividends

B. Net profit from continuing operations.

145. Earnings per share is calculated before accounting for which of the following items? A. Preference dividend for the period. B. Ordinary dividend. C. Taxation. D. Minority interest.

B. Ordinary dividend.

103. Insurers can recognize an intangible asset that is the difference between the fair value and book value of insurance liabilities taken on in a business combination. This asset should be accounted for using A. PAS 38, Intangible Assets B. PFRS 4, Insurance Contracts, only C. PAS 16, Property, Plant, and Equipment D. Such an asset should not be accounted for until phase two of the insurance contract

B. PFRS 4, Insurance Contracts, only

128. In the case of grants related to income, which of these accounting treatments is prescribed by PAS 20? A. Credit the grant to "general reserve" under shareholders' equity. B. Present the grant in the income statement as "other income"' or as a separate line item, or deduct it from the related expense. C. Credit the grant to "retained earnings" on the statement of financial position. D. Credit the grant to sales or other revenue from operations in the income statement.

B. Present the grant in the income statement as "other income"' or as a separate line item, or deduct it from the related expense.

136. An entity has bought a 25% share in another entity with a view to selling that investment within six months. The investment has been classified as held for sale in accordance with PFRS 5. How should the investment be treated in the final year accounts? A. It should be equity accounted. B. The assets and liabilities should be presented separately from other assets in the statement of financial position under PFRS 5. C. The investment should be dealt with under PAS 29. D. Purchase accounting should be used for this Investment.

B. The assets and liabilities should be presented separately from other assets in the statement of financial position under PFRS 5.

146. Ordinary shares issued as part of a business combination are included in the EPS calculation in the case of the "purchase" method from A. The beginning of the accounting period. B. The date of acquisition. C. The end of the accounting period. D. The midpoint of the accounting year.

B. The date of acquisition.

139. An investor must apply the requirements of PAS 39 in determining whether it is necessary to recognize any impairment loss in the investment in an associate. How is the impairment test carried out? A. The goodwill is separated from the rest of the investment and is impairment tested individually. B. The entire carrying amount of the investment is tested for impairment under PAS 36 by comparing its recoverable amount with its carrying amount. C. The carrying value of the investment should be compared with its market value. D. The recoverable amounts of all investments in associates should be assessed together to determine whether there has been an impairment on all investments.

B. The entire carrying amount of the investment is tested for impairment under PAS 36 by comparing its recoverable amount with its carrying amount.

143. What accounting method should be used for an investment in an associate where it is operating under severe long-term restrictions - for example where the government of a company has temporary control over the associate? A. PAS 39 should be applied. B. The equity method should be applied if significant influence can be exerted. C. The associate should be shown at cost. D. Proportionate consolidation should be used.

B. The equity method should be applied if significant influence can be exerted.

85. An entity has decided to improve its defined benefit pension scheme. The benefit payable will be determined by reference to 60 years service rather than 80 years service. As a result, the defined benefit pension liability will increase by P 10 million. The average remaining service lives of the employees is 10 years. How should the increase in the pension liability by P 10 million be treated in the financial statements? A. The past service cost should be charged against retained profit. B. The past service cost should be charged against profit or loss for the year. C. The past service cost should be spread over the remaining working lives of the employees. D. The past service cost should not be recognized.

B. The past service cost should be charged against profit or loss for the year.

147. When an enterprise makes a bonus issue/stock split/stock dividend or a rights issue, then A. The previous year's EPS is not adjusted for the issue. B. The previous year's EPS is adjusted for the issue. C. Only a note of the effect on the previous year's EPS is made. D. Only the diluted EPS for the previous year is adjusted.

B. The previous year's EPS is adjusted for the issue.

115. How should repayment of a long-term loan comprising repayment of the principal amount and interest due to date on the loan be treated in a cash flow statement? A. The repayment of the principal portion of the loan is a cash flow belonging in the "investing activities" section; the interest payment belongs either in the "operating activities" section or the "financing activities" section. B. The repayment of the principal portion of the loan is a cash flow belonging in the "investing activities" section; the interest payment belongs either in the "operating activities" section or the "investing activities" section. C. The repayment of the principal portion of the loan is a cash flow belonging in the "investing activities" section; the interest payment belongs in the "operating activities" section (because PAS 7 does not permit any alternatives in case of interest payments). D. The repayment of the principal portion of the loan is a cash flow belonging in the "investing activities" section; the interest payment should be netted against interest received on bank deposits, and the net amount of interest should be disclosed in the "operating activities" section.

B. The repayment of the principal portion of the loan is a cash flow belonging in the "investing activities" section; the interest payment belongs either in the "operating activities" section or the "investing activities" section.

150. Potential ordinary shares issued by a subsidiary should be included in the diluted EPS calculation as they could potentially have an impact on the net profit for the period and the number of shares to be included in the calculation. An enterprise need disclose diluted EPS only if it differs from basic EPS by a material amount A. True True B. True False C. False False D. False True

B. True False

137. The Standard does not require the equity method to be applied when the associate has been acquired and held with a view to its disposal within a certain time period. What is the period within which the associate must be disposed of? A. Six months B. Twelve months C. Two years D. In the near future

B. Twelve months

122. X Ltd., a large manufacturer of cosmetics, sells merchandise to Y Ltd., a retailer, which in turn sells the goods to the public at large through its chain of retail outlets. Y Ltd. purchases merchandise from X Ltd. under a consignment contract. When should revenue from the sale of merchandise to Y Ltd. Be recognized by X Ltd.? A. When goods are delivered to Y Ltd B. When goods are sold by Y Ltd C. It will depend on the terms of delivery of the merchandise by X Ltd. to Y Ltd. (i.e., CIF [cost, insurance, and freight] or FOB). D. It will depend on the terms of payment between Y Ltd. and X Ltd. (i.e., cash or credit).

B. When goods are sold by Y Ltd

90. PFRS 6 applies to expenditures incurred A. When searching for an area that may warrant detailed exploration, even though the entity has not yet obtained the legal rights to explore a specific area B. When the legal rights to explore a specific area have been obtained, but the technical feasibility and commercial viability of extracting a mineral resource are not yet demonstrable C. When a specific area is being developed and preparations for commercial extraction are being made D. In extracting mineral resources and processing the resource to make it marketable or transportable

B. When the legal rights to explore a specific area have been obtained, but the technical feasibility and commercial viability of extracting a mineral resource are not yet demonstrable

107. XYZ Inc. decided to extend its reporting period from a year (12-month period) to a 15-month period. Which of the following is not required under PAS 1 in case of change in reporting period? A. XYZ Inc. should disclose the reason for using a longer period than a period of 12 months. B. XYZ Inc. should change the reporting period only if other similar entities in the geographical area in which it generally operates have done so in the current year; otherwise its financial statements would not be comparable to others. C. XYZ Inc. should disclose that comparative amounts used in the financial statements are not entirely comparable D. All of the above.

B. XYZ Inc. should change the reporting period only if other similar entities in the geographical area in which it generally operates have done so in the current year; otherwise its financial statements would not be comparable to others.

131. Which of the following is not a related party as envisaged by PAS 24? A. A director of the entity B. The parent company of the entity C. A shareholder of the entity that holds 1% stake in the entity D. The son of the chief executive officer of the entity

C. A shareholder of the entity that holds 1% stake in the entity

135. The minimum disclosures prescribed under PAS 24 are to be made separately for certain categories of related parties. Which of the following is not among the list of categories specified under the Standard for the purposes of separate disclosure? A. Entities with joint control or significant influence over the entity B. The parent company of the entity C. An entity that has a common director with the entity D. Joint ventures in which the entity is a venture

C. An entity that has a common director with the entity

114. How should gain on sale of an office building owned by the entity be presented in a cash flow statement? A. As an inflow in the investing activities section of the cash flow because it pertains to a long-term asset B. As an inflow in the "financing activities" section of the cash flow statement because the building was constructed with a long-term loan from a bank that needs to be repaid from the sale proceeds C. As an adjustment to the net income in the "operating activities" section of the cash flow statement prepared under the indirect method D. Added to the sale proceeds and presented in the "investing activities" section of the cash flow statement

C. As an adjustment to the net income in the "operating activities" section of the cash flow statement prepared under the indirect method

110. When an entity opts to present the income statement classifying expenses by function, which of the following is not required to be disclosed as "additional information"? A. Depreciation expense B. Employee benefits expense C. Director's remuneration D. Amortization expense

C. Director's remuneration

106. Which of the following reports is not a component of the financial statements according to PAS 1? A. Statement of financial position B. Statement of changes in equity C. Director's report D. Notes to the financial statements

C. Director's report

78. Which one of the following is not a required adjustment in preparing an opening PFRS statement of financial position? A. Recognize all assets and liabilities whose recognition is required under PFRS B. Derecognize items as assets or liabilities if PFRS do not permit such a recognition C. Disclose as comparative information all figures under previous GAAP alongside figures for the current year presented under PFRS D. Measure all recognised assets and liabilities according to principles contained in PFRS

C. Disclose as comparative information all figures under previous GAAP alongside figures for the current year presented under PFRS

95. Which measurement model applies to exploration and evaluation assets subsequent to initial recognition? A. The cost model B. The revaluation model C. Either the cost model or the revaluation model D. The recoverable amount model

C. Either the cost model or the revaluation model

94. Which of the following expenditures would never qualify as an exploration and evaluation asset? A. Expenditure for acquisition of rights to explore B. Expenditure for exploratory drilling C. Expenditures related to the development of mineral resources D. Expenditure for activities in relation to evaluating the technical feasibility and commercial viability of extracting a mineral resource

C. Expenditures related to the development of mineral resources

116. A construction company is in the middle of a two-year construction contract when it receives a letter from the customer extending the contract by a year and requiring the construction company to increase its output in proportion of the number of years of the new contract to the previous contract period. This is allowed in recognizing additional revenue according to PAS 11 if A. Negotiations have reached an advanced stage and it is probable that the customer will accept the claim. B. The contract is sufficiently advanced and it is probable that the specified performance standards will be exceeded or met. C. It is probable that the customer will approve the variation and the amount of revenue arising from the variation, and the amount of revenue can be reliably measured. D. It is probable that the customer will approve the variation and the amount of revenue arising from the variation, whether the amount of revenue can be reliably measured or not.

C. It is probable that the customer will approve the variation and the amount of revenue arising from the variation, and the amount of revenue can be reliably measured.

142. If there is any excess of the investor's share of the net fair value of the associate's identifiable assets and contingent liabilities over the cost of the investment, that is, negative goodwill, how should that excess be treated? A. It should be included in the carrying amount of the investment. B. It should be written off against retained earnings. C. It should be included as income in the determination of the investor's share of the associate's profit or loss for the period. D. It should be disclosed separately as part of the investor's equity.

C. It should be included as income in the determination of the investor's share of the associate's profit or loss for the period.

77. XYZ Inc. is a first-time adopter under PFRS 1. The most recent financial statements it presented under its previous GAAP were as of December 31, 2014. It has adopted PFRS for the first time and intends to present the first PFRS financial statements as of December 31, 2015. It plans to present twoyear comparative information for the years 2014 and 2004. The opening PFRS statement of financial position should be prepared as of A. January 1, 2014 B. January 1, 2003 C. January 1, 2004 D. January 1, 2015

C. January 1, 2004

152. If a new issue of shares for cash is made between the year-end and the date that the financial statements are authorized, then A. EPS for both the current and the previous year are adjusted. B. EPS for the current year only is adjusted. C. No adjustment is made to EPS. D. Diluted EPS only is adjusted.

C. No adjustment is made to EPS.

144. Entity A has an ordinary "A" class, nonvoting share, which is entitled to a fixed dividend of 6% per annum. The "A" class ordinary share will A. Be included in the "per share" calculation after adjustment for the fixed dividend. B. Be included in the "per share" calculation for EPS without adjustment for the fixed dividend. C. Not be included in the "per share" calculation for EPS. D. Be included in the calculation of diluted EPS.

C. Not be included in the "per share" calculation for EPS.

101. If an entity gives a product warranty that has been issued directly by a manufacturer, dealer, or retailer, which Philippine Financial Reporting Standard is likely to cover this warranty? A. PFRS 4 B. PAS 39 C. PAS 18 & PAS 37 D. PAS 32

C. PAS 18 & PAS 37

100. Which Philippine Financial Reporting Standard would apply to those contracts that principally transfer financial risk, such as a credit derivative? A. PAS 23 B. PAS 18 C. PAS 39 D. PFRS 4

C. PAS 39

126. In the case of a nonmonetary grant, which of the following accounting treatments is prescribed by PAS 20? A. Record the asset at replacement cost and the grant at a nominal value. B. Record the grant at a value estimated by management. C. Record both the grant and the asset at fair value of the nonmonetary asset. D. Record only the asset at fair value; do not recognize the fair value of the grant.

C. Record both the grant and the asset at fair value of the nonmonetary asset.

117. A construction company signed a contract to build a theater over a period of two years, and with this contract also signed a maintenance contract for five years. Both the contracts are negotiated as a single package and are closely interrelated to each other. The two contracts should be A. Combined and treated as a single contract B. Segmented and considered two separate contract C. Recognized under the completed contracted method D. Treated differently - the building contract under the completed contract method and maintenance contract under the percentage of completion method

A. Combined and treated as a single contract

82. In rare circumstances, when a retirement benefit plan has attributes of both defined contribution and defined benefit plans, according to PAS 26 it is deemed A. Defined benefit plan B. Defined contribution plan C. Neither a defined benefit nor a defined contribution plan D. For aspects of the hybrid plan that are similar to a defined benefit plan: provisions of PAS 26 applicable to such plans are to be applied; for aspects of the hybrid plan that are similar to a defined contribution plan, provisions of PAS 26 that apply to such plans are to be applied

A. Defined benefit plan

151. If a bonus issue occurs between the year-end and the date that the financial statements are authorized, then A. EPS both for the current and the previous year are adjusted. B. EPS for the current year only is adjusted. C. No adjustment is made to EPS. D. Diluted EPS only is adjusted.

A. EPS both for the current and the previous year are adjusted.

105. An insurance contract can contain both deposit and insurance elements. An example might be a reinsurance contract where the cedant receives a repayment of the premiums at a future time if there are no claims under the contract. Effectively this constitutes a loan by the cedant that will be repaid in the future. PFRS 4 requires that A. Each payment by the cedant is accounted for as a loan advance and as a payment for insurance cover B. The insurance premium is accounted for as a revenue item in the income statement C. The premium is accounted for under PAS 18 D. The premium paid is treated purely as a loan, and it is accounted for under PAS 39

A. Each payment by the cedant is accounted for as a loan advance and as a payment for insurance cover

102. PFRS 4 says that insurance contracts should A. Generally continue to be subject to existing accounting policies during phase one B. Comply with the PFRS Framework document C. Comply with all existing PFRS D. Be covered by PAS 32 and PAS 39 only

A. Generally continue to be subject to existing accounting policies during phase one

104. Which of the following accounting practices is prohibited by PFRS 4? A. Shadow accounting B. Catastrophe provisions C. A test for the adequacy of recognized insurance liabilities D. An impairment test for reinsurance assets

B. Catastrophe provisions

83. In the case of a defined benefit plan, PAS 26 A. Makes it incumbent upon the plan to obtain an actuarial valuation B. Does not make it incumbent upon the plan to obtain an actuarial valuation C. Allows the plan to estimate the present value of future benefits based on valuations done by other similar plans D. Allows the plan to add a percentage based on consumer price index to the previous year's

B. Does not make it incumbent upon the plan to obtain an actuarial valuation

111. An entity (other than a financial institution) receives dividends from its investment in shares. How should it disclose the dividends received in the cash flow statement prepared under PAS 7? A. Operating cash inflow B. Either as operating cash inflow or as investing cash inflow C. Either as operating cash inflow or as financing cash inflow D. As an adjustment in the "operating activities" section of the cash flow because it is included in the net income for the year and as a cash inflow in the "financing activities" section of the cash flow statement

B. Either as operating cash inflow or as investing cash inflow

113. An entity purchases a building and the seller accepts payment partly in equity shares and partly in debentures of the entity. This transaction should be treated in the cash flow statement as follows: A. The purchase of the building should be investing cash outflow and the issuance of shares and the debentures financing cash outflows. B. The purchase of the building should be investing cash outflow and the issuance of debentures financing cash outflows while the issuance of shares investing cash outflow. C. This does not belong in a cash flow statement and should be disclosed only in the footnotes to the financial statements. D. Ignore the transaction totally since it is a noncash transaction. No mention is required in either the cash flow statement or anywhere else in the financial statements.

C. This does not belong in a cash flow statement and should be disclosed only in the footnotes to the financial statements.

120. ABC Inc. is a large manufacturer of machines. XYZ Ltd., a major customer of ABC Inc., has placed an order for a special machine for which it has given a deposit of 112,500 to ABC Inc. The parties have agreed on a price for the machine of 150,000. As per the terms of the sales agreement, it is an FOB (free on board) contract and the title passes to the buyer when goods are loaded onto the ship at the port. When should the revenue be recognized by ABC Inc.? A. When the customer orders the machine B. When the deposit is received C. When the machine is loaded on the port D. When the machine has been received by the customer

C. When the machine is loaded on the port

93. Is an entity ever required or permitted to change its accounting policy for exploration and evaluation expenditures? A. Yes, entities are required to change their accounting policy for these expenditures if the change would result in more useful information for users of financial statements. B. Yes, entities are free to change accounting policy for these expenditures as long as the selected policy results in information that is relevant and reliable. C. Yes, but only if the change makes the financial statements more relevant to the economic decision-making needs of users and no less reliable, or more reliable and no less relevant to those needs. D. No, entities would be permitted to change accounting policy only on adoption of a new or revised Standard that replaces the existing requirements in PFRS 6.

C. Yes, but only if the change makes the financial statements more relevant to the economic decision-making needs of users and no less reliable, or more reliable and no less relevant to those needs.

91. Does PFRS 6 require an entity to recognize exploration and evaluation expenditure as assets? A. Yes, but only to the extent such expenditure is recoverable in future periods B. Yes, but only to the extent the technical feasibility and commercial viability of extracting the associated mineral resource have been demonstrated C. Yes, but only to the extent required by the entity's accounting policy for recognizing exploration and evaluation assets D. No, such expenditure is always expensed in profit or loss as incurred

C. Yes, but only to the extent required by the entity's accounting policy for recognizing exploration and evaluation assets

112. How should an unrealized gain on foreign currency translation be presented in a cash flow statement? A. As an inflow in the "financing activities" section of the cash flow statement because it arises from a foreign currency translation B. It should be ignored for the purposes of the cash flow statement as it is an unrealized gain. C. It should be ignored for the purposes of the cash flow statement as it is an unrealized gain but it should be disclosed in the footnotes to the financial statements by way of abundant precaution. D. As an adjustment to the net income in the "operating activities" section of the statement of cash flows

D. As an adjustment to the net income in the "operating activities" section of the statement of cash flows

109. Which one of the following is not required to be presented as minimum information on the face of the statement of financial position, according to PAS 1? A. Investment property B. Investments accounted under the equity method C. Biological assets D. Contingent liability

D. Contingent liability

80. Which one of the following does not qualify for exemption under IFRS 1 for the purposes of retrospective application? A. Hedge accounting B. Financial assets and financial liabilities derecognised prior to January 1, 2001 C. Estimates made under previous GAAP D. Fair value accounting for investment property

D. Fair value accounting for investment property

130. Which of the following is not specifically excluded from the purview of PAS 20? A. Government participation in ownership of the entity B. Government grant covered by PAS 41 C. Government assistance provided in the form of tax benefits D. Forgivable loan from the government

D. Forgivable loan from the government

138. How is goodwill arising on the acquisition of an associate dealt with in the financial statements? A. It is amortized. B. It is impairment tested individually. C. It is written off against profit or loss. D. Goodwill is not recognized separately within the carrying amount of the investment.

D. Goodwill is not recognized separately within the carrying amount of the investment.

88. Which of these assets should be included within the valuation of plan assets? A. Unpaid contributions B. Unlisted corporate bonds that are redeemable but not transferable without the entity's permission C. A loan to the entity that cannot be assigned to a third party D. Investments in listed companies

D. Investments in listed companies

119. "Bill and hold" sales, in which delivery is delayed at the buyer's request but the buyer assumes title and accepts invoicing, should be recognized when A. The buyer makes an order. B. The seller starts manufacturing the goods. C. The title has been transferred but the goods are kept on the seller's premises. D. It is probable that the delivery will be made, payment terms have been established, and the buyer has acknowledged the delivery instructions.

D. It is probable that the delivery will be made, payment terms have been established, and the buyer has acknowledged the delivery instructions.

96. Which of the following facts or circumstances would not trigger a need to test an evaluation and exploration asset for impairment? A. The expiration—or expected expiration in the near future—of the period for which the entity has the right to explore in the specific area, unless the right is expected to be renewed. B. The absence of budgeted or planned substantive expenditure on further exploration and evaluation activities in the specific area. C. A decision to discontinue exploration and evaluation activities in the specific area when those activities have not led to the discovery of commercially viable quantities of mineral resources D. Lack of sufficient data to determine whether the carrying amount of the exploration and evaluation asset is likely to be recovered in full from successful development or by sale

D. Lack of sufficient data to determine whether the carrying amount of the exploration and evaluation asset is likely to be recovered in full from successful development or by sale

99. Which of the following types of insurance contracts would probably not be covered by PFRS 4? A. Motor insurance B. Life insurance C. Medical insurance D. Pension plan

D. Pension plan

132. PAS 24 requires disclosure of compensation of key management personnel. Which of the following would not be considered "compensation" for this purpose? A. Short-term benefits B. Share-based payments C. Termination benefits D. Reimbursement of out-of-pocket expenses

D. Reimbursement of out-of-pocket expenses

121. Revenue from an artistic performance is recognized once A. The audience register for the event online. B. The tickets for the concert are sold. C. Cash has been received from the ticket sales. D. The event takes place.

D. The event takes place.

124. Micrium, a computer chip manufacturing company, sells its products to its distributors for onward sales to the ultimate customers. Due to frequent fluctuations in the market prices for these goods, Micrium has a "price protection" clause in the distributor agreement that entitles it to raise additional billings in case of upward price movement. Another clause in the distributor's agreement is that Micrium can at any time reduce its inventory by buying back goods at the cost at which it sold the goods to the distributor. Distributors pay for the goods within 60 days from the sale of goods to them. When should Micrium recognize revenue on sale of goods to the distributors? A. When the goods are sold to the distributors B. When the distributors pay to Micrium the cost of the goods (i.e., after 60 days of the sale of goods to the distributors) C. When goods are sold to the distributor provided estimated additional revenue is also booked under the "protection clause" based on past experience D. When the distributor sells goods to the ultimate customers and there is no uncertainty with respect to the "price protection" clause or the buyback of goods

D. When the distributor sells goods to the ultimate customers and there is no uncertainty with respect to the "price protection" clause or the buyback of goods

125. Company XYZ Inc. manufacturers and sells standard machinery. One of the conditions in the sale contract is that installation of machinery will be undertaken by XYZ Inc. During December 2014, XYZ received a special onetime contract from ABC Ltd. To manufacture, install, and maintain customized machinery. It is the first time XYZ Inc. will be producing this kind of machinery, and it is expecting numerous changes that would need to be made to the machine after the installation is completed, which one period is described in the contract of sale as the "maintenance period." The total cost of making the changes during the maintenance period cannot be reasonably estimated at the time of the installation. When should the revenue from sale of this special machine be recognized? A. When the machinery is produced B. When the machinery is produced and delivered C. When the installation is complete D. When the maintenance period as per the contract of sale expires

D. When the maintenance period as per the contract of sale expires

92. What is an entity required to consider in developing accounting policies for exploration and evaluation activities? A. The requirements and guidance in Standards and Interpretations dealing with similar and related issues B. The definitions, recognition criteria, and measurement concepts for assets, liabilities, income, and expenses in the Framework C. Recent pronouncements of standard setting bodies, accounting literature, and accepted industry practices D. Whether the accounting policy results in information that is relevant and reliable

D. Whether the accounting policy results in information that is relevant and reliable