26 S1: Consolidated financial statements are typically prepared when one company has controlling financial interest unless such control is likely to be temporary. S2: Acquisition related costs in a business combination includes professional or consultancy fees, costs of registering and issuing debt and equity securities and general administrative costs

26 S1: Consolidated financial statements are typically prepared when one company has controlling financial interest unless such control is likely to be temporary. S2: Acquisition related costs in a business combination includes professional or consultancy fees, costs of registering and issuing debt and equity securities and general administrative costs

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter3: Analyzing And Recording Transactions

Section: Chapter Questions

Problem 1EA: Match the correct term with its definition. A. cost principle i. if uncertainty in a potential...

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According to IAS 39 Financial Instruments: Recognition and Measurement, at what amount should a financial instrument such as a long-term investment in the shares of a company initially be measured? A. Cost of the nearest equivalent financial instrument B. Fair value of consideration given C. Fair value of consideration given plus directly attributable transaction costs D. Fair value of consideration given less directly attributable transaction costs
Conceptual Framework and Reporting Standard: Small and Medium Sized Enterprise 1. The PFRS for SMEs requires that entity’s financial statements should be prepared using an accrual basis of accounting. True of False? 2.The PFRS for SMEs states that the objective of financial statements is to provide information about the financial position, performance and cash flows of the entity that is useful for economic decision-making by a broad range of users who are not in a position to demand reports tailored to meet their particular information needs. True or False? 3. The PFRS for SMEs allows offsetting in assets and liabilities, or income and expenses. True or False?
13 With respect to the earnings management continuum, what is the FIRST item in the continuum and what is the LAST item in the continuum? FIRST, change in methods or estimates with full disclosure; LAST, strategic matching O FIRST, non-GAAP accounting; LAST, change in methods or estimates with full disclosure O FIRST: strategic matching; LAST, non-GAAP accounting O FIRST: strategic matching; LAST, fictitious transactions
Shareholder value is defined as a. A company's value utilized prevailingly by creditors b. A company's value utilized prevailingly by debtors c. A valuation approach of a business entity that provides essential information for shareholders d. Valuation approach of a business entity that provides essential information for stakeholders
[S1] Operating performance of an entity is reflected by the level of income earned by the entity thru efficient and effective utilization of resources. [S2] Comprehensive income would include gain on sale of investment in ordinary shares. *a.both are trueb.both are falsec.Only S1 is trued.Only S2 is true
1. What is the accounting treatment for a corporate organization cost? a. Operating expense b. Other asset c. Intangible asset d. Deduction from share capital
Match the correct term with its definition. A. cost principle i. if uncertainty in a potential financial estimate, a company should err on the side of caution and report the most conservative amount B. full disclosure principle ii. also known as the historical cost principle, states that everything the company owns or controls (assets) must be recorded at their value at the date of acquisition C. separate iii. (also referred to as the matching principle) matches expenses with associated revenues in the period in which the revenues were generated. D. monetary iv. business must report any business activities that could affect what is reported on the financial statements E. conservatism v. system of using a monetary unit by which to value the transaction, such as the US dollar. F. revenue vi. period of time in which you performed the service or gave the customer the product is the period in which revenue is recognized. G. expense vii. business may only report activities on financial statements that are specifically related to company operations, not those activities that affect the owner personally.
[S1] Operating performance of an entity is reflected by the level of incomeearned by the entity thru efficient and effective utilization of resources.[S2] Comprehensive income would include gain on sale of investment inordinary shares A. both are trueB. both are falseC. Only S1 is trueD. Only S2 is true
Conceptual Framework and Reporting Standard: Small and Medium Sized Enterprise 1. In SME, borrowing costs are interest and other costs that an entity incurs in connection with the borrowing of funds. True or False? 2. Provision, in SME, shall be recognized if an entity has an obligation at the reporting date as a result of a past event and it is possible that the entity will be required to transfer economic benefits in settlement. True or False? 3. An entity can compute post-employment benefit by using either defined benefit plan or defined contribution plan. True or False?
Consolidated financial statements are typically prepared when one company has A. a substantial equity interest in the net assets of another company. B. the controlling financial interest in another company. C. significant influence over the operating and financial policies of another company. D. accounted for its investment in another company by the equity method.
Which of the following characteristics distinguish a corporation from other forms of businesses? I. Centralization of management II. Continuity of life III. Free transferability of ownership interests IV. Limited liability V. Profit motive Oa. Statements I, II, IV, and V are correct. Ob. Statements IV and V are correct. Oc. Statements I, II, III, and IV are correct., Od. All are distinguishing characteristics. Oe. Only statement III is correct.
Synergies from mergers and acquisitions may be operating or financial in nature. Which of the following is a financial synergy?a. Better debt capacity and cost of debt b. Improved forecast for demand and supply of the main product of the parent companyc. Improved employee productivityd. Improved market share