Advanced Accounting
14th Edition
ISBN: 9781260247824
Author: Joe Ben Hoyle, Thomas F. Schaefer, Timothy S. Doupnik
Publisher: RENT MCG
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Chapter 3, Problem 6P
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Identify the appropriate answer for the given statement from the given choices.
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Jordan’s response about the eff ect of Beta’s impairment loss is most likely incorrect withrespect to the impact on its:A. debt to total assets.B. fixed asset turnover.C. cash flow from operating activities.
Which statement is incorrect regarding reclassification of financial assets?
All reclassifications out of FVTOCI measurement category result in 'reclassification. adjustment.
The effective interest rate and the measurement of expected credit losses are not adjusted as a result of the reclassification from AC measurement category to FVTOCI and vice versa.
Reclassifications to FVTPL measurement category result to amounts recognized in profit or loss.
The effective interest rate is determined on the basis of the fair value of the asset at the reclassification date when an entity reclassifies a financial asset out of FVTPL measurement category.
A statement of affairs measures a deficiency – traceable to unsecured creditors without priority – as the difference between the estimated net realizable value of the assets and the amount due those creditors
True or False
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- Which of the following is a false statement regarding revaluation of PPE?A. Revalued amount is either fair value or depreciated replacement cost.B. If simultaneous revaluation is not possible, revaluation can be done on arolling basis provided revaluation of the class of assets is completed withina short period of time and provided the revaluations are kept up to date.C. The difference between the PPE’s carrying amount and its revalued amount isknown as revaluation surplus and should be presented in the statement ofcomprehensive income, net of applicable tax.D. When an asset's carrying amount is increased as a result of revaluation, theincrease shall always be credited to revaluation surplus regardless of theexistence of previous impairment loss recognized. Which of the following should be included as cost of inventory?A. Depreciation expense of the delivery equipment.B. Depreciation expense of the factory machinery.C. Storage cost of finished goods.D. None from the choices. In…arrow_forwardWhich of the following statements is false regarding property, plant and equipment (PPE)? Group of answer choices A. PPE is reported as a non-current asset on the balance sheet B. PPE is not intended for resale C. PPE can also be referred to as "inventory" D. None of the other alternativesarrow_forwardThe historical cost principle provides that: Select one: O a. the recorded amount of an acquired item should be the fair market value of the item. b. None of the answers are correct O c. tems whose costs are insignificant compared to other amounts on the financial statements may be accounted for in the most expedient manner. O d. assets and equities be expressed in terms of a common denominator. O e. the expenses of generating revenue should be recognized in the same period that the related revenue is recognized.arrow_forward
- How should the assets and liabilities of a disposal group held for sale bereported? A. The assets and liabilities should be offset and presented as a single amount B. The assets of a disposal group should be reported separately as current assets and the liabilities should be shown as current liabilities separately. C. The assets and liabilities should offset and presented as a deduction from equity. D. There should be no separate disclosure of assets and liabilities of the disposal grouparrow_forwardWhich statement is incorrect regarding reclassification of financial assets? a) Reclassifications to FVTPL measurement category result to amounts recognized in profit or loss. b.)The effective interest rate is determined on the basis of the fair value of the asset at the reclassification date when an entity reclassifies a financial asset out of FVTPL measurement category. c.) The effective interest rate and the measurement of expected credit losses are not adjusted as a result of the reclassification from AC measurement category to FVTOCI and vice versa. d.) All reclassifications out of FVTOCI measurement category result in ‘reclassification adjustmarrow_forwardWhich of the following approaches is used to determine the recognition of an impairment loss of financial assets? Select the best answer. a. O An approach that reflects the losses expected over the contractual life of the asset b. A loan is impaired if it is more likely than not that a creditor will be unable to collect all amounts due. c. A dual-measurement expected credit loss approach that is based on a financial asset's credit risk at inception and changes in credit risk from inception, as well as the applicability of certain practical expedients d. O Present value of contractual cash flows approacharrow_forward
- 7. Which of the following indicators of impairment is considered an internal source of information? a. Significant decline in market value than what is expected as a result of passage of time of normal use. b. Significant changes in technological, market, economic or legal environment in which the entity operates or in the market to which an asset is dedicated. c. Carrying amount of the net assets is more than its market capitalization. d. Significant change with adverse effect to the entity has taken place or will take place, which will affect expected use of asset, e.g., discontinuance, disposal, restructuring plans.arrow_forwardWhich limitation of an income statement occurs when one company uses an accelerated depreciation method while another company uses straight-line depreciation? O Companies omit from the income statement items they cannot measure reliably. O Income measurement involves judgment. O Income numbers are affected by the accounting methods employed. All of these answer choices are correct.arrow_forwardDiscuss the appropriate treatment in the income statement for the following items: a. Loss on discontinued operations. b. Non-controlling interest allocation.arrow_forward
- Which of the following statements about Loss Contingencies is TRUE? According to the practice of accounting conservatism, contingency losses do not have to be accrued until they are confirmed, while contingency gains have to be recorded when the event confirming their receipt is probable. Remote Losses do not require disclosure. According to the U.S. GAAP, a loss contingency must be accrued by a charge to income if any of the two conditions is met: 1) it is probable that an asset has been impaired, or a liability has been incurred at the date of the financial statements; 2) the amount of the loss can be reasonably estimated. If a loss is probable but cannot be estimated, it shall not be disclosed in the financial statements.arrow_forwardWhat does the Conceptual Framework state about derecognition?arrow_forwardUnder IFRS 9, the cumulative balance of equity as a result of measuring financial assets at fair value through other comprehensive income shall be reversed to profit or loss at the date the security is sold shall be reversed to profit or loss when there is objective evidence of impairment shall not be reversed to profit or loss but may be transferred to another equity account shall not be reversed to profit or loss and may not be transferred to another equity accountarrow_forward
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