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Rfjpia-R12: 2 Annual Regional Convention 2008 Quiz Bee - Pa1 & Toa
Rfjpia-R12: 2 Annual Regional Convention 2008 Quiz Bee - Pa1 & Toa
ND
2 Annual Regional Convention 2008
QUIZ BEE – PA1 & TOA
AVERAGE ROUND
Grant (a) – was paid to give financial assistance for start-up costs already
incurred.
Grant (b) – was paid to subsidize the costs of purchasing computer software
over the five-year period. The company is almost certain to keep the facilities
operational for the next five years.
The company's accounting year end is 31 December. Are the following
statements concerning recognition of the income from the two government
grants true or false, according to IAS20 Government grants and government
assistance?
(1) Income from Grant (a) should be recognized in full on receipt in 20X8.
(2) Income from Grant (b) should be recognized in full at the end of 5 years.
6. The Coral Company accounts for non-current assets using the cost model. On
20 July 20X7 Coral classified a non-current asset as held for sale in
accordance with IFRS5 Non-current assets held for sale and discontinued
operations. At that date the asset's carrying amount was PHP14,500, its fair
value was estimated at PHP21,500 and the costs to sell at PHP1,450. The
asset was sold on 18 October 20X7 for PHP21,200. In accordance with IFRS5,
at what amount should the asset be stated in Coral's statement of financial
position at 30 September 20X7?
A PHP20,050
B PHP21,500
C PHP21,200
D PHP14,500
Question 8 - D
IFRS5 para 15 requires that a non-current asset held for sale should be
stated at the lower of (i) the carrying amount and (ii) the fair value less costs
to sell.
8. The Dipper Company operates chemical plants. Its published policies include
a commitment to making good any damage caused to the environment by its
operations. It has always honored this commitment. Which ONE of the
following scenarios relating to Dipper would give rise to an environmental
provision as defined by IAS37 Provisions, contingent liabilities and contingent
assets?
a. On past experience it is likely that a chemical spill which would result in
Dipper having to pay fines and penalties will occur in the next year
b. Recent research suggests there is a possibility that the company's actions
may damage surrounding wildlife
c. The government has outlined plans for a new law requiring all
environmental damage to be rectified
d. A chemical spill from one of the company's plants has caused harm to the
surrounding area and wildlife
Question 11 - D
The published policy creates a constructive obligation as defined by IAS37
para 10. The spill is a past event which gives rise to a present obligation and
the need for a provision under para 14.
The government plans and any chemical spill relate to future events, while the
"possible" damage to wildlife gives rise to a contingent liability which should
be disclosed.