The Framework For Financial Reporting

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The Framework for Financial Reporting
Accounting Judgements
Statements of Income and Comprehensive Income
Statements of Financial Position and Changes in Equity; Disclosure Notes
The Statement of Cash Flows
Revenue Recognition
Financial Assets: Cash and Receivables
Cost-Based Inventories and Cost of Sales
Long-Lived Assets
Depreciation, Amortization, and Impairment
Financial Instruments: Investments in Bonds and Equity Securities

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Question 1

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Conceptually,liabilities constitute a present obligation as a result of a past event and entail an expected future sacrifice of assets or services.

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Question 2

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Under ASPE,only legal obligations are recognized.

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Question 3

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A reasonable expectation on the part of a company's stakeholders arising from a company's past practices or behaviour may constitute a constructive obligation in certain instances.

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Question 4

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True/False

A contingency may become a provision if the likelihood of the contingent event greatly increases.

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Question 5

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For a small population,the best estimate for the amount of a provision that must be recognized is the expected value of the possible outcomes.

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Question 6

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For a large population,the best estimate for the amount of a provision that must be recognized is the most likely outcome with respect to the expected value and cumulative probabilities.

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Question 7

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Discounting is not required when the time value of money is immaterial or if the amount and timing of cash flows is highly uncertain.

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Question 8

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Contingent gains may be accrued if they are certain to be realized.

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Question 9

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Contingencies must be both accrued and disclosed.

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Question 10

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Financial liabilities are initially recognized at fair value and at cost,amortized cost or fair value post-acquisition.

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Question 11

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An onerous contract is one where the unavoidable costs of meeting the contract may or may not exceed the benefits derived from the contract.

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Question 12

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A lawsuit in progress wherein the defendant will probably be found guilty would likely be accounted for as a provision.

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Question 13

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Warranties provisions may arise from legal or constructive obligations.

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Question 14

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Once a company has formally decided to restructure its operations,a provision must be made for the restructuring.

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Question 15

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Self-insurance costs for expected losses must never be provided for.

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Question 16

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Current liabilities are usually discounted.

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Question 17

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A decline in value of a company's reporting currency relative to the foreign currency in which it has payables will result in a foreign exchange gain on the reporting company's books.

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Question 18

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Adjustments to fair value relating to FVTPL liabilities will always flow through earnings.

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Question 19

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Loan guarantees must be provided for; the amount of the provision is the probability of payout multiplied by the fair value of the loan guarantee.

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Question 20

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A company may reclassify a current financial liability to a long-term one only if there is a contractual agreement in place by the reporting date to replace the financing.

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