Annual Regional Convention 2008 QUIZ BEE – PA1 !"A

A#ERA$E R"UND 1. According to IAS29 Financial reporting in hyperinflationary economies , which TWO of the following are monetary items? a. Trade paya les . In!entories c. Administration costs paid in cash d. "oan repaya le at par !al#e
Que%tion & - A D $onetary items are to e recei!ed %or settled& in fi'ed monetary terms %per IAS29 para 12&. This incl#des trade paya les and loans to e repaid at par !al#e.

2. The (op)ins *ompany is a man#fact#ring company. The cost per #nit of an item of in!entory is shown on its card as follows+ P'P $aterials ,.rod#ction la or costs ,, .rod#ction o!erheads 12 /eneral administration costs 1$ar)eting costs 0 According to IAS2 Inventories, what is the !al#e of one completed item of in!entory in (op)ins1s statement of financial position? a. .(.2, . .(.30 c. .(.40 d. .(.9Que%tion 11 - C .(.40 is the correct answer. IAS2 paras 1-512 define the cost of in!entory. In this e'ample the cost incl#des materials, prod#ction la or and prod#ction o!erheads, #t not general administration or mar)eting costs.

,. On 1 6an#ary 2-73 The 8 ro *ompany commenced trading to pro!ide )ey s)ills ed#cation facilities in a region identified for technology de!elopment. Also on 1 6an#ary 2-73, the company recei!ed two grants from its go!ernment for setting #p its operations in this location+ /rant %a& 9 was paid to gi!e financial assistance for start5#p costs already inc#rred. /rant % & 9 was paid to s# sidi:e the costs of p#rchasing comp#ter software o!er the fi!e5year period. The company is almost certain to )eep the facilities operational for the ne't fi!e years.

The Scandi#m *ompany is commencing a new constr#ction pro?ect.re=#ires grants for e'pendit#re already inc#rred to e recogni:ed immediately.(.112. 6#ne 2-73 ) 12 6#ne 2-73 * 13 6#ly 2-73 Que%tion & . The .The company1s acco#nting year end is .--.C IAS2. *ompany policy was to depreciate the asset o!er > years on a straight5 line asis and to treat the grant as deferred income.(. a ( ) * Statement (1) <alse <alse Tr#e Tr#e Statement (2) <alse Tr#e <alse Tr#e Que%tion 2 .(.0-. 0.(.(.IA& alance at .40. para 14 are f#lfilled y the date when e'pendit#res on the pro?ect start to e inc#rred. which is to e financed y orrowing.on 1 6an#ary 2-74.1 .1-. %2& Income from /rant % & sho#ld e recogni:ed in f#ll at the end of 0 years. Are the following statements concerning recognition of the income from the two go!ernment grants tr#e or false.10-.ara 12 re=#ires grants s#ch as that for the software to e matched against the related costs.ecem er.Government grants and government assistance? %1& Income from /rant %a& sho#ld e recogni:ed in f#ll on receipt in 2-73. The company recei!ed a go!ernment grant of . so that grant wo#ld e recogni:ed o!er the fi!e5year period.120 .(.para 2. from what date can Scandi#m commence the capitali:ation of orrowing costs? a 10 $ay 2-73 ( .ecem er 2-73? Carrying amount I !alance a . according to IAS2. Borrowing costs. 6#ne 2-73 Technical site planning commences 12 6#ne 2-73 8'pendit#res on the pro?ect start to e inc#rred 13 6#ly 2-73 *onstr#ction wor) commences According to IAS2..0-.40( .alila *ompany p#rchased a !arnishing machine for .--. >. @nder IAS2Government grants and government assistance .1. The )ey dates are as follows+ 10 $ay 2-73 "oan interest relating to the pro?ect starts to e inc#rred .in respect of this asset.C All rele!ant conditions in IAS2.1 . what sho#ld e the carrying amo#nts of the machine and the deferred income %A. .2.

1.(.Septem er 2-74? A .40. what is the total cost that sho#ld e capitali:ed as an intangi le non5c#rrent asset in respect of the new process? A .ipper wo#ld gi!e rise to an en!ironmental pro!ision as defined y IAS. The costs inc#rred were as follows+ *ost of trademar) . 4.(..40.---.0--. It has always honored this commitment.-0B ..2--. The *oral *ompany acco#nts for non5c#rrent assets #sing the cost model.(.is the correct answer.40..1>.1.40. On 2.0-C .21.(.--Que%tion 11 .6#ly 2-74 *oral classified a non5c#rrent asset as held for sale in accordance with I<BS0 "on#current assets held for sale and discontinued operations.0-- Que%tion + .21..ipper *ompany operates chemical plants.B IAS.--According to IAS.(.31.para 22.2-.0-Que%tion 8 .0--. The $ar)a *ompany has ac=#ired a trademar) relating to the introd#ction of a new man#fact#ring process.40-.3 paras 24529 specify the costs attri #ta le to a separately ac=#ired intangi le asset.(..0-. The asset was sold on 13 Octo er 2-74 for . At that date the asset1s carrying amo#nt was . See IAS2.(. 2--.(.A *arrying amo#nt .(.(.00-. where the grant is recogni:ed as income on a systematic and rational asis o!er the life of the asset. 0-.--8mployee enefits relating to the testing of the proper f#nctioning of the new process . Which OC8 of the following scenarios relating to .1>.(. .0--. The .(. 2.21.(.2... its fair !al#e was estimated at .D I<BS0 para 10 re=#ires that a non5c#rrent asset held for sale sho#ld e stated at the lower of %i& the carrying amo#nt and %ii& the fair !al#e less costs to sell. Its p# lished policies incl#de a commitment to ma)ing good any damage ca#sed to the en!ironment y its operations.(.(.--B .3 Intangi!le assets.(.2.(. The asset is depreciated o!er its #sef#l life per IAS12.4 $rovisions% contingent lia!ilities and contingent assets? .--- .--D .--C . In accordance with I<BS0.. 3. .(.>0-.40..4--..eferred income .and the costs to sell at . at what amo#nt sho#ld the asset e stated in *oral1s statement of financial position at .--8'pendit#re on promoting the new prod#ct .21. The deferred income in the statement of financial position is red#ced each year y the amo#nt credited to profit or loss.(.(.) * .2-D .(. This re=#ires the trademar) costs and costs of testing to e incl#ded..

the act#al ret#rn on plan assets was . On 14 6#ly 2-74.(. See IAS19 para 21.0--.loss on man#fact#ring plant Que%tion .inder *ompany is completing the preparation of its draft financial statements for the year ended .. Also.(..--.(.(.1 $ay 2-74.4. Cote that the difference etween the e'pected and the act#al ret#rn on plan assets is an act#arial loss.--.>.The .1 $ay 2-74 to reflect ad?#sting e!ents after the end of reporting period? A .C The amo#nts to e recogni:ed as an e'pense in profit or loss are the c#rrent ser!ice cost less the e'pected ret#rn on plan assets.(..paras 9.>. oth ased on the profits for the year to . A chemical spill from one of the company1s plants has ca#sed harm to the s#rro#nding area and wildlife Que%tion 11 .(.D The p# lished policy creates a constr#cti!e o ligation as defined y IAS.---.ecem er 2-74.(. On 2> 6#ly 2-74.3.(.(. Becent research s#ggests there is a possi ility that the company1s actions may damage s#rro#nding wildlife c. The go!ernment plans and any chemical spill relate to f#t#re e!ents. while the Apossi leA damage to wildlife gi!es rise to a contingent lia ility which sho#ld e disclosed. res#lting in a financial loss of .(.(.0-C .22-. According to IAS1..--.--.4.140.---..&vents after the reporting period .4 para 1-.(. The White *ompany set #p a defined enefit post5employment plan with effect from 1 6an#ary 2-74. Co allowance had een made against this de t in the draft financial statements.--.--. while the employer contri #tions increase plan assets. 12 and 22.(.0.>.12. The go!ernment has o#tlined plans for a new law re=#iring all en!ironmental damage to e rectified d. according to IAS19 &mployee !enefits? A . di!idends are recogni:ed in the .0.140.and White1s contri #tions paid into the plan were .ipper ha!ing to pay fines and penalties will occ#r in the ne't year ..1 . a man#fact#ring plant was destroyed y fire. .--. 1-.(.6#ne 2-74.B C The correct answers are .inder1s profit or loss for the year to .0.a..1 $ay 2-74. On 2.was made.(. What is the net e'pense to e recogni:ed in profit or loss for the year ended .(..(. the c#rrent ser!ice cost was .--. 9.was declared and a contract#al profit share payment of . a c#stomer went into li=#idation ha!ing owed the company . On past e'perience it is li)ely that a chemical spill which wo#ld res#lt in .22-.on#s C . The spill is a past e!ent which gi!es rise to a present o ligation and the need for a pro!ision #nder para 1>. a di!idend of .0-Que%tion 11 .--. See IAS1.allowance for #ncollecti le trade recei!a les D .(.0.on#s and .--B .--.di!idend B .2. which TWO amo#nts sho#ld e recogni:ed in .for the past 0 months.---.>.--D . In the first year the e'pected ret#rn on plan assets was .allowance.

statement of changes in e=#ity. not profit or loss .

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