Obligations for which the amount of the future sacrifice is so uncertain that it cannot be measured reliably are classified as: Select the one correct answer:
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- Direction: Choose the correct answer. 1. A provision is a. An event which is not recognized because it is not probable or cannot be measured reliably b. An event which is probable and measurable c. An event which is probable, possible or remote and measurable. d. An evet which is probable but not measurable. 2.Which of the following statements is true? a. Vested and unvested past service cost shall be amortized over the remaining vesting period. b. Vested past service cost shall be recognized as expense and unvested past service cost shall be amortized over the remaining vesting period. c. Vested and unvested past service cost shall be recognized in retained earnings d. Vested and unvested past service cost shall be expense immediately. 3. In computing basic earning per share, an entity would include which of the following? a. Dividends on nonconvertible cumulative preference shares b. Dividend on ordinary shares c. Interest on convertible bonds d. Number of nonconvertible…Which statement is incorrect in the measurement of a provision? *a. The risks and uncertainties that inevitably surround many events and circumstances shall be taken into account in reaching the best estimate of a provisionb. Where the effect of the time value of money is material, the amount of a provision shall be the present value of the expenditure expected to settle the obligationc. Future events that may affect the amount required to settle the obligation shall be reflected in the amount of the provision where there is sufficient objective evidence that the future events will occurd. Gains from expected disposal of assets shall be taken into account in measuring a provision_____ is a contract that involves compensation for specific potential future losses in exchange for periodic payments and that provides for the transfer of the risk of a loss, from one entity to another, in exchange for a premium. a.Spot contract b.Insurance c.Hedging d. Forward contract
- A provision should be recognized when: O a. Present obligation from a past event, outflow that will be required to settle, and Reliable estimate can be made. O b. There is contingency. O C. Estimate is made and there is evidence readily available. O d. After the event has been follow through and there is a liability present.Which of the following is not a criterion that must be met for an item to be classified as a liability? A certain cash payment will occur in the future. A sacrifice will require the entity’s assets or services. There is a probable future sacrifice. There is a present obligation that results from a past transaction.Obligations that may arise from past transactions only if certain events occur in the future are contingent liabilities. Question 5 options: True
- Contingent liabilities must be recorded if: O The future event is probable and the amount owed can be reasonably estimated O The future event is remote O The future event is reasonably possible O The amount owed cannot be reasonably estimated All of the aboveWhich condition is necessary for the recognition of a liability? A. It is probable that an outflow of economic benefits will be required to settle an obligation B. The amount of the obligation can be measured reliably C. The amount of the obligation must be definite D. It is probable that an outflow of economic benefits will be required to settle an obligation and the amount of obligation can be measured reliably.Is the following statement is true or false? Amortization is not a payment process. True O False
- Which among the following suits best for Unearned revenue? a. Liability b. Expense c. Revenue d. AssetWhat are Contingent Liabilities? Give an example. What are the factors that determine the reason for Contingent Liabilities?Which of the following items on the statement of net assets available for benefits would indicate a plan failed nondiscrimination testing? Select one: a. Excess contributions refundable/payable b. Employee contributions receivable c. Adjustment from fair value to contract value d. Adjustment from contract value to fair value