CONCEPTUAL FRAMEWORK AND ACCOUNTING STANDARDS

ANSWERS:

PFRS 1 – FIRST-TIME ADOPTION OF PFRS

PROBLEM 1 PROBLEM 2
1. D 1. E 6. B
2. C 2. C 7. B
3. C 3. C 8. D
4. C 4. B 9. A
5. B 5. D 10. A
Solution: (9)

PFRS principle: Advertising costs are expensed in the period in which

they as incurred, i.e., when the advertisement has been made known
to the public.

Application: derecognize the deferred advertising costs and charge

then directly to retained earnings.

PFRS 2 – SHARE-BASED PAYMENT

PROBLEM 1 PROBLEM 2
1. D 1. C (600 X 100 X100) X 94% X 1/3 = 1,900,000
2. D 2. C (600 X 100 X100) X 94% X 2/3 =
3,760,000 – 1,900,000 = 1,860,000

3. B 3. C ( 600 X 100 X 100 ) X 95% X 3/3 =

5,700,000 – 3,760,000 = 1,940,000

PFRS 3 – BUSINESS COMBINATIONS

PROBLEM 1 PROBLEM 2

1. B 1. B
2. D Fair value of identified net assets 2,950,000
3. D Multiply by: non-controlling interest 25%
NCI’s proportionate share 737,500

Consideration transferred 2,500,000

NCI in the acquire 737,500
Total 3,237,500
Less: Fair value of identified
Net assets acquired 2,950,000
Goodwill 287,500
The 250,000 transaction costs are expensed.
Acquisition related costs do not affect the
measurement of goodwill.
PFRS 5 – NON-CURRENT ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS
PROBLEM 1 PROBLEM 2
1. C 1. C
2. A 2. D
3. D 3. C
4. C 4. B
5. B 5. D