Cornerstones of Financial Accounting
4th Edition
ISBN: 9781337690881
Author: Jay Rich, Jeff Jones
Publisher: Cengage Learning
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Question
Chapter A1, Problem 9MCQ
To determine
Concept introduction:
International financial reporting framework (IFRS):
International
To choose:
The true statement.
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Students have asked these similar questions
Which of the following refers to the similarity between the U.S. GAAP and IFRS regarding accounting for Long-Lived Assets?
Depreciation is based on the fair value of assets.
An impairment loss occurs if the carrying value exceeds the recoverable amount, defined as the higher of the asset’s fair value (less costs to sell) and its value in use, which is the discounted net cash flows.
For the purposes of determination which expenses may be capitalized, Research and Development expenditures are treated differently.
Intangible assets are acquired at amortized cost.
IFRS GAAP and U.S. GAAP agree most of the time. In which instance might their disagreement have a big impact on an investment decision?
A. revenue recognition
B. goodwill
C. plant, property and equipment
D. accelerated depreciation
(s) Which of the following is different about capitalizing interest under U.S. GAAP and IFRS?
O GAAP requires payments to be made on the project before interest can be capitalized.
O GAAP requires capitalization stop when the asset is substantially ready to use.
O GAAP requires construction to begin before interest can be capitalized.
O GAAP requires interest be capitalized on financed and unfinanced expenditures.
Chapter A1 Solutions
Cornerstones of Financial Accounting
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Similar questions
- Long-term operating assets can be reported on the balance sheet at fair value instead of historical cost. Does this statement apply to IFRS and U.S. GAAP? Group of answer choices It does not apply to IFRS and U.S. GAAP. It applies to U.S. GAAP only. It applies to IFRS only. It applies to both IFRS and U.S. GAAP.arrow_forwardLong-term operating assets can be reported on the balance sheet at fair value instead of historical cost. Does this statement apply to IFRS and U.S. GAAP? Group of answer choices It does not apply to IFRS and U.S. GAAP. It applies to U.S. GAAP only. It applies to both IFRS and U.S. GAAP. It applies to IFRS only.arrow_forwardAssets and liabilities, and income and expenses, when material, shall not be offset against each other. Which among the following is not an allowed offsetting? * a.foreign exchange gains and losses B.gain from the proceeds of selling equipment and the related selling expenditures C. share premium and organizational costs D."gain" from donated land and the related cost of transferring the titlearrow_forward
- Which statements are correct concerning measurement of cost of property, plant and equipment?I. The purchase price of an item of property, plant and equipment is the cash price equivalent at the date of recognitionII. If payment is deferred beyond normal credit terms, the difference between the cash price equivalent and total payment is recognized as interest expense over the life of the asset.III. If an item of property, plant and equipment is acquired in exchange for a nonmonetary asset or a combination of monetary and nonmonetary asset, the cost of such item is measured at fair value unless the exchange transaction lacks commercial substance or fair value of either asset received or given up is not reliably determinable.IV. If an entity is able to determine reliably the fair value of both the asset given up and asset received in an exchange, the fair value of the asset given up is used to measure the cost of asset received in exchange.arrow_forwardAccounting for plant assets involves cost determination, depreciation, additional expenditures, and disposals. Is plant asset accounting broadly similar or dissimilar between IFRS and U.S. GAAP? Identify one notable difference between IFRS and U.S. GAAP in accounting for plant assets.arrow_forwardWhich of the following is not a difference between U.S. GAAP and IFRS treatment of impaired assets? Multiple Choice The use of discounted cash flow. Due to differences, U.S. GAAP may trigger an impairment loss that would not be triggered by IFRS. The right to reverse prior impairment losses when there is a change in the estimates used to measure the loss. In determining the valuation, costs to sell are deducted from fair value.arrow_forward
- What costs are capitalized, or added to the asset account when acquiring property and equipment? A. Only the ticketed list price of the asset purchased. B. Any cost that is considered normal and necessary to get the asset into position and condition to be used. C. The lower of cost or net realizable value. D. Any of the above are allowed by U.S. GAAP as the cost to capitalize when acquiring property and equipment.arrow_forwardAssets and liabilities, and income and expenses, when material, shall not be offset against each other. Which among the following is not an allowed offsetting? * foreign exchange gains and losses gain from the proceeds of selling equipment and the related selling expenditures share premium and organizational costs "gain" from donated land and the related cost of transferring the titlearrow_forwardwhich of the following statements in relation to the cost of the asset is true? A. all of the statements are true B. The cost includes cash equivalent paid C. The cost includes the fair value of any non monetary consideration given to acquire an asset D. The cost includes nonrefundable purchase taxesarrow_forward
- U.S. GAAP requires firms to expense immediately all internal expenditures for R&D costs. Explain why standard setters have chosen not to allow the capitalization alternative? How would analysts be better served if U.S. GAAP required capitalization of R&D costs?arrow_forwardUnder IFRS, a company that acquires an intangible asset may use the revaluation model for subsequent measurement only if a. The useful life of the intangible asset can be readily determined. b. An active market exists for the intangible asset. c. The cost of the intangible asset can be measured reliably. d. The intangible asset is a monetary asset.arrow_forward1. Inventory should be stated at (a) Lower of cost and fair value. (b) Lower of cost and net realizable value. (c) Lower of cost and nominal value. (d) Lower of cost and net selling price. 2. Which of the following costs of conversion cannot be included in cost of inventory? (a) Cost of direct labor. (b) Factory rent and utilities. (c) Salaries of sales staff (sales department shares the building with factory supervisor). (d) Factory overheads based on normal capacity. 3. Inventories are assets (a) Used in the production or supply of goods and services for administrative purposes. (b) Held for sale in the ordinary course of business. (c) Held for long-term capital appreciation. (d) In the process of production for such sale. (e) In the form of materials or supplies to be consumed in the production process or the rendering of services. (f) Choices b and d. (g) Choices b, d, and e. 4. The cost of inventory should not include (a) Purchase price. (b) Import duties and other taxes. (c)…arrow_forward
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