PAS 24 & PAS 34

An interim financial report contains;

• Either a complete set or condensed set of financial statements.

Publicly traded entities are encouraged to provide interim financial reports;

• At least at the end of the half year and within 60 days of the end of the interim period.

The minimum disclosures about a related party transaction include all of the following, except;

• Nature of the relationship.

Entity A is the parent company of Entity B. Which of the following is required to be disclosed in the
group's (Entity A and B's) consolidated financial statements?

• All of these

For external reporting purposes, it is appropriate to use estimated gross profit rate to determine the
cost of goods sold for;

• Interim reporting.

Which is not a required minimum related party disclosure?

• The amount of similar transaction with unrelated parties to establish that comparable related party
transactions have been entered into at arm's length.

Which basis financial statements are prepared as a minimum for interim financial reporting?

• Statement of financial position, statement of comprehensive income, statement of cash flows and
statement of changes in equity.

According to PAS 24, related party disclosures are necessary;

• To indicate the possibility that an entity's financial position and performance might have been affected
by the existence of such relationship.

Which of the following are not related parties?

• Two co-ventures of a common joint venture business

Which is not a mandated related party disclosure?

• Names of all the associates that an entity has dealt with during the year.

Conceptually, interim financial statements can be described as emphasizing;

• Timeliness over reliability

Entities should disclose all of the following in interim financial report, except;

• Events after the end of reporting period.

Unrelated parties include all of the following except;

 • Key management personnel

What is overriding consideration when determining the existence of a related party relationship?

• The ability of one party to affect decisions of another party regarding relevant activities through the
existence of control, joint control or significant influence.

Advertising costs incurred shall be deferred to provide an appropriate expense in each period for;

• Neither interim reporting nor year-end reporting.

There is a presumption that anyone reading interim financial reports shall;

• Have access to the most recent annual report.

Close family members of an individual include all of the following, except;

• Brothers and sisters of the individual.

Mr. Y and Ms. Z share joint control over Ventures, Inc. Which of the following are related parties?

• Ventures Inc. and Mr. Y

Interim financial reports shall be published;

• Whenever the entity wishes

Interim financial statements are usually presented on a;
• Quarterly basis
Which statement is true regarding interim financial statements?
• If interim financial statements are presented, four basic financial statements are required.
Which of the following best indicates that two parties are related for purposes of PAS 24?
• One party has the ability to affect the financial and operating decisions of the other party through
control, significant influence or joint control.
For interim reporting, an inventory loss from a market decline in the second quarter shall be recognized
as a loss;
• In the second quarter.
Related parties include all of the following, except'
• Two entities that have a common director.
An entity owns a number of farms that harvest produce seasonally. Approximately 80% of the sales are
in the period August to October. Because the business is seasonal, what does the standard suggest?
• Disclosure of financial information for the latest and comparative 12-month period in addition to the
interim report.
If an entity does not prepare interim financial reports;
• The year-end financial statements' compliance with IFRS is not affected.

All of the following fall within the definition of an entity's related party, except;
 • The partner of a key manager is a major supplier of the entity.
Interim financial reporting should be viewed as;
• As reporting for an integral part of an annual period.
Which of the following is not a required disclosure under PAS 24?
• Related party transactions (in the consolidated financial statements)
An entity that entered into a related party transaction would be required to disclose all, except;

• Nature of any future transaction planned between the parties and the terms involved.

PAS 16 & PAS 23

Borrowing costs are defined as;

• Interest and other costs that an entity incurs in connection with borrowing of funds.

Property, plant and equipment are defined as;

• Tangible assets held for use in the production or supply of goods or services, for rental to others, or for
administrative purposes and expected to be used during more than one reporting period.

If the qualifying asset is financed by specific borrowing, the capitalizable borrowing cost is equal to;

• Actual borrowing cost incurred up to completion of asset minus any investment income from the
temporary investment of the borrowing

Which is not a disclosure requirement in relation to borrowing cost?

• Segregation of qualifying asset from other assets.

According to PAS 23, borrowing costs that do not directly relate to the acquisition, construction or
production of a qualifying assets are;

• Expensed

Interest revenue earned on specific borrowing for qualifying asset;

• Reduces the cost of the qualifying asset.

The period of time during which interest must be capitalized ends when;

• The asset is substantially complete and ready for the intended use

Which cost should be expense immediately?

• All of these are expense immediately.

PAS 23 does not require which of the following disclosures?

• Separate presentation of qualifying assets from other assets either on the face of the statement of
financial position or in the notes.
In which of the following instances is the capitalization of borrowing costs under PAS 23 would most
likely be suspended?

• The construction of a building is discontinued because it is condemned by the government. The

resumption of development is uncertain.

Borrowing costs can be capitalized as cost of the asset when;

• The asset is a qualifying asset and it is probable that the borrowing costs will result in future economic
benefits to the entity but the costs can be measured reliably.

The carrying amount of property, plant and equipment shall be derecognized;

• On disposal and when no future economic benefits are expected from the use of the asset.

Which cost should be expense immediately?

• All of these are expense immediately.

Which of the following is a qualifying asset?

• A second-hand heavy machinery that takes 2 years to refurbish and customize for its intended use.

If an entity is able to determine reliably the fair value of the asset received and the fair value of the
asset given in an exchange transaction, the cost is measured at;

• Fair Value of asset given.

Which of the following assets could be treated as qualifying asset for the purpose of capitalizing
borrowing costs?

• Investment property

Capitalization of borrowing cost;

• Shall be suspended only during extended period of delay in which active development is delayed.

An entity starts the capitalization of borrowing costs to the cost of a qualifying asset when;

• All of the above conditions are met.

Which of the following costs may not be eligible for capitalization as borrowing cost?

• Imputed cost of equity.

The cost of property, plant and equipment comprises all of the following except;

• Initial estimate of the cost of dismantling the asset for which the entity has no present obligation.

What valuation model should an entity use to measure property, plant and equipment?

• The cost model or the revaluation model.

If the qualifying asset is financed by general borrowing, the capitalizable borrowing cost is equal to;

• Average expenditures on the asset multiplied by a capitalization rate or actual borrowing cost incurred,
whichever is lower.
On January 1, 20x1, Entity A obtained a 12%, P6,000,000 loan, specifically to finance the construction of
a building. The proceeds of the loan were temporarily invested and earned interest income of
P180,000. The construction was completed on December 31, 20x1. How much borrowing costs are
capitalized to the cost of the constructed building?

• 540,000

Which statement about the capitalization of borrowing cost as part of the cost of a qualifying asset is
true?

• If funds come from general borrowings, the amount to be capitalized is based on the weighted average
amount of expenditures.

According to PAS 23, borrowing costs are capitalized when;

• They relate directly to the acquisition, construction or production of a qualifying asset.

Which of the following is not a characteristic of property, plant and equipment?

• The property, plant and equipment are subject to depreciation.

Entities are encouraged to disclose all of the following in relation to property, plant and equipment,
except;

• The fair value of property, plant and equipment that is not materially different from carrying amount
when the cost model is used.

Costs directly attributable to bring the asset to the location and condition for the intended use include
all, except;

• Cost of employee benefit not arising directly from the acquisition of property, plant and equipment.

Which of the following is not a condition that must be satisfied before interest capitalization can begin
on a qualifying asset?

• The interest rate is equal to or greater than the cost of capital.

Which of the following is a qualifying asset?

• An application software (intangible asset) that takes 3 years to develop.