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01 Quiz Bee - P1 and TOA (Easy)
01 Quiz Bee - P1 and TOA (Easy)
ND
RFJPIA-R12
Annual Regional Convention 2008
QUIZ BEE PA1 & TOA
EASY ROUND
1. Which ONE of the following statements best describes the term 'liability'?
A An excess of equity over current assets
B Resources to meet financial commitments as they fall due
C The residual interest in the assets of the entity after deducting all its liabilities
D A present obligation of the entity arising from past events
Question 1 - D
The correct answer is "A present obligation of the entity arising from past
events", as defined in para 49(b) of the Framework.
3. The Oakes Company has a loan due for repayment in six months' time, but
Oakes has the option to refinance for repayment two years later. Oakes plans to
refinance this loan.
In which section of its statement of financial position should this loan be
presented, according to IAS1 Presentation of financial statements? (select one
answer)
A Current liabilities
B Current assets
C Non-current liabilities
D Non-current assets
Question 12 - C
Because Oakes both has the right to roll over the loan beyond 12 months for
the end of the reporting period and intends to roll it over, it should be
presented as a non-current liability per para 73 of IAS1.
4. Which TWO of the following should be taken into account when determining the
cost of inventories per IAS2 Inventories?
A Storage costs of part-finished goods
B Trade discounts
C Recoverable purchase taxes
D Administrative costs
Question 1 - A & B
The correct answers are trade discounts (deduct these from purchase costs)
and storage costs for part-finished (but not finished) goods.
See IAS2 paras 11 and 16.
5. Which ONE of the following statements best describes the carrying amount of an
asset?
A The cost (or an amount substituted for cost) of the asset less its residual value
B The amount at which the asset is recognized in the statement of financial
position after
deducting any accumulated depreciation and accumulated impairment
losses
C The higher of the asset's net selling price and its value in use
D The fair value of the asset at the date of a revaluation less any subsequent
accumulated
impairment losses
Question 3 - B
The correct answer is "The amount in the statement of financial position
after accumulated depreciation and impairment losses".
IAS16 para 6 defines the carrying amount.
6. Which ONE of the following statements best describes the term 'depreciation'?
A The systematic allocation of an asset's cost less residual value over its useful life
B The removal of an asset from an entity's statement of financial position
C The amount by which the recoverable amount of an asset exceeds its carrying
amount
D The amount by which the carrying amount of an asset exceeds its recoverable
amount
Question 5 - A
"The systematic allocation of an asset's cost" is the correct answer.
See IAS16 para 6 for definitions.
7. The Mirror Company classified a non-current asset accounted for under the cost
model as held for sale on 31 December 20X6. Because no offers were received
at an acceptable price, Mirror decided on 1 July 20X7 not to sell the asset, but to
continue to use it. In accordance with IFRS5 Non-current assets held for sale and
discontinued operations, the asset should be measured on 1 July 20X7 at (select
one answer)
10. The Snowfinch Company is closing one of its operating divisions, and the
conditions for making restructuring provisions in IAS37 Provisions, contingent
liabilities and contingent assets have been met. The closure will happen in the
first quarter of the next financial year. At the current year end, the company has
announced the formal plan publicly and is calculating the restructuring
provision. Which ONE of the following costs should be included in the
restructuring
provision?
A Retraining staff continuing to be employed
B Relocation costs relating to staff moving to other divisions
C Contractually required costs of retraining staff being made redundant from the
division
being closed
D Future operating losses of the division being closed up to the date of closure
Question 5 - C
IAS37 paras 80-82 require provisions to be made for costs necessarily
incurred by the restructuring, but not those relating to the future conduct of
the business.