RFJPIA-R12

2ND Annual Regional Convention 2008 QUIZ BEE PA1 !"A

EASY ROUND 1. Which ONE of the following statements best describes the term 'liability'? A An excess of equity o er current assets B !esources to meet financial commitments as they fall due C "he residual interest in the assets of the entity after deducting all its liabilities D A #resent obligation of the entity arising from #ast e ents
Question 1 - D "he correct answer is $A #resent obligation of the entity arising from #ast e ents$% as defined in #ara &'(b) of the Framework.

*. Are the following statements true or false% according to +A,1 Presentation offinancial statements? (1) -i idends #aid should be recognised in the statement of com#rehensi e income. (*) A loss on dis#osal of assets should be recognised in the statement of changes in equity. Statement (1) Statement (2) A .alse .alse B .alse "rue C "rue .alse D "rue "rue
Question 3 - A A loss on dis#osal of assets is recognised in the statement of com#rehensi e income because +A,1/ Property, plant and equipment does not #ermit otherwise (+A,1 #ara 00). -i idends #aid are recognised in the statement of changes in equity (+A,1 #ara 11/).

2. "he Oa3es 4om#any has a loan due for re#ayment in six months' time% but Oa3es has the o#tion to refinance for re#ayment two years later. Oa3es #lans to refinance this loan. +n which section of its statement of financial #osition should this loan be #resented% according to +A,1 Presentation of financial statements? (select one answer) A 4urrent liabilities B 4urrent assets C Non5current liabilities D Non5current assets
Question 12 - C 6ecause Oa3es both has the right to roll o er the loan beyond 1* months for the end of the re#orting #eriod and intends to roll it o er% it should be #resented as a non5current liability #er #ara 72 of +A,1.

&. Which "WO of the following should be ta3en into account when determining the cost of in entories #er +A,* Inventories? A ,torage costs of #art5finished goods

B "rade discounts C !eco erable #urchase taxes D Administrati e costs

Question 1 - A & B "he correct answers are trade discounts (deduct these from #urchase costs) and storage costs for #art5finished (but not finished) goods. ,ee +A,* #aras 11 and 1/.

8. Which ONE of the following statements best describes the carrying amount of an asset? A "he cost (or an amount substituted for cost) of the asset less its residual alue B "he amount at which the asset is recogni9ed in the statement of financial #osition after deducting any accumulated de#reciation and accumulated im#airment losses C "he higher of the asset's net selling #rice and its alue in use D "he fair alue of the asset at the date of a re aluation less any subsequent accumulated im#airment losses
Question 3 - B "he correct answer is $"he amount : in the statement of financial #osition : after accumulated de#reciation and : im#airment losses$. +A,1/ #ara / defines the carrying amount.

/. Which ONE of the following statements best describes the term 'de#reciation'? A "he systematic allocation of an asset's cost less residual alue o er its useful life B "he remo al of an asset from an entity's statement of financial #osition C "he amount by which the reco erable amount of an asset exceeds its carrying amount D "he amount by which the carrying amount of an asset exceeds its reco erable amount
Question 5 - A $"he systematic allocation of an asset's cost:$ is the correct answer. ,ee +A,1/ #ara / for definitions.

7. "he ;irror 4om#any classified a non5current asset accounted for under the cost model as held for sale on 21 -ecember *1</. 6ecause no offers were recei ed at an acce#table #rice% ;irror decided on 1 =uly *1<7 not to sell the asset% but to continue to use it. +n accordance with +.!,8 Non current assets !eld for sale and discontinued operations% the asset should be measured on 1 =uly *1<7 at (select one answer) A the lower of its carrying amount and its reco erable amount B the higher of its carrying amount and its reco erable amount C the lower of its carrying amount on the basis that it had ne er been classified as held for sale and its reco erable amount D the higher of its carrying amount on the basis that it had ne er been classified as held for sale and its reco erable amount
Question 2 - C +.!,8 #ara *7 in effect requires an entity ceasing to classify an asset as held for sale to remeasure it as if it had ne er been held for sale% sub>ect to an im#airment test (the reco erable amount test) at that date.

0. A brand name that was acquired se#arately should initially be recogni9ed % according to +A,20 Intan"i#le assets% at (select one answer) A reco erable amount B either cost or fair alue at the choice of the acquirer C fair alue

D cost
Question 5 - D +A,20 #ara *& states that an intangible asset should be recognised initially at cost.

'. "he Naylor 4om#any has determined that it needs to recognise an im#airment loss on each of two non5current assets? #lant and land. "he rele ant amounts are as follows@ Plant Land Original cost 4A711%111 4A1%&11%111 Bre ious re aluations Nil 4A&81%111 Existing carrying amount 4A711%111 4A1%081%111 +m#airment loss to be recognised in year 4A*11%111 4A211%111 According to +A,2/ Impairment of assets% how should each of the im#airment losses be recognised? Plant $and A +n #rofit or loss +n #rofit or loss B +n #rofit or loss +n other com#rehensi e income C +n other com#rehensi e income +n #rofit or loss D +n other com#rehensi e income +n other com#rehensi e income
Question - B +A,2/ #aras /15/1 state that im#airment losses on assets that ha e not been re alued are recognised in #rofit or loss. +m#airment losses on re alued assets are treated as a re aluation decrease.

11. "he ,nowfinch 4om#any is closing one of its o#erating di isions% and the conditions for ma3ing restructuring #ro isions in +A,27 Provisions, contin"ent lia#ilities and contin"ent assets ha e been met. "he closure will ha##en in the first quarter of the next financial year. At the current year end% the com#any has announced the formal #lan #ublicly and is calculating the restructuring #ro ision. Which ONE of the following costs should be included in the restructuring #ro ision? A !etraining staff continuing to be em#loyed B !elocation costs relating to staff mo ing to other di isions C 4ontractually required costs of retraining staff being made redundant from the di ision being closed D .uture o#erating losses of the di ision being closed u# to the date of closure
Question 5 - C +A,27 #aras 0150* require #ro isions to be made for costs necessarily incurred by the restructuring% but not those relating to the future conduct of the business.