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1.When measuring the discounted amount of future rentals to be...

1.When measuring the discounted amount of future rentals to be capitalized as part of the initial amount assigned to right-of-use asset, identifiable payments to cover taxes, insurance and maintenance should be


A. Included with future rentals to be capitalized.

B. Excluded from future rentals to be capitalized.

C. Capitalized but at a different discount rate and for a relevant period that tends to be different form the future rental payments.

D.Capitalized but at different discount rate and recorded in a different account from future rentals.


2.Which of the following would not be included in the lease receivable account?


A.Guaranteed residual value

B. Unguaranteed residual value

C. A bargain purchase option

D.All would be included


3.If the actual return on plan assets exceeds the expected return based on the discount rate, there is

 

A. YES- Actuarial gain ; YES - Actuarial loss

B. YES- Actuarial gain ; NO - Actuarial loss

C. NO- Actuarial gain ; YES - Actuarial loss

D. NO- Actuarial gain ; NO - Actuarial loss


4.In accounting for a defined benefit plan


A. An appropriate funding pattern must be established to ensure that enough money would be available at retirement to meet the benefits promised.

B. The employer's responsibility is simply to make a contribution each year based on the formula established in the plan.

C. The expense recognized each period is equal to the cash contribution.

D. The liability is determined based upon variables that reflect current salary.


5.Under a sales type lease, what is the meaning of "gross investment in the lease"?

A.Present value of minimum lease payments

B.Present value of minimum lease payments and unguaranteed residual value

C.Absolute amount of the minimum lease payment

D.Aggregate of minimum lease payments and unguaranteed residual value


6.The portion of the lease payments that is not fixed in amount but is based on a factor other than just the passage of time such as percentage of sales, amount of usage, price index and market rate of interest is called.


7.What is the basic principle for accounting for income taxes under PAS 12?

A.There must be no large fluctuation in an enterprise's income tax expense from period to period.

B.The income tax expense must be related to the income or expense item that results in income tax.

C.An entity is required to recognize deferred tax liability or asset when the book basis for the asset or liability is not equal to its tax base and the difference is due to temporary difference.

D.An entity is required to recognize deferred tax liability or asset when the book basis for the asset or liability is not equal to its tax base and the difference is due to permanent difference.


8.A pension asset is reported when


A. The accumulated benefit obligation exceeds the fair value of pension plan assets.

B. The accumulated benefit obligation exceeds the fair value of pension plan assets but a past service cost exists.

C. Pension plan assets at fair value exceed the accumulated benefit obligation.

D. Pension plan assets at fair value exceed the defined benefit obligation.


9.Which of the following is taken into account when determining the discount rate in a defined benefit plan?


A.Market yields at the end of reporting period on high-quality bonds.

B. Investment or actual risk

C. Specific risk associated with the entity's business

D. Risk that future experiences may differ from actuarial assumptions


10.Which of the following are components of a post-employment benefit cost under the defined benefit plan?

I.

Contributions to the plan

II.

Current service cost

III.

Interest cost

IV.

 Past service cost

V.

 Benefits paid


A. II, III, and IV only

B. I, II, IV, only

C.II, IV, and V only

D.I, II, III, IV, and V


11.Which of the following situations would prima facie lead to a lease being classified as an operating lease?

A.Transfer of ownership to the lessee at the end of the lease term.

B.Option to purchase at a value below the fair value of the asset.

C.The lease term is for a major part of the asset's life.

D.The present value of the minimum lease payments is 50% of the fair value of the asset.


12.Taxable temporary difference is the

Statement I: Temporary difference that will result in taxable amount in determining the taxable income of future periods when the carrying amount of the asset or liability is recovered or settled.

Statement II: Temporary difference that will result in deductible amount in determining the taxable income of future periods when the carrying amount of the asset or liability is recovered or settled.

Group of answer choices

A. Both I and II

B. I only

C. II only

D.Neither I nor II


13.Which of the following statements is correct regarding permanent differences under PAS 12?


A. Permanent differences result from items that enter into pretax financial income but never into taxable income.

B. Permanent differences result from items that enter into taxable income but never into pretax financial income.

C. Permanent differences affect only the period in which they occur.

D. All of the choices are correct.


14.What statistical method is used when the provision is estimated by weighting all possible outcomes by their associated probabilities given that provision being measured involves a large population of items?


15.A contingent liability

A. Definitely exists as a liability but the amount and due date are indeterminable.

B.Is accrued even though not reasonably estimated.

C. Is the result of a loss contingency.

D.Is not recognized in the financial position.


16.How would the carrying value of a bond payable be affected by amortization of each of the following?

 

Discount      Premium

A.

No effect         No effect

C.

Increase          Decrease

B.

Increase          No effect

D.

Decrease         Increase


17.Which of the following is not considered when evaluating whether or not to record a liability for pending litigation?



A. Time period in which the underlying cause of action occurred.

B.The type of litigation involved.

C.The probability of an unfavorable outcome.

D. The ability to make reasonable estimate of the amount of the loss.


18.Which statement is incorrect regarding a liability?


A. An essential characteristic of a liability is that the entity has a present obligation.

B. A liability may be legally enforceable as a consequence of a binding contract or statutory requirement.

C. A liability may arise from normal business practice, custom and a desire to maintain good business relations or act in an equitable manner.

D. A decision by the management of an entity to acquire assets in the future gives rise to a present obligation.


19.What method may be used to report the bonds payable at year-end


A. Amortized cost

B. Fair value through other comprehensive income

C. Amortized cost and fair value through other comprehensive income

D. Amortized cost and fair value through profit or loss



 

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