Chapter 4 HW Solutions.docx - Solutions to Chapter 4 Online Material Questions 1 FALSE 2 C 3 D 4 D 5 E 6 FALSE 7 TRUE 8 FALSE Exercise 1 An entity

Chapter 4 HW Solutions.docx - Solutions to Chapter 4 Online...

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Solutions to Chapter 4 Online Material: Questions: 1. FALSE 2. C 3. D 4. D 5. E 6. FALSE 7. TRUE 8. FALSE Exercise 1: An entity classifies liabilities as current liabilities when any of the following is true (IAS 1.69): A. The entity believes the liability will be settled within the normal operating cycle period B. The entity holds the liability primarily for the purpose of trading C. The obligation to settle the liability must be fulfilled within a year of the end of the reporting period D. The entity cannot defer settlement of the liability past the end of the subsequent reporting period All other liabilities should be classified as non-current. Some examples include: accounts payable, trade payables, some accruals (employee and operating expenses) Exercise 2: The $12,000 owed to its suppliers; the $50,000 five year long term loan that is due in three months; and the $15,000 note due in 9 are all considered current liabilities. The $500,000 mortgage is considered a non-current liability. Exercise 3: Under IFRS, entities are not allowed to present income or expense items as extraordinary items in the statement of comprehensive income, in the income statement (if presented), or in the notes. “Extraordinary items” are incorporated into the normal operating accounts of the entity (above the line items). Exercise 4: Entities with share capital are required to disclose the following information: Numbers of shares authorized, issued and fully paid, and issued but not fully paid; Par value per share (or that the shares have no par value);
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