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The management of Orcena Corporation wants to apply IFRS 13.

A question raised by the financial


controller to his staff is whether applying IFRS 13 would change the requirements to measure certain
investmnets at fair value or cost. Which of the following statements is/are correct?

Both of the above

Statement I IFRS 13 will not change whether the investments should be measured ar fair value or cost.

None of the above

Statement II IFRS 13 will change which investments are measured at fair value. Statement III IFRS 13
specifies how to measure fair value.

Which of the following is/are Level 2 input/s?

Statement IV- IFRS 13 will change when to measure fair value

A. I and III only

B. I and IV only
C. I and II only

The price per square meter for a building derived from observable market data from similar buildings in
similar locations

Quoted price of Vision Company, Ltd listed in Asian stock markets but are not actively traded in these
markets

Price for an ABC Bank bond that is derived from XYZ Banl bonds which have similar criteria and are
actively traded

D. II and IV only
IV Bank Z bond price based on yield curve constructed from quoted bonds and treasury bills.
De Vera Corporation acquires a research and development project in a business combination. The entity
does not intend to complete the project because it would compere with one of its own projects. Instead, th
entity intends to hold the project to prevent its competitors from obtaining access to the technology. In
doing this, the project is expected to provide defensive value, principally by improiving the prospects for
the entitys own competing technology. To measure the fair value of the acquired R&D project at initial
recognition, the highest and best use of the project would be determined on which of the following basis?

A. I, II and III only


B. I, III and IV only
C. II and IV only
D. I, II, III and IV

The entitys own intended use of technology

How market participants would use the technology

An entity acquires a group of assets including an income-producing software asset. To allocate the cost of
the group to the individual assets acquired, the entity measures the fair value of the software asset. The
entity determines that the software asset would provide maximum value to market participants through its
use in combination with other assets or with other assets and liabilities. The following information was
used to determine fair value:

Lorenz Corp is preparing to apply IFRS 13 for the first time. The financial reporting manager asks his team to
prepare the following information for disclosure in relation to fair value measurement categorized within
Level 2 and Level 3 of the fair value hierarchy:
A description of the valuation techniques used in the fair value measurement

Cash flows reflecting the income stream expected to result from the software asset (license fee from
customers) over its economic life.

A description of the inputs used in the fair value measurement

Quantitative information about significant unobservable inputs for Level 3


Information on the amount that would currently be required to construct a substitute software asset of
comparable utility.

Based on this information, which of the following types of valuation technique did the entity use to
measure fair value?

The assistant manager is of the opinion that Lorenz Corp is not required to create quantitative information just
to comply with the standard if this information was not already developed by Lorenz Corp, while the financial
reporting manager believes it is mandatory to create such quantitative information.

Which of the following is correct?


I Income approach

II- Cost approach

Lorenz Corp is not required to develop quantitative information just to comply with IFRS 13 but cannot
ignore information that is not reasonably available

III- Market approach

Lorenz Corp is required to develop quantitative information even if it has not already been developed

A.

Lorenz Corp is not required to develop quantitative information for Level 3 inputs per IFRS 13

I only
B. II only
C. I and II only
D. I, II and III

Lorenz Corp need to use available data to develop quantitative information.

IFRS 13 deals with fair value measurements of which of the following assets and liabilities? I- Debt and
equity securities

A. I and III only


B. II and IV only

II- Share-based payment transactions III-Investment properties

C. I, II and III only


IV- Derivative assets and liabilities

D. I, III and IV only

How might Fleurise, Nina Miller, and all users of IAS 1 apply the information provided in the presentation
of IFRS financial statements?

To make economic decisions regarding the companys financial position, financial performance, and cash
flows

To make economic decisions regarding the companys financial performance, cash flows, and hiring
guidelines

12. Which of the following are rules for recognizing current tax, according to the standard?

I. Current tax for current and prior periods should, to the extent unpaid, be recognized as a liability.

II. If the amount already paid exceeds the amount due for these periods, the excess is recognized as an
asset. III. Whatever tax is assessed to be payable for the year is recognized as an expense, except to the
extent that

To make economic decisions regarding the companys cash flows, hiring guidelines, and environmental position the tax arises from a transaction or event which is recognized, in the same or in a different period, directly in
equity.
To make economic decisions regarding the companys financial performance, environmental position,

and community service

What predictions regarding Fleurise or another company might be made through using IFRS financial
statements?

A balance sheet, an income statement, a statement of changes in equity, a cash flow statement, and notes
comprising a summary of significant accounting policies and other explanatory notes

A balance sheet, an income statement, a statement of changes in equity, a cash flow statement, a financial
review by management, and notes comprising a summary of significant accounting policies and other
explanatory notes

Predictions related to the companys future financial position, as well as market timing and certainty

Predictions related to the companys future financial performance, as well as their competitors financial
performance

Predictions related to the companys future inventory flows, as well as inventory timing

Predictions related to the companys future cash flows, as well as cash flow timing and certainty

9.

What would be included in a complete set of IFRS financial statements?

A balance sheet, an income statement, a statement of changes in equity, and a cash flow statement

A balance sheet, an income statement, a statement of changes in equity, a cash flow statement, a financial
review by management, value-added statements, and notes comprising a summary of significant accounting
policies and other explanatory notes

IV. The balance sheet picks up the difference between that amount and any amount paid as a liability or as an asset

I. Deferred tax liabilities are not recognized on temporary differences that arise from the initial recognition of
goodwill.

I and II only

I, II and III only

I, II, III and IV

I, III and IV only

13. Which of the following is/are an exception(s) to IAS 12s recognition rules for deferred tax liabilities?

II. Deferred tax assets and deferred tax liabilities are not recognized on temporary differences that arise from
the initial recognition of an asset or liability in a transaction that, at the time of the transaction, is not a
business combination and affects neither accounting profit nor taxable profit.

I only

II only

I and II

None of the above


11. What is deferred tax, according to IAS 12?
10. Which of the following companies would use IAS 1?
The amount that the tax authorities assess to be payable for the period, calculated according to their own rules

Profit-oriented

Non-profit

Government

All of the above

The profit (loss) for a period, determined in accordance with the rules established by the tax authorities,
upon which income taxes are payable (recoverable)

The difference between the carrying amount of an asset or liability and its tax base

Taxes that have an effect on future tax cash flows

14. According to IAS 12, which of the following is/are disclosure requirements for taxes?

Tax expense relating to the reduction of deferred (but not current) tax expense by using a previously
unrecognized tax loss, tax credit, or temporary difference of a prior period

The write-down (or its reversal) of a current tax asset

An explanation of changes in the applicable tax rates compared to the previous accounting period

None of the above

Company X recognizes deferred taxes on revaluation of land and building due to the different accounting
treatments of land and buildings under IFRS and the purpose of the tax calculation. Under IFRS, Company
X applies a revaluation model of accounting while for the purpose of tax calculation, land and buildinsgs
are measured at historical cost less depreciation for buildings. During the current accounting period, a gain
on revaluation of land and buildings which amounted to P150,000 was recognized within other
comprehensive income. Company X has chosen to present two statements: a separate statement of profit
and loss and a statement of comprehensive income. Where should Company X recognize tax consequences
of this gain during the current accounting period?

In the statement of changes in equity

B. II and IV

In the statement of profit and loss

C. I, II and IV

In the statement of comprehensive income

D. II, III and IV

In either A or C
17. What is the requirement of IFRS 8 in relation to aggregation of operating segments?
16. Which of the following segments need to be disclosed separately?

I Operating segments that contribute 10% or more of the entitys total sales

II - Operating segments that contribute 10% or more of the combined reported profit of all reporting
segments III - Operating segments that contribute 10% or more of the entitys total cost of sales
IV - Operating segments that have 10% or more of the combined assets of all operating segments

A. I and II

Aggregation of operating segments requires that they exhibit similar economic characteristics, including
similar long-term gross margins.

Aggregation of operating segments does not always require that they exhibit similar economic characteristics.

Aggregation of operating segments requires that they exhibit similar economic characteristics, not including
similar long-term gross margins.

None of the above

Post- employment benefits, as the benefits are payable after the employee completes service

18. NF Company decided to terminate a number of employees (which is not part of a wider restructuring in
scope of IAS 37). It is unlikely that significant changes to this decision will be made. What steps must NF
have completed in order to recognize a liability for cost of the termination benefits?

Termination benefits, as the executive has accepted early termination in exchange for compensation

None of the above


Create a plan that includes the location, function and number of employees whose services are to be
terminated

Communicate the plan to employees in sufficient detail so that affected employees can determine the type
and amount of benefits they will receive should they be terminated

20. Florian is going to adopt IFRS for the first set of financial statements as at 31 December 2014. Which of
the following exemptions can Florian use?

Florian can assume that defined benefit obligation as of 1 January 2013, 31 December 2013 and 31
December 2014 are unchanged from previous GAAP so that it has to do the actuarial calculation only as at
31 December 2014.

Create a plan that includes the time when the terminations will be completed
Florian can include hindsight obtained in 2014to determine the discount rate as at 31 December 2013.
All items must be completed.

19. Abacus Ltd. enters into an agreement for an executive to retire early. This agreement is not part of a
wider restructuring plan. The executive is 1 year away from his current retirement date. Under the plan,
Abacus commits to continue paying executive 50% of his salary until the normal retirement date; however,
the executive will no longer be required to provide any service for this period.

There are no exemptions related to measurement, presentation and disclosure for employee benefit for an
IFRS first-time adopter with an annual period beginning after 1 January 2014.

Florian is not required to disclose the comparative figures for 2013 as at 1 January 2013.

How would Abacus classify this plan?

A. Short-term employee benefits, as the benefits are expected to be paid within 12 months of the executives
last day of providing service

21. Group A has acquired the following. Which of the following acquisitions are business combination
under IFRS 3?

I - Land and a vacant building from Company B. No process, other assets or employees are required. Group
A does not enter into any contracts of Company B.

All three acquisitions are business combinations under IFRS 3.

I and II acquisitions are business combinations under IFRS 3.


II - An operating hotel, the hotels employees, the franchise agreement, inventory, reservation system and all
I and III acquisitions are business combinations under IFRS 3.
back office operations
II and III acquisitions are business combinations under IFRS 3.
III - All of the outstanding shares in Biotech D, a development stage company that has a license for product
candidate. Phase I clinical trialsare currently being performed by Biotech D employees. Biotech Ds
administrative and accounting functions are performed by a contract employee.

Select the correct answer.

Entity A should disregard this, as this is an operating lease of Entity B and no asset or liability is recognized
related to operating leases.

22. Entity A acquired Entity B. On the acquisition date, Entity B had an operating lease as a lessee with a
remaining period of two years out of the original four years. Due to significant changes in the market, Entity
B is paying less than what you would expect to currently pay for a similar lease. The value of the existing
lease based on the current terms is 10,000 and that of a lease based on relative market terms is 13,000. How
should Entity A account for this?
23. Entity A had several business acquisitions during the reporting period and after the reporting period.
Entity A will disclose, among other information, the following:

The name and a description of the acquiree


Entity A determines whether the terms of each operating lease in which Entity B is the lessee are favorable
or unfavorable. Entity A should account for the difference between the value of the existing lease terms and
the market terms in profit or loss.

Entity A determines whether the terms of each operating lease in which Entity B is the lessee are favorable
or unfavorable. Entity A should recognize an intangible asset separate from goodwill for the favorable
portion of the operating lease relative to market terms.

The acquisition date

The percentage of voting equity interests acquired

IV. The primary reasons for the business combination and a description of how the acquirer obtained control
of the acquiree.
None of the above.
Select the correct answer.

These disclosures shall be done for each business combination that occurred in the reporting period only, but
are not required for business combinations that occurred after the end of the reporting period.
C.
These disclosures shall be done for each material business combination that occurred both in the reporting
period after the end of the reporting period, but before the financial statements are authorized for issue. The
information is disclosed in aggregate for individually immaterial business combinations.

Probably a joint operation

D.
These disclosures re optional for each business combination that occurred both in the reporting period and
after the end of the reporting period, but before the financial statements are authorized for issue.

Probably a joint venture

These disclosures shall be done for each business combinations that occurred both in the reporting period
and after the end of the reporting period, but before the financial statements are authorized for issue.

25. HFR Ltd. Has a 12% holding in the shares of ABC Ltd. In addition, HFR has, through one of its
subsidiaries, an option to buy 13% more shares in ABC. Although the exercise price is in the money, HFR
does not have the intention and the financial ability to exercise this option.

24. Colorado has a 10% holding in Darweesh Establishment. Each of the seven other investors in Darweesh
holds between 10% and 20% of its equity. The Darweesh Establishment owns a fleet of ships that is used
but all investors to transport their own products around the world. The operation of Darweesh and of its fleet
is the subject of a detailed agreement among all the investors. Colorado has a director on the board of
Darweesh but, in accordance with the agreement, the entity is directed by one of the other investors.

How should this investment be classified?

A.
A subsidiary

How should this investment be classified?

B.
An Associate

A.
A subsidiary

C.

B.

A joint arrangement

An associate

D.
None of these categories

True
False
Which of the following statements about accounting is true or false?

True
C.

The Romans kept elaborate financial records and standardized systems for purposes such as the
accountability of provincial governors but they did not develop any system of commercial bookkeeping.

True
True

The first published work on double-entry bookkeeping is presumed to be a book on arithmetic written by a
businessman which included a chapter the subject.

True
D.

III.
The phenomenon of globalization gave rise to the complexity of international business activities
and led to the mandatory uniform application of international financial reporting standards by all countries

True
False
False

Statement I
Statement II
Statement III

Choose the incorrect statement about generally accepted accounting principles (GAAP):

A.

They are not rigid laws as they are subject to amendment from time to time
Firms that do not comply with GAAP may suffer negative economic consequences

True
True
False
B.

Generally accepted accounting principles and regulatory accounting principles are both enforced by the
Bureau of Internal Revenue.

The Philippine Financial Reporting Standards that constitute GAAP in the Philippines are not included in
the scope of the Conceptual Framework

Philippine Accounting Principles Committee


Standing Interpretations Committee

Philippine Interpretations Committee


The body established by the Financial Reporting Standards Council as its support group tasked to study and
deliberate on controversial issues affecting Philippine accounting practice is

Which of the following statements on the scope of authority of the PFRSs and the Conceptual Framework is
false?

A. The Philippine Financial Reporting Standards in the Philippines include the PFRSs, the PASs, and the
Philippine Interpretations

B. The Conceptual Framework has the highest level of authority in financial accounting and reporting
practice in the Philippines

C. In the absence of a Standard or an Interpretation that specifically applies to a transaction, management


should consider the applicability of the Conceptual Framework in developing and applying an accounting
policy that results in information that is relevant and reliable

International Financial Reporting Standards Committee

The debit credit convention must be used.

For every increase in asset, there must be an increase in liability or revenue.

Events and transactions are analyzed and recorded using the principle of duality and equality

Which of the following statements about financial accounting is incorrect?

General purpose financial statements must be prepared by a certified public accountant.


D. The Philippine Financial Accounting Standards applies to all financial reporting enterprises in the Philippines

Financial accounting is a social science that can be influenced by changes in legal, political, social, and
business environments.
Which of the following best describes the double-entry concept?
The preparation of general-purpose financial statements is usually based on the assumption that the primary
users of information are external decision-makers.
Only two accounts are affected by each recording of accountable event.

The general objective of financial accounting is to provide information about the financial position, performance,
and cash flows of an entity that is useful in the making of economic decisions

Which of the following statements is incorrect?

All of the accounts of a specific business enterprise are referred to as a ledger.


Which of the following statements will not pertain to an asset?

Every adjusting entry affects both a balance sheet and an income statement
Transactions often overlap accounting periods

It can command a price


It should be exclusively owned by an economic entity

It is an economic good
It is limited in supply

If an entity uses the modified cash basis of accounting, the modifications from the accrual basis should have
substantial support which requires that

The financial statements have only minor modifications from GAAP.

The modifications must be the same as those required by regulatory body.


The modifications must be the same as GAAP and not illogical.

No modifications are allowed.

The fact that an expense is recognized on the income statement indicates that an equivalent outlay of cash
has been made in the same period.

All economic entities or enterprises in the Philippines are required to follow full Philippine

Financial Reporting
Standards (PFRSs)
Which of the following entities are required to apply the PFRS for SMEs in Philippine financial reporting?

and Philippine Accounting Standards (PAS) in the

Exelsior Enterprises with total assets of P 347M and total liabilities of P 284 M
preparation of financial statements
ABC Noverlty Shoppe with total assets of P 30 M and total liabilities of P5 M and submits financial
statements to creditors, suppliers, and regulatory bodies.

ABE Insurance Company with total assets of P 340 M and total liabilities of P 195 M

Rural Bank of Capistrano, Tarlac, with total assets of P 300 M and total liabilities of P 120 M

IV.
There are a few instances when some provisions of the PASs and PFRSs differ from the IASs and

Which of the following statements about Philippine GAAP is (are) false?

the IFRSs

I. Before year 2000, Philippine GAAP was largely influenced by US GAAP (FASB)

The use of revalued amounts of property and equipment was allowed in the Philippines even before

the IFRSs were adopted by the Philippine accountancy profession.

A.
I and II only

III.

B. II and III only

inventory units on hand at the end of the accounting period.


C. III and IV only

D. II, III and IV only

II. Accountants use well-defined steps in the processing and issuance of financial information III. External
auditors attest to the fairness of presentation of financial condition and operating results

IV. Accountants record the value of a purchased machinery by referring to the amount appearing on the
purchase invoice.
A. I and II
Which of the following statements does not properly describe the fact that the Accountancy Profession is a
communication profession?

B. II and IV only
C. II and
III only

Financial statements should use terminology within the level of understanding of the statement user.

D.III and IV only


39. Which of the following is an asset but not an economic resource?

Financial statements can be expressed in the Spanish or Chinese language

Financial statements, as far as possible, should show information that can be verified from documentary
evidence in order to gain the confidence of statement users

A.
Investment property

Financial statements can be expressed in any dialect of a country

C.

Deferred tax asset


Which TWO of the following is an application of the science aspect of accounting?
B.
Accountants use their judgment in the choice of the inventory cost flow to be applied to

Machinery

D.

Inventories

A.
No effect
40. Which of the following is not a characteristic of financial accounting?

No effect

A. Use of facts and estimates

No effect

C. Subjective data provided relevant

No effect

B. Primarily historical in nature

B.

D. Concerned with general and purpose reports

No effect
Increase

41. How would the declaration and subsequent issuance of a 30% stock dividend by the issuer affect each of

Decrease
No effect

the following the market value of the share exceeds the par value of the stock?
C.
Increase
No effect
Decrease
Common Stock

Decrease

Additional paid-in capital


Retained Earnings

D.

Stockholders Equity

Increase
No effect
Decrease

No effect

B.
No effect

42. How would a stock split affect each of the following?

No effect
No effect

C.
Asset

No effect

Total stockholders equity

No effect

Additional paid in capital

Increase

A.
Increase
Increase

D.

No effect

Decrease
Decrease
Decrease

Future deductible amounts include expenses and losses that are included in the tax return before they are
recognized for accounting purposes.
43. Araya Commercial obtained an interest-free loan of P 500,000 and a cash grant of P 400,000 from the
City of Albay. The cash grant is a partial subsidy for the annual salary of five of its employees for the year
2014 . How should Araya Commercial account for these events?

An entity operates a chemical plant and has a published policy of making good any damage caused to the
environment. Which of the following would give rise to a provision?

Only the cash grant should be taken to Equity, as additional paid-in capital

It is likely that a chemical spill which would result to pay penalty will occur next year

Only the cash grant should be recognized as income

Research suggests that there is a possibility that the entitys action may cause damage to surrounding
wildlife

Both the cash grant and the interest-free loan should be taken to Equity, as additional paid-in capital

Both the cash grant and the interest-free loan should be recognized as income

Which of the following statements is true?

Temporary differences occur because accounting standards and income tax laws differ as to when they
recognize assets, liabilities, owners equity, revenues, gains, expenses and losses

The term future taxable amount relates to a deferred tax asset

Future taxable amounts include revenues and gains that are included in the tax return before they are
recognized for accounting purposes.

The government has a plan for a law requiring all environment damage to be rectified

When the fair value of plan assets exceeds the defined benefit obligation, PAS 19R

A chemical spill from a chemical plant has caused harm to the surrounding wildlife
Requires recognition of an asset.

A lessee when accounting for a lease incentive received under an operating lease treats is as a:

Requires recognition of an asset if the excess fair value of plan assets exceeds the corridor amount

increase in rental income over the lease term;

Recommends but does not require recognition of an asset

increase in rental expense over the lease term;


Does not permit recognition of an asset
reduction in rental expense over the lease term;

reduction in rental income over the lease term

Which of the following is not true regarding a defined contribution plan?

An appropriate funding pattern must be established to ensure that enough money will be available at
retirement to meet the benefits promised.

With respect to the computation of earnings per share, which of the following would be most indicative of a
simple capital structure?

Common stock, preferred stock, and convertible securities outstanding

Earnings derived from one primary line of the business


Ownership interests consisting solely common stock
Equity represented materially by liquid asset

An appropriate funding pattern must be established to ensure that enough money will be available at
retirement to meet the benefits promised
Which of the following statements about government funds is true or false?
The expense recognized each period as equal to the cash contribution using current salary levels

Vested benefits require a certain minimum number of years of service and to which an employee is entitled to
receive when he resigns and are not contingent upon additional service under the plan

Statement 1: Government funds include public moneys of every sort and other resources pertaining to any
agency of the government.

Statement 2: Government funds or property shall be spent or used solely for public purpose
First statement is false; second statement is true
Both statements are true

Both statements are false

An entity capitalizes borrowing costs as part of the cost of a qualifying asset on the commencement date.
The commencement date for capitalization is the date when entity first meets all of the following EXCEPT:

First statements is true; second statement is false


A. It undertakes activities that are necessary to prepare the asset for its intended use or sale.
Upon receipt of progress payments and government grants related to the asset.
It incurs borrowing costs.
It incurs expenditures for the asset.

ABC has an investment, Entity K, which it controls through holding the majority equity interest and because
it has the ability to appoint the majority of the executive directors of the board of directors of Entity K.
Which of the following standards shall ABC apply to account for its investment?

PFRS 12 Disclosure of Interests in Other Entities


If the property comprise a portion that is held to earn rentals or for capital appreciation and another portion
that is held for use in the production or supply of goods or services or for administrative purposes. If the
portions could not be sold separately, the entity shall:

PAS 28 (Revised) Investments in Associates and Joint Ventures

Recognize both portions as Property, Plant and Equipment (PPE) only.

PFRS 10 Consolidated Financial Statements

Recognize both as Investment property only if the other portion is insignificant in nature.

PFRS 11 Joint Arrangements

Recognize the whole property either as Investment Property or PPE depending on which portion has the
larger Fair Value.

I, J and K enter into an agreement and set up a joint steering committee. Each party has one vote and two
votes are needed to carry a motion. K has ultimate decision-making authority in cases where the joint
steering committee cannot reach an agreement. For example, if no combination of I, J and K can agree with
each other, K would have the ultimate decision making authority. Which of the following statement is/are
true applying principles of PFRS 11 Joint Arrangements?

Recognize both portions as Investment Property only.

56. IFRS 4 does not apply to:


There is joint control.

K has control because of his decision-making authority.

Financial instruments issued with a discretionary participation features

I and J could agree together, without needing the agreement of K.


Financial guarantee contracts
a. I and III only
b. II only

Product Warranties Issued directly by manufacturer, dealer or retailer.

c.

IV.

Insurance Contracts

III only
d. All are false

Direct insurance contracts in which the entity is the policy holder.

55. Cash paid to acquire non-controlling interests shall be presented as cash used in ____________ activities
in the consolidated statement of cash flows.

I and V

I and IV
Operating
Investing
Financing

II , III and V

Either investing or financing


II , III , IV and V

To comply with Par 23 of IFRS 6: Exploration and Evaluation of Mineral Resources the entity shall disclose:

Substantive Expenditure on exploration

The period for which the entity has the right to explore in the specific area has expired during the period or
will expire in the near future, and is not expected to be renewed

The amounts of assets, liabilities, income and expense and operating and investing cash flows arising from
the exploration for and evaluation of mineral resources.

All of the above.

Agriculture: Bearer Plants (Amendments to IAS 16 and IAS 41) changes the accounting policy requirements
for biological assets that meet the definition of bearer plants. The amendment defines a bearer plant as
living plant that: (Select the true statement/s)

Statement I: is used in the production or supply of agricultural produce Statement II: is expected to bear
produce for more than one period

Statement III: has a remote likelihood of being sold as agricultural produce, even for incidental scrap sales

a. I, II and III
An example of notional amount is

b.
I and II only

Number of barrels of oil


Interest rates

c. II and III only


d. I and III only

Currency swaps
60. Statement 1: Under PFRS for SMEs, an entity is required to recognize all actuarial gains and loss in
profit or loss in all its defined benefit plans.
Stock prices
Statement 2: Under PFRS 13, Fair Value Measurement, active market is defined as the market with the
greatest volume and level of activity for the asset or liability.

Both statements are true.


Both statements are false.

Statement 1 is true; statement 2 is false.


Statement 1 is false; statement 2 is true.

61. Statement 1: Deferred tax should be measured at the tax rates that are expected to apply in the period
when the deferred tax asset or liability is recognized.

Statement 2: The acquirer shall measure at the acquisition date components of non-controlling interests in
the acquiree that are present ownership interests and entitle their holders to a proportionate share of the
entity's net assets in the event of liquidation at either:

fair value; or

the present ownership instruments' proportionate share in the recognized amounts of the acquiree's

IFRIC 4, Determining whether an Arrangement contains a Lease does not apply to:

Outsourcing arrangements
Public-to-private service concession arrangements

Arrangements in the telecommunications industry

Take-or-pay and similar contracts

identifiable net assets.

Once the acquirer has chosen to measure the non-controlling interests in the acquiree at (a) or (b), the acquirer
can only measure the non-controlling interests in the acquiree as such for all subsequent business combinations.

If an entity is required by the standard to separate an embedded derivative from its host contract, but is
unable to measure the embedded derivative separately either at acquisition or at the end of a subsequent
financial reporting period. The entity shall:

Both statements are true.

Designate the embedded derivative only as at Fair value through profit or loss.
Designate the entire hybrid contract as at Fair value through profit or loss.

Both statements are false.

Designate the host contract only as at Other Comprehensive Income.


Designate the entire hybrid contract as at Other Comprehensive Income.

Statement 1 is true; statement 2 is false.


Which is true?
Statement 1 is false; statement 2 is true.
Substantial modification of the terms of an existing financial liability or a part of it shall be accounted for as
an extinguishment of the original financial liability and the recognition of a new

financial liability.

An exchange between an existing borrower and lender of debt instruments with substantially different
terms shall not be accounted as an extinguishment of the original financial liability.

Entity shall remove a financial liability or a part of a financial liability from its statement of financial
position when, and only when, it is extinguished (when the obligation specified in the contract is
discharged or cancelled or expires).

However, if agreement cannot be reached between A and B, B has the deciding vote. The decisions made in
Committee No. 2 are binding on A and B and they must vote accordingly in Committee No. 1.

Who among A, B, C and D have joint control applying PFRS 11 Joint Arrangements?

a. A, B, C and D
b. B, C and D only
c. C and D only

II only

d. None of them

II and III

I and III

66. An entity shall determine whether a transaction or other event is a business combination by applying the
definition in PFRS 3, Business Combinations, which requires that the assets acquired and liabilities assumed
constitute a/an _________. If the assets acquired are not a/an _________, the reporting entity shall account
for the transaction or other event as a/an ___________.

All of the statements are correct.


operating segment, operating segment, business combination
A, B, C and D enter into agreement No. 1 to undertake oil and gas exploration. Committee No. 1 is formed
to direct all activities related to the activity including review and approval of annual budgets and operating
policies. Committee No. 1 consists of four members nominated by A, B, C and D. The decisions of
Committee No. 1 require the unanimous vote of the members.

operating segment, business, asset acquisition

business, business, asset acquisition


business, operating segment, asset acquisition

A and B enter into agreement No. 2, which establishes Committee No. 2 to coordinate cooperation between
A and B, with respect to the same oil and gas exploration activity. A and B each appoint one representative
to Committee No. 2. Committee No. 2 has the power to make decisions to be submitted for approval to
Committee No. 1. Any matter to be decided by Committee No. 2 requires the consent of both parties.

ABC Company is an associate of XYZ Company. Which is/are FALSE?

XYZ Company can lose significant influence over ABC Company as a result of a contractual agreement.

Value in use is the present value of the estimated future cash flows expected to be generated by ABC
Company, including cash flow from operations of the investee and the proceeds from the ultimate disposal
of the investment.

When ABC Company has outstanding cumulative preference shares, the XYZ Company shall compute its
share of earnings or losses after deducting the preference dividends, whether or not such dividends are
declared.

In PFRS 9 Financial Instruments, if the entity transfers substantially all the risks and rewards of
ownership of the financial asset, the entity

shall derecognize the financial asset

If the investment of XYZ to ABC Company is achieved in stages, it is covered by PAS 28.

shall derecognize the financial asset and recognize separately as assets or liabilities any rights and
obligations created or retained in the transfer

Which of the following statements is (are) true regarding impairment loss?

shall continue to recognize the financial asset

All property and equipment items should be tested for impairment annually.

shall continue to recognize the financial asset but also recognize as liabilities any rights created or retained
in the transfer

The impairment loss should be allocated, first, to corporate assets, then allocated to the individual assets
comprising the cash-generating unit, on a pro-rata basis based on their carrying amounts, and then, to
goodwill.

Which of the following statements is/are true regarding the amendments in PAS 41 and PAS 16 that will be
effective in January 1, 2016?

To ensure uniformity of practice, the formula used in computing impairment loss is the same for all assets.

Bearer biological assets will be accounted for as property, plant and equipment, separate from any related
produce.

An impairment loss of an asset carried at historical cost should always be taken to the income statement.

69. Purchases without any bidding is an example of:

a.

Unconscionable b. Excessive

c. Unnecessary d. Irregular

Entities will have the option to apply IAS 16s cost model or revaluation model to subsequently

measure bearer biological assets.

Entities following either model will need to determine the useful life of the bearer biological asset

I, III and IV only


IV only

in order to depreciate it. The useful life will need to be re-evaluated every 3 years.
IV.

Which of the following statements is/are true?

Early adoption of the new requirements is permitted.

a.

I, II and III only

b.

II, III and IV only

Demolition costs of the old building shall be considered as part of costs of site preparation mentioned under
PAS 16.17(b) and, therefore, shall capitalized as part of the new building.

If the land and building purchased in a lump sum price will be subsequently measured using the fair value
model, the land and building will be classified as two separate items under Investment Property at their
allocated cost determined using the relative fair value.

As the entity, at date of acquisition, has decided to initially use the property as owner-occupied property, the
land and building acquired in lump sum price will be classified as two separate items under Plant, Property
and Equipment measured at their allocated cost determined using the relative fair value method.

None of the above

Which of the following statements is/are false in relation to the annual improvements to IFRS?

Joint arrangements are outside the scope of IFRS 3, not just joint ventures.

In accounting for contingent consideration in a business combination under IFRS 3 Business


Combinations, contingent consideration can be measured at fair value through other

comprehensive income.

Short-term receivables and payables with no stated interest rates must be held at invoice amounts under
IFRS 13 Fair Value Measurement.

Hedge accounting

Fair value accounting for investment property


IV.

A management entity an entity that provides key management personnel services is not a

Estimate made under previous GAAP

related party subject to the related party disclosures under IAS 24.
Financial assets and financial liabilities derecognized prior to January 1, 2001
I, II and III only

II, III and IV only

Which of the following statements is/are false about the changes in PAS 16 Property, Plant and
Equipment and PAS 38 Intangible Assets?

I, III and IV only


IV only

Which of the following does not qualify for exemption under PFRS 1 for purposes of retrospective
application?

adjusted to equal the difference between the gross carrying amount and the carrying amount of the asset
after taking into account accumulated impairment losses

When an item of PPE or Intangible Asset is revalued, the carrying amount of that asset is adjusted to the revalued
amount. This should be done by adjusting the gross carrying amount in a manner that is consistent with the
change in the gross carrying amount of the asset so that revaluation of the carrying amount of the asset. For
example, the gross carrying amount may be restated by reference to observable market data or it may be restated
proportionately to the change in the carrying amount. The accumulated depreciation at the date of the revaluation
is

I and II

None of the above


When an item of PPE or Intangible Asset is revalued, the carrying amount of that asset may be adjusted to
the revalued amount by eliminating the accumulated depreciation against the gross carrying amount of the
asset.

The 2014 new chart of accounts was based on:


a. NGAS

I only
II only

b. IAS c. IFRS d. IPSAS

77. PACMan Company signs a contract with a licensor for the exclusive rights to broadcast matches in a
long-established sporting competition covering the whole season for a number of years. The entity is
required to pay agreed amounts at the start of each season, with the rights to that season and future seasons
reverting to the licensor if payment is not made on time. PACMan concludes that an obligation does not
exist until the beginning of each season for the amount payable to secure rights for that season.

In addition, PACMan Company acquires a basketball team. A critical factor in the Companys decision to acquire
the team was the reputation of its players, many of whom are regularly selected to play for their country. A player
cannot play for a team unless he is registered with the relevant basketball authority. It is customary to see
exchange transactions involving players' registrations. The payment to a player's previous team in connection
with the transfer of the player's registration enables the acquiring team to negotiate a playing contract with the
player that covers a number of seasons and prevents other teams from using that player's services.

Which of the following statements is/are true applying principles of IAS 38 Intangible Assets in relation to
the acquisition of the basketball team?

The amounts paid for the transfer of the player correspond to the acquisition of a contractual right.

As it results from a contractual right, it is identifiable.

The cost in this case is reliably measurable, being the price agreed in the contract with other basketball
team.

IV.

The item does not meet the definition of an intangible asset since no future economic benefits

are expected from this acquisition.

I, II and III only


II, III and IV only

I, III and IV only


IV only

Which of the following standards may not be applied in accounting for ANIMALS in zoo (or Game Park)
that does not have an active breeding program and rarely sells any animals or animal products and
BACTERIA in the pharmaceutical industry that involves development of a culture

PAS 2

PAS 16

b. COA
c.
GSIS

PAS 36
IV.

PAS 41

I, II and III only

d. BIR

The weighted average inventory costing method is particularly suitable to inventory when:

I and II only
II only

dissimilar products are stored in separate locations;

IV only
the entity carries stocks of raw materials, work-in-progress and finished goods;
The IASB tentatively decided that the mandatory effective date of IFRS 9 Financial Instruments will be
for annual periods beginning on or after __________________.

January 1, 2017

goods have distinct use-by dates and the goods produced first must be sold earliest

homogeneous products are mixed together

January 1, 2018
Inventory estimates will be required for the following except
January 1, 2015
when interim financial statements are prepared
January 1, 2016
when inventory is destroyed by typhoon or lahar flow
All of the following are national government agencies except:
as proof of reasonable accuracy of the physical inventory
a. PUP

in the determination of the ending inventory to be shown on the balance sheet at year end.

A. Purchase returns

B. Mark-up, net C. Mark-down, net

D. All of these

When an inventory costing formula is changed, the change is required to be applied:

85. The following assets are recognized upon initial measurement on the basis of fair value rather than historical

prospectively and the adjustment taken through the current profit or loss;

cost except

retrospectively and the adjustment taken through the opening balance of accumulated profits;
A. Investment property
prospectively and the current period adjustment recognized directly in equity;
retrospectively and the adjustment recognized as an extraordinary gain or loss.

B.
Held-for-trading securities
C. Biological asset

According to PAS 2 Inventories, which of the following will be included in the computation of the cost
ratio when estimating inventories by the average retail method?

86. The amortization of premium over the life of the bond is an adjustment of interest income in the
investors books

D.
Non-monetary asset received through government grant

At balance sheet date, Monica Company was awaiting the final details of a court case for damages awarded in its
favor. The amount and probable receipt of damages is unknown and will not be decided until the court sits again
in several months time. How is this event dealt with in the preparation of the financial statements?

do not recognize or disclose in the financial statements as the possibility of receiving damages is remote;
A. up
B. down
recognize as an asset in the financial statements as the receipt of damages is probable;
C. Steady
D. Cannot be determined

disclose in the notes to the financial statements as it is possible that the entity will receive the damages and
the court decision is out of its control;

statement has indicated to other parties that it will accept certain responsibilities, it incurs a constructive
obligation

recognize as a deferred asset in the balance sheet and re-classify as a non-current asset when the court
decision is known.

A contingent asset should be recognized in the books of account if it is probable that economic

resources will flow to the enterprise.


Mikey Inc. is facing a lawsuit for product liability damages which remains unsettled on balance sheet date,
December 31, 2014. Company lawyers estimate a probable loss amounting to P 1,000,000. Mikeys
insurance adjuster however, has opined that recovery from the insurance company amounting to P 700,000
is virtually certain. Under PAS 37, how should these situations be presented in the financial statements, Dec.
31, 2013?

A. Only I is true B. Only II is trueC. I and II are true

D. II and III are true

Which of the following situations will require disclosure as a related party?

Contingent Loss of P1,000,000; Contingent Liability of P 1,000,000

In consolidated financial statements in respect to intra-group transactions

Loss, net of gain, P300,000; Liability, net of Asset of P 300,000

In related party relationships where control exists, irrespective of whether there have been

Loss, net of gain, P 300,000; Asset, P 700,000; Liability, P 1,000,000

transactions

Loss, P 1.000,000; Liability, P1,000,000; Contingent Asset, P 700,000; Contingent Liability, P1,000,000

In financial statements of state-controlled enterprises of transactions with other state-controlled enterprises

Which of the following statements is (are) true?

In parent financial statements when they are made available or published with the consolidated financial
statements

between related parties

A legal obligation is one that arises only from legislation


When an enterprise, by an established pattern of past practice, or a sufficiently specific current

Disclosure of related-party transactions is required by GAAP because A. They do not commonly occur in
the normal course of business

They cannot be presumed to be carried out on an arms-length basis and thus, the enterprises Financial
statements are not complete and reliable without such disclosures

Not all items included in cash constitute legal tender

Cash should be valued at fair value


They usually have a greater material effect on financial statements than transactions between unrelated
parties
Compensating cash balance that are legally restricted for the payment of a current liability can be shown as
part of Cash and Cash Equivalent provided the restriction is disclosed.
They usually involve irregularities

On October 1, 2013, Bona Company contracted to buy foreign goods requiring payment in dollars one

month after their receipt at Novas factory. Title to the goods passed on December 28, 2013. The goods were
still in transit on December 31, 2013. Exchange rates of the peso to the dollar were P 68. P 76 and P 80 on
Oct. 1, Dec. 28, and Dec. 31, respectively. According to PAS 1, Nova should account for the exchange rate
fluctuation in 2013 as

If a bank or financial institution holding funds of a reporting entity is in bankruptcy or financial difficulty
such cash should be written down to estimated realizable value if the amount is lower than face value

Which of the following statements pertaining to PAS 7, Statement of Cash Flows is (are) true?

In a statement of cash flows using the indirect approach for operating activities an increase in inventories
should be presented as a deduction from net income.

A loss included in net income from operating activities


In a Statement of Cash Flows, banks and financial institutions are allowed to report their receipts and
disbursement transactions at net,
A loss included in net income after operating activities but before net income from ordinary activities

An extraordinary loss

Non cash financing and investing activities need not be reported in the financial statements, whether on
the face or in the notes thereto

A gain included in net income after operating activities but before net income from ordinary activities.

IV.
In a statement of Cash Flows using the indirect approach, decreases in cash equivalents should

Which of the following statements regarding Cash and Cash equivalents is false?
be presented as addition to net inome

A. I

a maintenance contract on the building for a period of five years. Under PAS 11, how should the two
contracts be accounted for?

and II only
B. I, III, and IV only

Treat the building contract under the cost recovery method and the maintenance contract under the
percentage of completion method.

C. I II and IV only

Combined and treated as a single contract

D. I, II, III, IV

Segregated and considered two separate contracts.

95. AG&P, a construction entity entered into two contracts with LEGASPI MALL, which were signed and
negotiated as a single package: (1) a contract to build a Shopping Mall over a period of three years, and (2)

Recognize both contracts under the completed production method

For entities wanting to use the cost model of accounting, the revaluation of a subsidiarys assets would be
undertaken in the:

subsidiarys records;

parent entitys records;


consolidation worksheet;

notes to the consolidated financial statements.

Which of the following government sector got the biggest slice of the 2014 budget:
a.
Social Services
b. Defense
c. Economic Services d. General
Public

Services

98. The following Cash account tittles are included in the trial balance of a national government agency, except

a. Petty cash
b.
Cash-in Vault
c. Cash-Collecting
d. Cash-MDS,

Officer
Regular

In a business combination the revaluation of non-current assets in the records of the subsidiary, means that the
subsidiary has effectively adopted the:

parent-entity model of consolidation;

proprietary model of accounting;

cost model of accounting;

revaluation model of accounting.

What is the best cost accumulation procedure to use when many batches, each differing as to product
specification, are produced?

A. Job order

B. Process

C. Actual

D. Standard