QUESTION BANK 10

Statement of changes in equity a. 6 months ending June 30, 20 x1; June 30, 20x0 b. 6 months ending 30 June 20 x1 30 June 20x0 c. 3 months ending 30 June 20 x1 30 June 20x0 d. 6 months ending June 30, 20 x1; June 30, 20x0; Year ended December 31, 20x0

a. 6 months ending June 30, 20 x1; June 30, 20x0 — In accordance with PAS 34 Paragraph 28

Statement of Changes in Equity a. 6 months ending June 30, 20x1; June 30, 20x0 b. 3 months ending June 30, 20x1; June 30, 20x0 6 months ending June 30, 20x1; June 30, 20x0 c. 3 months ending June 30, 20x1; June 30, 20x0 6 months ending June 30, 20x1; June 30, 20x0; Interim period ending June 30, 20x1; Year ended December 31, 20x0 d. 6 months ending June 30, 20x1; June 30, 20x0 3 months ending June 30, 20x1; June 30, 20x0; Year ended December 31, 20x0

a. 6 months ending June 30, 20x1; June 30, 20x0 — In accordance with PAS 34 Paragraph 28

Statement of cash flows a. 6 months ending June 30, 20x1; June 30, 20x0 b. 3 months ending June 30, 20x1; June 30, 20x0 6 months ending June 30, 20x1; June 30, 20x0 c. 3 months ending June 30, 20x1; June 30, 20x0 6 months ending June 30, 20x1; June 30, 20x0; Interim period ending June 30, 20x1; Year ended December 31, 20x0 d. 6 months ending June 30, 20x1; June 30, 20x0 3 months ending June 30, 20x1; June 30, 20x0; Year ended December 31, 20x0

a. 6 months ending June 30, 20x1; June 30, 20x0 — In accordance with PAS 34 Paragraph 28

Statement of cash flows a. 6 months ending June 30, 20x1; June 30, 20x0 b. 6 months ending 30 June 20x1; June 30, 20x0 c. 3 months ending 30 June 20x1; June 30, 20x0 d. 6 months ending June 30, 20x1; June 30, 20x0; Interim period ending June 30, 20x1; Year ended December 31, 20x0

a. 6 months ending June 30, 20x1; June 30, 20x0 — In accordance with PAS 34 Paragraph 28

Which of the following is a unique reporting problem associated with the determination of the results of operations for an interim period? a. Advertising and similar costs expensed in one interim period may benefit other interim periods in the same annual period. b. Cost of goods sold for an interim period reflects only the amount of product cost applicable to sales revenue recognized in the interim period. c. Depreciation for an interim period represents an estimate. d. An extraordinary loss occurring in the second quarter must be prorated over the last three interim periods of the year.

a. Advertising and similar costs expensed in one interim period may benefit other interim periods in the same annual period. — Interim Financial reporting states that Advertising costs may be deferred within a fiscal year if the benefits clearly extend beyond the interim period of the expenditure

Use the following information for the next four questions: The entity's financial year ends December 31 (calendar year). The entity will present the following financial statements (condensed or complete) in its quarterly interim financial report as of June 30, 20x1: Statement of financial position a. At June 30, 20x1; December 31, 20x0 b. At March 31, 20x1; June 30, 20x1; June 30, 20x0 c. At March 31, 20x1; June 30, 20x1; June 30, 20x0; December 31, 20x0 d. At June 30, 20x1; June 30, 20x0; December 31, 20x0

a. At June 30, 20x1; December 31, 20x0 — In accordance with PAS 34 Paragraph 28

Use the following information for the next four questions: The entity's financial year ends at December 31(calendar year). The entity will present the following financial statements (condensed or complete) in its half-yearly interim financial report as of June 30, 20x1: Statement of financial position a. At June 30, 20x1; December 31, 20x0 b. At June 30, 20x1; June 30, 20x0 c. At June 30, 20x1; June 30, 20x0; December 31, 20x0 d. At June 30, 20x1; June 30, 20x0

a. At June 30, 20x1; December 31, 20x0 — In accordance with PAS 34 Paragraph 28.

The IASB encourages publicly traded entities to provide interim financial reports a. At least at the end of the half year and within 60 days of the end of the interim period. b. Within a month of the half-year-end. c. On a quarterly basis. d. Whenever the entity wishes.

a. At least at the end of the half year and within 60 days of the end of the interim period. — According to PAS 34.1

An inventory loss from a market price decline occurred in the first quarter, and the decline was not expected to reverse during the fiscal year. However, in the third quarter the inventory's market price recovery exceeded the market decline that occurred in the first quarter. For interim financial reporting, the peso amount of net inventory should a. Decrease in the first quarter by the amount of the market price decline and increase in the third quarter by the amount of the decrease in the first quarter. b. Decrease in the first quarter by the amount of the market price decline and increase in the third quarter by the amount of the market price recovery. c. Decrease in the first quarter by the amount of the market price decline and not be affected in the third quarter. d. Not be affected in either the first quarter or the third quarter.

a. Decrease in the first quarter by the amount of the market price decline and increase in the third quarter by the amount of the decrease in the first quarter. — Refer to PAS 34, paragraph 30 (a).

Requiring that an entity apply the same accounting policies in its interim financial statements as in its annual statements may seem to suggest that interim period measurements are made as if each interim period stands alone as an independent reporting period. However, by providing that the frequency of an entity's reporting shall not affect the measurement of its annual results, PAS 34 acknowledges that an interim period is a part of a larger financial year. The latter view is also called a. Integral View b. Discrete View c. Independent View d. Mines View

a. Integral View — Integral View is considered as an integral part of the annual accounting period.

A corporation issues quarterly interim financial statements and uses the lower of cost or net realizable value to measure its inventory in its annual financial statements. Which of the following statements is correct regarding how the corporation should value its inventory in its interim financial statements? a. Inventory losses should be recognized in the interim statements. b. Inventory write-downs should be made only in the annual financial statements. c. Only the cost method of valuation should be used. d. Gains from valuations in previous interim periods should be fully recognized.

a. Inventory losses should be recognized in the interim statements. — Paragraph 16A(d) of IAS 34 requires similar disclosure in an interim financial report. Examples include changes in estimate in the final interim period relating to inventory write-downs, restructurings, or impairment losses that were reported in an earlier interim period of the financial year.

4. Which standard applies to the following? (Item #1) condensed financial statements; (Item #2) complete set of financial statements? a. PAS 34, PAS 1 b. PAS 24, PAS 1 c. PAS 1, PAS 34 d. PFRS for SMEs, PAS 1

a. PAS 34, PAS 1 — PAS 34 paragraph 8 provides that an interim financial report shall include condensed financial statements.

If a gain on reversal of impairment loss occurs in the second fiscal quarter. How should the gain be accounted for? a. Recognized in full in the second quarter. b. Recognized equally over the second, third, and fourth quarters. c. Recognized only in the annual financial statements. d. Recognized equally in each quarter, by restating the first quarter.

a. Recognized in full in the second quarter. — PAS 34, paragraph 30 (a), states that the original estimate is changed in the subsequent interim period either by accrual of an additional amount of loss or by reversal of previously recognised amount.

Conceptually, interim financial statements can be described as emphasizing a. Timeliness over reliability. b. Reliability over relevance. c. Relevance over comparability. d. Comparability over neutrality.

a. Timeliness over reliability. — The interim financial report is to provide an update on the latest complete set of annual financial statements.

Which of the following statements is correct? I. Revenues that are received seasonally, cyclically, or occasionally within a financial year shall not be anticipated or deferred as of an interim date if anticipation or deferral would not be appropriate at the end of the entity's financial year. II. Costs that are incurred unevenly during an entity's financial year shall be anticipated or deferred for interim reporting purposes if, and only if, it is also appropriate to anticipate or defer that type of cost at the end of the financial year. a. True, true b. True, false c. False, true d. False, false

a. True, true — Refer to PAS 34 paragraphs 37 and 39

A bonus is anticipated for interim reporting purposes if, and only if, I. the bonus is a legal obligation or past practice would make the bonus a constructive obligation for which the entity has no realistic alternative but to make the payments II. a reliable estimate of the obligation can be made. a. True, true b. True, false c. False, true d. False, false

a. True, true — This is according to PAS 34.B6

Which of the following reporting practices is permissible for interim financial reporting? a. Use of the gross-profit method for interim inventory pricing. b. Use of the direct-costing method for determining manufacturing inventories. c. Deferral of unplanned variances under a standard cost system until year end. d. Deferral of inventory write-downs until year end.

a. Use of the gross-profit method for interim inventory pricing. — Interim period is a financial reporting period shorter than a full fiscal year which is why Gross profit method is permissible as this method estimates the amount of ending inventory in a reporting period.

The following relate to the required periods interim financial statements (condensed or complete) should be presented except a. balance sheet for the current interim period, balance sheet as of the end of the current interim period and a comparative balance sheet as of the end of the immediately preceding financial year and comparable interim periods (current and year-to-date) of the immediately preceding financial year; b. income statements for the current interim period and cumulatively for the current financial year to date, with comparative income statements for the comparable interim periods (current and year-to date) of the immediately preceding financial year; c. statement showing changes in equity cumulatively for the current financial year to date, with a comparative statement for the comparable year-to-date period of the immediately preceding financial year; and d. cash flow statement cumulatively for the current financial year to date, with a comparative statement for the comparable year-to-date period of the immediately preceding financial year.

a. balance sheet for the current interim period, balance sheet as of the end of the current interim period and a comparative balance sheet as of the end of the immediately preceding financial year and comparable interim periods (current and year-to-date) of the immediately preceding financial year; — PAS 34, paragraph 20A states that statement of financial position as of the end of current interim period and a comparative statement of financial position as of the end of the immediately preceding financial year.

PAS 34 Interim Financial Reporting a. encourages publicly-listed entities to at least provide semi-annual interim financial reports and publish them not later than 60 days after the end of the interim period. b. encourages publicly-listed entities to at least provide quarterly interim financial reports and publish them not later than 45 days after the end of the interim period. c. requires publicly-listed entities to at least provide semi-annual interim financial reports and publish them not later than 60 days after the end of the interim period. d. requires publicly-listed entities to at least provide quarterly interim financial reports and publish them not later than 45 days after the end of the interim period.

a. encourages publicly-listed entities to at least provide semi-annual interim financial reports and publish them not later than 60 days after the end of the interim period. — Stated under PAS 34 paragraph 1.

In addition to the other information required for non-highly seasonal businesses, an entity whose business is highly seasonal is encouraged under PAS 34 to present a. financial information for the twelve months ending on the interim reporting date and comparative information for the prior twelve-month period b. financial information for the twelve months ending on the interim reporting date and comparable information for the latest annual financial reporting period. c. financial information for the twelve months ending on the interim reporting date and no comparative information. d. financial information for the thirteen months ending on the interim reporting date and comparable information for the thirteen-month period of the immediately preceding financial year

a. financial information for the twelve months ending on the interim reporting date and comparative information for the prior twelve-month period — Justified under PAS 34, paragraph 21.

A cost that does not meet the definition of an asset at the end of an interim period is a. not deferred on the balance sheet either to await future information as to whether it has met the definition of an asset or to smooth earnings over interim periods within a financial year b. deferred on the balance sheet either to await future information as to whether it has met the definition of an asset or to smooth earnings over interim periods within a financial year c. deferred on the balance sheet if it is material in order to smooth earnings over interim periods within a financial year d. not deferred on the balance sheet but disclosed to enable the entity to either await for future information as to whether it has met the definition of an asset or to smooth earnings over interim periods within a financial year

a. not deferred on the balance sheet either to await future information as to whether it has met the definition of an asset or to smooth earnings over interim periods within a financial year — Justified under PAS 34.30

In deciding how to recognize, classify, or disclose an item for interim financial reporting purposes, materiality is to be assessed in relation to a. the interim period financial data b. forecasted annual data. c. previous year's risk assessment d. shareholders' interest

a. the interim period financial data — Justified under PAS 34, paragraph 23.

Under the Conceptual Framework, recognition is the a. process of incorporating in the notes to financial statements an item that meets the definition of an element and satisfies the criteria for recognition b. process of converting non-cash assets into claims for cash c. process of incorporating in the balance sheet or income statement an item that meets the definition of an element and satisfies the criteria for recognition d. process of assigning monetary amounts to the effects of economic transactions

c. process of incorporating in the balance sheet or income statement an item that meets the definition of an element and satisfies the criteria for recognition — This is under PAS 8, recognition of the elements of financial statements

If an estimate of an amount reported in an interim period is changed significantly during the final interim period of the financial year but a separate financial report is not published for that final interim period, which of the following statements is true? a. the nature and amount of that change in estimate shall be disclosed in a note to the annual financial statements for that financial year. b. the nature and amount of that change in estimate need not be disclosed in a note to the annual financial statements for that financial year. c. a separate financial report should be published for that final interim period. d. an estimate of an amount reported in an interim period should not be changed significantly during the final interim period of the financial year

a. the nature and amount of that change in estimate shall be disclosed in a note to the annual financial statements for that financial year. — Stated under PAS 34 Paragraph 16A(c).

Statement of profit or loss and other comprehensive income a. 6 months ending June 30, 20x1; June 30, 20x0 b. 3 months ending June 30, 20x1; June 30, 20x0 6 months ending June 30, 20x1; June 30, 20x0 c. 3 months ending June 30, 20x1; June 30, 20x0 6 months ending June 30, 20x1; June 30, 20x0; Interim period ending June 30, 20x1; Year ended December 31, 20x0 d. 6 months ending June 30, 20x1; June 30, 20x0 3 months ending June 30, 20x1; June 30, 20x0; Year ended December 31, 20x0

b. 3 months ending June 30, 20x1; June 30, 20x0 6 months ending June 30, 20x1; June 30, 20x0 — In accordance with PAS 34 Paragraph 28

Interim financial reports should include as a minimum a. A complete set of financial statements complying with PAS 1. b. A condensed set of financial statements and selected notes. c. A balance sheet and income statement only. d. A condensed balance sheet, income statement, and cash flow statement only.

b. A condensed set of financial statements and selected notes. — This is with accordance to PAS 34 paragraph 8.

For interim financial reporting, a company's income tax provision for the second quarter of 20x1 should be determined using the a. Effective tax rate expected to be applicable for the full year of 20x1 as estimated at the end of the first quarter of 20x1. b. Best estimate of the weighted average annual income tax rate expected for the full financial year of 20x1. c. Effective tax rate expected to be applicable for the second quarter of 20x1. d. Statutory tax rate for 20x1.

b. Best estimate of the weighted average annual income tax rate expected for the full financial year of 20x1. — Refer to PAS 34, paragraph 30 (c).

An entity owns a number of farms that harvest produce seasonally. Approximately 80% of the entity's sales are in the period August to October. Because the entity's business is seasonal, PAS 34 suggests a. Additional notes be written in the interim reports about the seasonal nature of the business. b. Disclosure of financial information for the latest and comparative 12-month period in addition to the interim report. c. Additional disclosure in the accounting policy note. d. No additional disclosure.

b. Disclosure of financial information for the latest and comparative 12-month period in addition to the interim report. — Stated under PAS 34, paragraph 21, For an entity whose business is highly seasonal, financial information for the twelve months up to the end of interim period and comparative information for the prior twelve-month period may be useful.

PAS 34 shall be applied by I. entities which are required by the government or other entities to provide interim financial reports II. those who choose to provide interim financial reports. a. I only b. I and II c. II only d. Neither I nor II

b. I and II — Explained under PAS 34 paragraph 1

It means a financial report containing either a complete set of financial statements or a set of condensed financial statements for an interim period. a. Quarterly Report b. Interim financial report c. Interim financial highlights d. Interim management report

b. Interim financial report — PAS 34 allows an entity to publish a set of condensed financial statements or complete set of financial statements in interim financial report.

If an entity opts to present complete set of financial statements during an interim period, it shall apply a. PAS 34 b. PAS 1 c. PFRS 1 d. PFRS 8

b. PAS 1 — PAS 1 is all about the presentation of financial statements. PAS 34 will only be then applied if it talks about condensed financial statements.

If an entity does not prepare interim financial reports, then a. The year-end financial statements are deemed not to comply with PFRS. b. The year-end financial statements' compliance with PFRS is not affected. c. The year-end financial statements will not be acceptable under local legislation. d. Interim financial reports should be included in the year-end financial statements.

b. The year-end financial statements' compliance with PFRS is not affected — Preparation of interim financial reports are not mandatory, thus it does not affect the year-end financial statements.

An entity shall apply the same accounting policies in its interim financial statements as are applied in its annual financial statements, except a. prior period errors discovered during the interim period b. for accounting policy changes made after the date of the most recent annual financial statements that are to be reflected in the next annual financial statements. c. for accounting estimates that requires year-to-date measurements d. in no case that an entity shall apply different accounting policies in its interim financial statements as are applied in its annual financial statements

b. for accounting policy changes made after the date of the most recent annual financial statements that are to be reflected in the next annual financial statements. — Refer to PAS 34, paragraph 28.

The frequency of an entity's reporting (annual, half-yearly, or quarterly) shall not affect the measurement of its annual results. To achieve that objective, measurements for interim reporting purposes shall be made a. on an interim basis b. on a year-to-date basis c. on an individual transaction basis d. on a prospective basis except when retrospective application is warranted

b. on a year-to-date basis — Stated under PAS 34, paragraph 28.

The principles for recognizing and measuring losses from inventory write-downs, restructurings, or impairments in an interim period are the same as those that an entity would follow if it prepared only annual financial statements. However, if such items are recognized and measured in one interim period and the estimate changes in a subsequent interim period of that financial year, a. the original estimate is changed in the subsequent interim period by restating the prior interim financial statements b. the original estimate is not changed in the subsequent interim period but the annual financial statement is adjusted either by accrual of an additional amount of loss or by reversal of the previously recognized amount c. the original estimate is changed in the subsequent interim period either by accrual of an additional amount of loss or by reversal of the previously recognized amount d. ignored, since interim period measurements are made as if each interim period stands alone as an independent reporting period

b. the original estimate is not changed in the subsequent interim period but the annual financial statement is adjusted either by accrual of an additional amount of loss or by reversal of the previously recognized amount — According to PAS 34.16, the nature and amount of changes in estimates of amounts reported in prior interim periods of the current financial year or changes in estimates of amounts reported in prior financial years.

Which of the following statements is incorrect? a. In the interest of timeliness and cost considerations and to avoid repetition of information previously reported, an entity may be required to or may elect to provide less information at interim dates as compared with its annual financial statements. b. The interim financial report is intended to provide an update on the latest complete set of annual financial statements. Accordingly, it focuses on new activities, events, and circumstances and does not duplicate information previously reported. c. Basic and diluted earnings per share shall be presented on the face of an income statement, under complete financial statements but not in condensed financial statements, for an interim period. d. It is unnecessary for the notes to an interim financial report to provide relatively insignificant updates to the information that was already reported in the notes in the most recent annual report. e. At an interim date, an explanation of events and transactions that are significant to an understanding of the changes in financial position and performance of the entity since the last annual reporting date is more useful.

c. Basic and diluted earnings per share shall be presented on the face of an income statement, under complete financial statements but not in condensed financial statements, for an interim period. — PAS 34, paragraph 11A states that if an entity presents the components of profit or loss in a separate income statement as described in paragraph 81 of PAS 1, it presents basic and diluted earnings per share in that separate statement.

PAS 34 states a presumption that anyone reading interim financial reports will a. Understand all Philippine Financial Reporting Standards. b. Have access to the records of the entity. c. Have access to the most recent annual report. d. Not make decisions based on the report.

c. Have access to the most recent annual report. — Stated under PAS 34.15

A change in accounting policy, other than one for which the transition is specified by a new PFRS, shall be reflected by: I. restating the financial statements of prior interim periods of the current financial year and the comparable interim periods of any prior financial years that will be restated in the annual financial statements in accordance with PAS 8 II. when it is impracticable to determine the cumulative effect at the beginning of the financial year of applying a new accounting policy to all prior periods, adjusting the financial statements of prior interim periods of the current financial year, and comparable interim periods of prior financial years to apply the new accounting policy prospectively from the earliest date practicable a. I only b. II only c. I or II d. I and II

c. I or II — Refer to PAS 34, paragraph 43.

An entity is preparing half-yearly financial information in line with PAS 34. The period to be covered by the financial statements is the six months to June 30, 20x1. A new PFRS has been published that is effective for periods beginning on or after January 1, 20x1. The entity must adopt the PFRS a. In the financial statements for the year to December 31, 20x1, only. b. In its interim financial statements to June 30, 20x1, only. c. In its interim financial statements to June 30, 20x1, and its annual financial statements to December 31, 20x1. d. At its own discretion.

c. In its interim financial statements to June 30, 20x1, and its annual financial statements to December 31, 20x1. — Changes will be applied to the following year.

A financial reporting period shorter than a full financial year. a. Quarter b. Semi-annual c. Interim period d. Fiscal period

c. Interim period — Interim Financial Reporting means the preparation and presentation of financial statements for a period of less than one year.

For interim financial reporting, a realized gain occurring in the second quarter should be a. Recognized ratably over the last three quarters. b. Recognized ratably over all four quarters with the first quarter being restated. c. Recognized in the second quarter. d. Reported as note disclosure only in the second quarter.

c. Recognized in the second quarter. — The gain is reported in the interim period when realized

Which of the following statements is incorrect? a. In making assessments of materiality, it shall be recognized that interim measurements may rely on estimates to a greater extent than measurements of annual financial data. b. An item as material if its omission or misstatement could influence the economic decisions of users of the financial statements. c. The Standards contain quantified guidance as to materiality. d. While judgment is always required in assessing materiality, PAS 34 bases the recognition and disclos ure decision on data for the interim period by itself for reasons of understandability of the interim figures. e. If an estimate of an amount reported in an interim period is changed significantly during the final interim period of the financial year but a separate financial report is not published for that final interim period, the nature and amount of that change in estimate shall be disclosed in a note to the annual financial statements for that financial year.

c. The Standards contain quantified guidance as to materiality. — The standard does not contain quantified guidance as to materiality.

For the purpose of external reporting, it is proper to use estimated gross profit rates to determine ending inventory and cost of goods sold for (Item #1) Interim financial reporting; (Item #1) Year-end financial reporting a. Yes, Yes b. No, No c. Yes, No d. No, Yes

c. Yes, No — PAS 34, paragraph 25, appendix B.

Income tax expense is recognized in each interim period based on a. the current enacted rate b. the current enacted rate and the substantially enacted rate during the interim period c. the best estimate of the weighted average annual income tax rate expected for the full financial year d. the substantially enacted rate during the interim period

c. the best estimate of the weighted average annual income tax rate expected for the full financial year — Can be seen under PAS 34 Appendix B12

Statement of profit or loss and other comprehensive Income a. 6 months ending June 30, 20x1; June 30, 20x0; Year ended December 31, 2000 b. 6 months ending June 30, 20x1; June 30, 20x0 c. 3 months ending June 30, 20x1; June 30, 20x0 d. 6 months ending June 30, 20x1; June 30, 20x0

d. 6 months ending June 30, 20x1; June 30, 20x0 — In accordance with PAS 34 Paragraph 28

Which of the following statements is incorrect? a. The same accounting policies are followed during the interim period as those followed in annual reporting, except for accounting policy changes made after the date of the most recent annual financial statements that are to be reflected in the next annual financial statements. b. Costs that do not benefit other interim periods are recognized in full in the interim period such costs were incurred. c. Measurements for interim reporting purposes should be made on a year-to-date basis, so that the frequency of the entity's reporting (annual, half-yearly, or quarterly) does not affect the measurement of its annual results. d. A change in accounting estimate during an interim period is accounted for prospectively by restating financial statements reported in previous interim periods but not the most recent annual financial statement.

d. A change in accounting estimate during an interim period is accounted for prospectively by restating financial statements reported in previous interim periods but not the most recent annual financial statement. — PAS 34 paragraph 34 states that when it is impracticable to determine the cumulative effect at the beginning of the financial year of applying a new accounting policy to all prior periods, adjusting the financial statements of prior interim periods of the current financial year and comparable interim periods of prior financial years to apply the new accounting policy prospectively from the earliest date practicable.

Which of the following statements is incorrect regarding PAS 34? a. A user of an entity's interim financial report is assumed to have access to the most recent annual financial report of that entity. b. It is unnecessary for the notes to an interim financial report to provide relatively insignificant updates to the information that was already reported in the notes in the most recent annual report. c. At an interim date, an explanation of events and transactions that are significant to an understanding of the changes in financial position and performance of the entity since the end of the last annual reporting period is more useful. d. All disclosure requirements in PAS 1 should be provided when the entity prepares condensed interim financial statements.

d. All disclosure requirements in PAS 1 should be provided when the entity prepares condensed interim financial statements. — All disclosure requirements in PAS 34 should be provided when the entity prepares condensed financial statements

Which of the following statements is incorrect? a. In the interest of relevance and timeliness, less information is normally provided in a condensed set of interim financial statements. b. Users of interim financial statements are assumed to have access to the most recent annual financial report. c. Only information that is significant to the understanding of changes in financial position and performance of an entity since the end of the last annual reporting are included in the interim financial report. d. An entity shall not provide a complete set of financial statements in its interim financial reporting. Only condensed financial statements shall be provided.

d. An entity shall not provide a complete set of financial statements in its interim financial reporting. Only condensed financial statements shall be provided. — If an entity publishes a set of condensed financial statements in its interim financial report, those condensed statements shall include, at a minimum, each of the headings and subtotals that were included in the entity's most recent annual financial statements and the selected explanatory notes as required by PAS 34.

Which of the following statements is correct regarding the provisions of PAS 34? a. An entity does not need to provide disclosures for operating segments in its interim financial report even if the entity is required under PFRS 8 to provide such disclosures in its annual financial statements. b. An entity does not need to adjust its financial statements for adjusting events after the reporting period as this requirement is applicable only to annual financial statements. c. Related party disclosures need not be provided in the interim financial report but should be provided in the annual financial statements. d. Disclosure of accounting policies need not be provided in the interim financial report but should be provided in the annual financial statements.

d. Disclosure of accounting policies need not be provided in the interim financial report but should be provided in the annual financial statements. — Accounting policies will be provided in the interim financial report and in the annual financial statements. Stated under PAS 34 paragraph 19

Which of the following statements is incorrect? a. An entity may present complete set of financial statements in its interim financial reporting. b. The results for each interim period should be based on the accounting principles and practices used by an entity in the preparation of its latest annual financial statements unless a change in an accounting practice or policy has been adopted in the current year. c. PAS 34 requires that an entity apply the same criteria for recognizing and measuring a provision at an interim date as it would at the end of its financial year. The existence or non-existence of an obligation to transfer benefits is not a function of the length of the reporting period. It is a question of fact. d. For interim financial reporting, an inventory loss from a market decline in the second quarter that is expected to be restored in the fiscal year should be recognized as a loss proportionately in each of the first, second, third and fourth quarters.

d. For interim financial reporting, an inventory loss from a market decline in the second quarter that is expected to be restored in the fiscal year should be recognized as a loss proportionately in each of the first, second, third and fourth quarters. — Gain or loss from disposal of property, gain or loss from discontinued operation and other gain or loss shall not be allocated over the interim periods

Which of the following statements is incorrect? I. PAS 34 mandates which entities should be required to publish interim financial reports, how frequently, or how soon after the end of an interim period. II. Unlike for publicly listed entities which are required by PAS 34 to present interim financial statements, non-listed entities are just encouraged by the standard to present interim financial statements. III. The SEC and PSE require companies covered by the reportorial requirements of Revised Securities Act to file quarterly interim financial reports within 45 days after the end of each of the first three quarters. IV. Publicly traded entities are encouraged under PAS 34 to provide interim financial reports at least as of the end of the first half of their financial year; and to make their interim financial reports available not later than 60 days after the end of the interim period. V. For interim reporting relevance is sometimes sacrificed for reliability. a. V b. III and IV c. I, II, IV and V d. I, II and V

d. I, II and V — PAS 34 does not require any entity to report an interim financial statement, rather they only encourage. Also, they do not sacrifice reliability over relevance.

An interim financial report shall include, at a minimum, all of the following components, except a. If an entity publishes a complete set of financial statements in its interim financial report, the form and content of those statements shall conform to the requirements of PAS 1 for a complete set of financial statements. b. If the financial statements are condensed, they should include, at a minimum, each of the headings and sub-totals included in the most recent annual financial statements and the explanatory notes required by PAS 34. c. Additional line-items should be included if their omission would make the interim financial information misleading. If the annual financial statements were consolidated (group) statements, the interim statements should be group statements as well. d. In the statement that presents the components of profit or loss for an interim period, an entity need not present basic and diluted earnings per share for that period when the entity is within the scope of PAS 33 Earnings per Share.

d. In the statement that presents the components of profit or loss for an interim period, an entity need not present basic and diluted earnings per share for that period when the entity is within the scope of PAS 33 Earnings per Share. — PAS 24, paragraph 11A states that If an entity presents the components of profit or loss in a separate income statement as described in paragraph 81 of IAS 1, it presents basic and diluted earnings per share in that separate statement.

Which of the following statements is incorrect? a. Estimates are used to a greater extent during interim periods as compared to annual reporting. b. The comparative interim statement of financial position is dated as of the end of the immediately preceding annual financial year. The comparative financial statements for the other financial statements are prepared on a year-to-date basis. c. Statements of comprehensive income are prepared covering the interim period and a year-to-date basis; comparative statements of comprehensive income are provided for similar periods. d. No additional information is encouraged by PAS 34 if the entity's business is highly seasonal.

d. No additional information is encouraged by PAS 34 if the entity's business is highly seasonal. — PAS 34 paragraph 21 states that entities whose business is highly seasonal are encouraged (but not required) to report financial information for the twelve months up to the end of the interim period, and comparative information for the prior twelve-month period.

Which of the following is not an apparent limitation or problem regarding interim reporting? a. Considerable judgment should be made in determining which information is significant or insignificant to users which may or may not be included in a condensed financial report. b. As reporting periods are shortened, the effects of errors in estimation and allocation are magnified, and randomly occurring events which might not be material in the context of a full fiscal year could create major distortions in short interim period summaries of reporting entity performance. c. Seasonal fluctuations and temporary market conditions affects the reliability, comparability, and predictive value of interim reports. d. The conciseness and limited time of preparation undermine the usefulness of interim financial reports making them useful only to internal users who have direct access to additional information on the reporting entity.

d. The conciseness and limited time of preparation undermine the usefulness of interim financial reports making them useful only to internal users who have direct access to additional information on the reporting entity. — PAS 34 Paragraph 15A explains that a user of an entity's interim financial report will have access to the most recent annual financial report of that entity. Therefore, it is unnecessary for the notes to an interim financial report to provide relatively insignificant updates to the information that was reported in the notes in the most recent annual financial report.

Under PAS 34, interim financial reports should be published a. Once a year at any time in that year. b. Within a month of the half year end. c. On a quarterly basis. d. Whenever the entity wishes.

d. Whenever the entity wishes. — PAS 34 does not mandate which entities are required to publish interim financial reports, how frequently, or how soon after the end of an interim period.

PAS 34 Interim Financial Reporting a. requires listed entities to provide interim financial reports b. requires listed entities and those in the process of enlisting their securities to provide interim financial reports c. requires listed entities and those in the process of enlisting their securities and non-SMEs to provide interim financial reports d. does not state which entities are required to provide interim financial reports.

d. does not state which entities are required to provide interim financial reports. — PAS 34 does not mandate which entities are required to publish interim financial reports, how frequently, or how soon after the end of an interim period.

Timely and reliable interim financial reporting improves the ability of investors, creditors, and others to understand an entity's (choose the incorrect statement) a. capacity to generate earnings b. capacity to generate cash flows c. financial condition and liquidity d. financial position and accuracy of inventory on hand

d. financial position and accuracy of inventory on hand — According to PAS 34 timely and reliable interim financial reporting improves the ability of investors, creditors, and others to understand an entity's capacity to generate earnings and cash flows and its financial condition and liquidity.

Income tax expenses during interim periods are recognized based on a. the best estimate of the weighted average income tax rate in effect during the quarter. b. the effective income tax rate during the current quarter. c. the substantially enacted future income tax rate if different from the current income tax rate d. the best estimate of the weighted average annual income tax rate expected for the full financial year.

d. the best estimate of the weighted average annual income tax rate expected for the full financial year. — IAS 34 Appendix B12 states that Income tax expense should be recognised based on the best estimate of the weighted average annual effective income tax rate expected for the full financial year.

The following are examples of the kinds of disclosures required by PAS 34, except a. a the write-down of inventories to net realizable value and the reversal of such a write-down b. recognition of a loss from the impairment of property, plant and equipment, intangible assets, or other assets, and the reversal of such an impairment loss c. acquisitions and disposals of items of property, plant and equipment d. corrections of prior period errors e. extraordinary items

e. extraordinary items — Refer to PAS 34, paragraph 15B.

An entity shall include all of the following information, as a minimum, in the notes to its interim financial statements, if material and if not disclosed elsewhere in the interim financial report, except a. a statement that the same accounting policies and methods of computation are followed in the interim financial statements as compared with the most recent annual financial statements or, if those policies or methods have been changed, a description of the nature and effect of the change b. explanatory comments about the seasonality or cyclicality of interim operations c. the nature and amount of items affecting assets, liabilities, equity, net income, or cash flows that are unusual because of their nature, size, or incidence d. the nature and amount of changes in estimates of amounts reported in prior interim periods of the current financial year or changes in estimates of amounts reported in prior financial years, if those changes have a material effect in the current interim period e. segment information even if PFRS 8 Operating Segments does not require that entity to disclose segment information in its annual financial

e. segment information even if PFRS 8 Operating Segments does not require that entity to disclose segment information in its annual financial — PAS 34, paragraph 16A (g) states that segment information is disclosed only if IFRS 8 requires that entity to disclose segment information in its annual financial statements.