Presentation of FS-IAS1 (after group presentation)

1 Which of the following would be a suitable accounting policy note for disclosure in the
financial statements relating to inventory?
a.Inventory is valued at cost for each separate product or item.
b.Inventory is valued at the lower of total cost and total net realisable value.
c.Inventory is valued at the higher of cost and net realisable value for each separate product
or item.
d.Inventory is valued at the lower of cost and net realisable value for each separate product or
item.

2 The financial statement which summarizes operating, investing, and financing

activities of an entity for a period of time is the
a.statement of financial position.
b.statement of cash flows.
c.income statement.
d.retained earnings statement.
3.The example of a current asset is:
a.Available-for-sale financial assets.
b.Trade receivable with payment deferred beyond 1 year.
c.Inventories with quick turnover.
d.Deferred tax asset
4.Which of the following should be reported for share capital?
a.The shares authorized
b.The shares outstanding
c.The shares issued
d.All of these choices are correct.
5.Rosalie Corporation is located in London but does business throughout Europe. The
company builds and sells equipment used in manufacturing pharmaceuticals. On
December 31, 2019, Rosalie has trading securities valued at £63,000; goodwill valued at
£450,000; prepaid insurance valued at £36,000; patents valued at £210,000; and a
customer list valued at £390,000. On Rosalie Corporation’s statement of financial
position at December 31, 2019, what amount should be reported as intangible assets?
a.£1,149,000
b.£1,050,000
c.£1,113,000
d.£660,000
6.The example of a non-current asset is:
a.Deferred tax asset
b.Government bond repayable in 3 months
c.Trade receivable
d.Inventories with long production and completion times
7.Which of the following companies is a going concern?
a.Oil and gas company operating in Egypt has just received a court order to close the factory
and stop all operations in Egypt within 1 year
b.A bank suffers in the mortgage crash and a state refuses to bail it out
c.A trading company is in serious liquidity problems and a court granted an order to repay
debt of CU 1 000 000 to a creditor immediately. The company must sell its assets in order to
settle this liability.
d.State-owned company runs out of cash and is not able to repay its liabilities and salaries on
time. According to applicable laws, the state must provide a low-interest loan to this
company.
8. IAS 1 permits to present expenses in the statement of profit or loss and other
comprehensive income in the classification
a.By function and by nature
b.By segment and by function.
c.By segment and by operations
d.By segment and by nature.

9.A manufacturing company recognized a valuation provision to inventories due to their

obsolescence. Does IAS 1 allow offsetting inventory valuation provision against
inventory balance in the statement of financial position:
a.No, because IAS 1 does not permit offsetting of assets and liabilities unless is it allowed by
another standard
b.Yes, because in this case, offsetting leads to better understanding of the financial statements
by their users
c.No, because IAS 1 states that assets and liabilities shall not be offset.
d.Yes, because IAS 1 specifically says that this situation is not offsetting.
10.A company presented its expenses in the profit or loss as follows: cost of sales,
administrative expenses, marketing expenses, distribution expenses and other expenses.
This presentation is:
a.By nature.
b.By function.
c.By operations
d.By segment.
11. What identification information does NOT need to be presented on the face of the
financial statements
a.Whether the financial statements are individual or group.
b.The presentation currency and the level of rounding.
c.Date of preparation of the financial statements.
d.Date of the end of the reporting period or the period covered by the set of financial
statements or notes
12. The occurrence that most likely would have no effect on 2019 net income is the
a.stock purchased in 2005 deemed worthless in 2019.
b.sale in 2019 of an office building contributed by a stockholder in 1970.
c.correction of an error in the financial statements of a prior period discovered subsequent to
their issuance.
d.collection in 2019 of a dividend from an investment.

13. What components shall a complete set of financial statements include?

a.Statement of financial position, income statement, statement of changes in equity, statement
of cash flows, accounting policies and notes, annual report
b.Statement of financial position, statement of profit or loss and other comprehensive income,
statement of changes in equity, statement of cash flows, accounting policies and notes.
c.Statement of financial position, statement of other comprehensive income, statement of
changes in equity, statement of cash flows, directors report
d.Statement of financial position, statement of comprehensive income, statement of changes
in equity, statement of cash flows, annual report
14. Working capital is equal to:
a.Current assets minus current liabilities.
b.Current assets plus current liabilities.
c.Current assets.
d.Current liabilities.
15. Which of the following would be a suitable accounting policy note for disclosure in
the financial statements relating to land and buildings?
a.The entity uses the same accounting policy for land and buildings as it does for intangible
assets.
b.Land and buildings are accounted for at cost, and the buildings are written off over their
expected useful life of fifty years on a straight-line basis.
c.Land and buildings are accounted for at cost and are not depreciated as the directors believe
that the market value of land and buildings will increase over time.
d.Land and buildings are accounted for at cost and are written off over their expected useful
life of fifty years on a straight-line basis.
16. The example of a current liability is
a.Deferred tax liability.
b.Provision for warranty repairs within the second year of guarantee after sale.
c.Trade payable with payment deferred beyond 1 year.
d.Long-term loan that became payable due to breach of covenants. The bank does NOT
require immediate repayment and agrees with the original repayment schedule.

17. Dividends paid to ordinary shareholders shall be presented:

Select one:
a.In the statement of other comprehensive income as a decrease in equity
b.In the statement of changes in equity as a decrease in equity.
c.In the statement of profit or loss as a financial expense.
d.In the statement of profit or loss as other operating expense.

The principal benefit of separately reporting discontinued operations and continuing

operations is to enhance:
a.Predictive ability.
b.Comprehensive reporting.
c.Consistency in reporting.
d.Intraperiod contin
18 Treasury shares should be reported as a
a.reduction of equity.
b.other asset.
c.current asset.
d.investment.
19 Which of the following is not an acceptable major asset classification?
a.Investments
b.Deferred charges
c.Current assets
d.Property, plant, and equipment
1. Which of the following is not a requirement in the financial statements under IAS 1?
a.Name of the entity b.Whether accounts cover a single entity or a group
c.Chairman’s commentary on performance d.The accounting period

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Conceptual Framework (at home)

1 The conceptual framework for financial reporting lists the qualitative characteristics
of financial statements.(i) Comparability;(ii) Verifiability;(iii) Timeliness;(iv)
Understandability;(v) Relevance;(vi) Faithful representation. Which two of the above
are not included in the enhancing qualitative characteristics listed by the conceptual
framework?
Select one:
a.(ii) and (v)
b.(i) and (vii)
c.(v) and (vi)
d.(iv) and (v)
2. Which of the following basic elements of financial statements is more associated with
the statement of financial position than the income statement?
a.Gains
b.Expenses
c.Income
d.Equity
3. Which of the following is a fundamental quality of useful accounting information?
a.Consistency
b.Comparability
c.Conservatism
d.Faithful representation

4. Which of the following measurement base(s) should be used by an entity according to

the conceptual framework for financial reporting?
a.Current cost
b.Any of the above
c.Present value
d.Historical cost

5. Which of the following is not true concerning a conceptual framework in accounting?

a.It should be a basis for standard-setting

b.It should allow practical problems to be solved more quickly by reference to it
c.It should be based on fundamental truths that are derived from the laws of nature
d.All of these answers are correct
6. What is the objective of general-purpose financial reporting?
a.to provide users with financial information that implies total freedom from error.
b.to provide companies with the option to select information that favors one set of interested
parties over another.c.to provide a metric for financial information used to determine when
the boundary between two or more entities should be disregarded and the entities considered
to be a licensing arrangement
d.to provide financial information about the reporting entity that is useful to present and
potential equity investors, lenders, and other creditors in making decisions in their capacity as
capital providers
7. Changing the method of inventory valuation should be reported in the financial
statements under what qualitative characteristic of accounting information?
a.Consistency
b.Timeliness
c.Verifiability
d.Comparability
8. Which of the following is a possible advantage of a rules-based system of financial
reporting?
a.It prevents a fire-fighting approach to the formulation of standards
b.It offers accountants more protection in the event of litigation
c.It encourages the exercise of professional judgement
d.It ensures that no standards conflict with each other

9. Which of the following accounting treatments correctly applies the principle of

faithful representation?
a.Allocating part of the sales proceeds of a motor vehicle to interest received even though it
was sold with 0% (interest free) finance
b.Recording the whole of the net proceeds from the issue of a loan note which is potentially
convertible to equity shares as debt (liability)
c.Reporting a transaction based on its legal status rather than its economic substance
d.Excluding a subsidiary from consolidation because its activities are not compatible with
those of the rest of the group
10. Which of the bodies listed below is responsible for revewing International
Accounting Standards and issuing guidance on their application?
:a.International Accounting Standards Board
b.IFRS Intepretation Committee
c.IFRS Foundation
d.IFRS Advisory Council
11.The International Accounting Standards Board’s (IASB’s) Conceptual Framework
includes all of the following except:
a.Supplementary information
b.Objective of financial reporting
c.Qualitative characteristics of accounting information
d.Elements of financial statements
12.The International Accounting Standards Board’s (IASB’s) Conceptual Framework
includes all of the following except:
a.Neutrality
b.Relevance
c.Materiality
d.Comparability
13. What is meant by comparability when discussing financial accounting information?\
a.Information has predictive or feedback value
b.Information is timely
c.Information is reasonably free from error
d.Information that is measured and reported in a similar fashion across companies
14. Company A issuing its annual financial reports within one month of the end of the
year is an example of which enhancing quality of accounting information?
a.Understandability
b.Comparability
c.Verifiability
d.Timelines

15.Comparability is identified as an enhancing qualitative characteristic in the IASB's

Conceptual Framework for Financial Reporting. Which of the following does NOT
improve comparability?

a.Applying an entity's current accounting policy to a transaction which an entity has not
engaged in before
b.Restating the financial statements of previous years when there has been a change of
accounting policy
c.Disclosing discontinued operations in financial statements
d.Prohibiting changes of accounting policy unless required by an IFRS or to give more
relevant and reliable information
16. Which of the following statements is incorrect in relation to the recognition criteria
for elements of the financial statements?
a.Liabilities are recognised when it is probable that an ouWhich of the following statements
is incorrect in relation to the recognition criteria for elements
of the financial statementstflow of resources embodying economic benefits will result from
the settlement of a present obligation and the amount at which settlement will take place can
be measured reliably.
b.Assets are recognised when it is probable that future economic benefits will flow to the
entity and the asset has a cost or value that can be measured reliably.
c.Income is recognised when an increase in future economic benefits related to a decrease in
an asset or an increase in a liability that has arisen can be measured reliably.
d.Because equity is the arithmetic difference between assets and liabilities, a separate
recognition criteria for equity is not needed in the conceptual framework.
17 Which of the following statements in relation to income is true?
a.Gains and revenue are different in nature and therefore are recognised as separate elements
of the financial statements per the conceptual framework.
b.The conceptual framework defines income as an increase in economic benefits which
results in an increase in equity.
c.Gains are normally reported separately from revenue in the Statement of profit or loss and
other comprehensive income due to the different probabilities attached to that type of income.
d.The conceptual framework requires that all items of income are reported on a net basis.
18 What is a purpose of having a conceptual framework?
a.To make sure that economic activity can be identified with a particular legal entity
b.To enable the profession to more quickly solve emerging practical problems and to provide
a foundation from which to build more useful standards
c.To segregate activities among competing companies
d.To provide comparable information for different companies
19 Which one of the following would be classified as a liability?
a.Expansion is planning to invest in new machinery and has been quoted a price of $570,000.
b.Carter has estimated the tax charge on its profits for the year just ended as $165,000.
c.Reckless purchased an investment 9 months ago for $120,000. The market for these
investments has now fallen and Reckless's investment is valued at $90,000.
d.Dexter's business manufactures a product under licence. In 12 months' time the licence
expires and Dexter will have to pay $50,000 for it to be renewed.
20 which of the following best describes the role of the IFRS Advisory Coucil?
a.To select the members of the IASB
b.To provide the IASB with the views of its members on standard setting projects
c.To promote the use of International Accounting Standards amongst its members
d.To prepare intepretations of International Accounting Standards
21 The conceptual framework for financial reporting lists the qualitative characteristics
of financial statements. (i) Comparability;(ii) Verifiability;(iii) Timeliness;(iv)
Understandability;(v) Relevance;(vi) Faithful representation. Which two of the above
are not included in the enhancing qualitative characteristics listed by the conceptual
framework?
a. (ii) and (v)
b. (v) and (vi)
c. (iv) and (v)
d. (i) and (vii)

1. How does the conceptual framework differ from an accounting standard?

a. The principles in the conceptual framework are specific in nature while accounting
standards
provide more general requirements for financial reporting
b. The principles in the conceptual framework are general concepts while accounting
standards
provide specific requirements for a particular area of financial reporting
c. The principles in the conceptual framework are designed to provide guidance and apply to
a
limited range of decisions relating to the preparation of financial reports while accounting
standards
apply to a wider range of decisions relating to the preparation of financial reports
d.The principles in the conceptual framework provide specific requirements for a particular
area of
financial reporting while accounting standards are designed to provide general guidance
2. What are the four enhancing qualitative characteristics recognised by the conceptual
framework
?
a. Materiality, comparability, timeliness, cost versus benefit
b. Relevance, materiality, reliability, comparability
c. Understandability, verifiability, timeliness, comparability
d. Understandability, cost versus benefit, verifiability, comparability

8. Comparability is identified as an enhancing qualitative characteristic in the IASB's

Conceptual
Framework for Financial Reporting. Which of the following does NOT improve
comparability?
a.Restating the financial statements of previous years when there has been a change of
accounting
policy
b.Prohibiting changes of accounting policy unless required by an IFRS or to give more
relevant and
reliable information
c.Applying an entity's current accounting policy to a transaction which an entity has not
engaged in
before
d.Disclosing discontinued operations in financial statements
9.Which of the following is NOT a purpose of the IASB’s Conceptual Framework?
a. To assist the IASB in the preparation and review of IFRS
b. To assist auditors in forming an opinion on whether financial statements comply with IFRS
c. To assist in determining the treatment of transactions not being covered by an existing
IFRS
d. To be authoritative where a specific IFRS conflicts with the Conceptual Framework
10. Which of the following is not a contributory factor towards faithful representation?
a. Completeness b. Free from error c. Neutrality d. Predictive value
12. Which of the following is not an objective of The Conceptual
Framework?
A Addresses the common needs of users of financial reports.
B Enables consistency of qualitative characteristics in financial
reports.
C Enables implementation of one universal set of accounting
standards.
D Provides guidance for transactions not addressed in existing
accounting standards

13.Which of the following statements about the primary purpose of

financial reporting is the most correct?
A Provides information that can help with decision making.
B The individual needs of users can be satisfied by tailoring of
financial reports.
C Enables accountability since managers would have to account for
resources used.
D Identifies a range of existing and potential users dependant on
financial statements to make decisions.
14. The main objective of financial reporting is:
A. To provide a process of identifying, recording and communicating
financial information
B. To provide an assurance to users that the financial information is
free from any material misstatements
C. To provide information on financial position, financial
performance and cash flow of an entity for economic decision
making and also considering stewardship and financial forecasting
D. To provide an audit report to users
15. Which of the following statements best defines a statement of
profit or loss?
a. It is a summary of assets and expenses at a specified date
b. It is a summary of cash receipts and payments made during an
accounting period
c. It is a summary of assets, liabilities and equity at a specified date
d. It is a summary of income and expenditure for an accounting
period
16. Which of the following statements best defines a statement of
financial position?
a. It is a summary of income and expenditure for an accounting
period
b. It is a summary of cash receipts and payments made during an
accounting period
c. It is a summary of assets, liabilities and equity at a specified date
d. It is a summary of assets and expenses at a specified date
17. Which one of the following statements is correct?
a. The going concern concept guarantees that a business will
continue in operational existence for at least twelve months
after the reporting date.
b. To comply with the law, the legal form of a transaction must
always be reflected in financial statements.
c. If a non-current asset initially recognised at cost is revalued,
the surplus must be credited in the statement of cash flows.
d. In times of rising prices, the use of historical cost
18. Which of the following statements defines the business entity
concept?
a. Which of the following statements defines the business entity
concept?
b. Which of the following statements defines the business entity
concept?
c. A business is never a separate legal entity from those who own or
manage that business.
d. Financial transactions are recorded and presented from the
perspective of the business, rather than from the perspective of the
owners or managers of that business.
19. Accrual accounting focuses on the:
A. Earnings process
B. Legal considerations of the business entity
C. Articulation of the financial statements
D. Cash flows of the business
20. Which of the following items is not an enhancing qualitative
characteristic of useful financial information as stated in the
IASB Framework?
a. Comparability
b. Timeliness
c. Faithful representation
d. Understandability
21. Which two of the following items are not enhancing qualitative
characteristics of useful financial information as stated in the
IASB Framework?
a. Relevance and comparability
b. Relevance and faithful representation
c. Faithful representation and understandability
d. Faithful representation and comparability
22. Which of the following statements best explains the principle of
faithful representation in relation preparation of the annual
financial statements?
a. Transactions are presented any way that is considered appropriate
b. Transactions are presented in such a way as to maximise profit for
the year
c. Transactions are presented in such a way to maximise asset values
in the statement of financial position
d. Transactions are presented to reflect their commercial substance of a
transaction rather than their legal form
23. The accounting concept which dictates that non-current assets
should be valued at cost less accumulated depreciation, rather
than at their enforced saleable value, is:
a. Understandability
b. Relevance
c. Comparability
d. Going concern
30.Which of the following statements is correct:
a.The primary objective of financial reporting is to provide
information about a firm's products and services
b.Professional Judgement is not required in accounting because of
GAAP
c.Professional Judgement is required because accountants always
have choices in methods
d.Allowing a choice of alternative accounting treatments improves the
consistency and comparability of financial statements
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Revenues-IFRS 15

1. ABC Company offers a 12-month superfast broadband and modem equipment to

customers for $300, prepaid. Modem if purchased separately will cost $40, bandwidth
package if purchased separately costs $25/month. When is the transaction price
allocated to the package providing bandwidth to the customer?
a.As soon as receive the prepayment of $300 from customer
b.Immediately record $ 40 at the beginning of the contract with the customer, the rest is
recorded over the time of the contract
c.At the end of 12 months
d.Gradual recognition over a 12-month period
2. Light Company specializes in the production of wall lamps. In order to expand
market share for existing LED products and introduce new NeoLed products, Light
Company conducts the promotion "Buy 1 get 1 free". Specifically, buy one Led bulb
worth 200,000 VND and get 1 NeoLed light for free. The usual selling price of Led lights
is 200,000 VND, while the selling price of NeoLed lights has not been determined. On
the market, the selling price of a product line similar to another company's NeoLed is
40,000 VND. In this contract, how many performance obligations under IFRS 15?
a.4
b.1
c.3
d.2
3. Which of the statements is not true in recognizing revenue in accordance with IFRS
15?
a.Transfers of goods will typically be recognized at a point in time
b.Revenue is recognized when the customer obtains control of the good or service
c.When a licence is a right to access the entity’s intellectual property throughout the licence
period, revenue is recognized over time
d.Revenue may not be recognized when not all significant risks and rewards have been
transferred to a third party
4. Sports clubs sell membership cards to customers who use services at the club with a
membership fee of $300/card. On January 1, the club sold 2,800 membership cards and
collected money. If the club makes an adjustment entry at the end of each month, the
journal entry on January 31 is:
a.Dr Unrealized revenue – Cr Membership revenue
b.Dr Membership Revenue – Cr Unrealized Revenue
c.Dr Unrealized Revenue – Cr Cash
d.Dr Cash – Cr Membership Revenue
5. Elecity sells machines to customer X worth $100,000 and provides free maintenance
after 1 year of use. Elecity commits to customers to exchange if the machine has
technical defects within 3 months from the date of purchase. Elecity estimates that
about $1,000 will be returned. The journal entry recognizes revenue at the date of sale
as:
a.Other opinion
b.Dr Cash: $100,000 / Cr Revenue: $99,000, Cr Liabilities: $1,000
c.Dr Cash: $100,000 / Cr Revenue: $100,000
d.Dr Cash: $99,000 / Cr Revenue: $99,000
6. Accounting service company X signed a contract to provide accounting services and
prepare financial statements for Y for 4 years for a fee of $500,000. X incurs the cost of
purchasing accounting software to treat Y accounting for $5,000. Accounting software
recognized by X is:
a.Intangible assets
b.Service revenue
c.Expenses incurred during the period
d.Contract asset
7. On July 1, 20x1, company P signed a contract to provide telecommunications services
to X for a fee of $100,000 for 12 months and a free connection device. This device has a
market price of $5,000 and the price of telecommunications service provided without
the device is $10,000/month. Connection device may be available from other
telecommunications providers. Total revenue recorded in July will be:
a.$8,000
b.$5,000
c.$12,000
d.$4,000
8. Company AB signs a contract to supply 100,000 bottles of cosmetics to company XY
at $1,000/bottle and gives customers 500 lipsticks for buying in bulk. AB is committed to
refunding the money for the cosmetic bottles that do not meet the quality. What
performance obligations does AB have in the contract?
a.4
b.3
c.1
d.2
9.Light Company specializes in the production of wall lamps. In order to expand
market share for existing LED products and introduce new NeoLed products, Light
Company conducts the promotion "Buy 1 get 1 free". Specifically, buy one Led bulb
worth 200,000 VND and get 1 NeoLed light for free. The usual selling price of Led lights
is 200,000 VND, while the selling price of NeoLed lights has not been determined. On
the market, the selling price of a product line similar to another company's NeoLed is
40,000 VND. According to IFRS 15, the revenue for the sale of 10 LED bulbs during the
promotion is:
a.333,334
b.Other opinion
c.1,666,666
d.2,000,000

10.Telecom Co. enters into a two-year contract with a customer to provide wireless
service (voice and data) for $40 per month. To induce customers, Telecom Co. provides
a free phone. Telecom Co. normally sells the phone on a standalone basis for $200.
Telecom Co. also charges the customer a one-time activation fee of $35. Which of the
following is true?
a.There are two distinct performance obligations: the wireless service and the phone
b.There are two distinct performance obligations: the voice service and the data service
c.The activation fee is a separate performance obligation
d.The free phone constitutes a marketing expense

11 Contract assets and receivables contract should be accounted for according to:
a.IFRS 16 Leases
b.IFRS 4 Insurance Contracts
c.IFRS 15 Revenue from Contracts with Customers
d.IFRS 9 Financial Instruments
12.Which of the statements is not true in recognizing revenue in accordance with IFRS
15?
a.Transfers of goods will typically be recognized at a point in time
b.Revenue may not be recognized when not all significant risks and rewards have been
transferred to a third party
c.When a licence is a right to access the entity’s intellectual property throughout the licence
period, revenue is recognized over time
d.Revenue is recognized when the customer obtains control of the good or servic
13.The main principle of IFRS 15 is that the entity will recognize (1) when transfer (2)
to the customer and receive the amount of reflection (3) that it expects.
a.(1) income; (2) goods or services; (3) consideration
b.(1) revenue; (2) goods; (3) consideration
c.(1) revenue; (2) goods or services; (3) consideration
d.(1) revenue; (2) goods or services; (3) the price of the good or service
14 Which of the following is an adjustment to a contract that is accounted for as a
separate contract?
a.The value of the contract increases in proportion to the market price of the added goods
b.The added goods are distinct from those in the original contract, and the value of the
contract increases in proportion to the market price of the added goods.
c.The goods added are not different from the goods in the original contract
d.The additional goods are distinct from the original contract goods and the increased
contract value is less than the stand-alone sale price of the additional goods.
15 According to IFRS 15, revenue will be recognized:
a.At a point of time
b.At a point of time or over a period of time depending on the content of the contract with the
customer
c.At a point of time or over a period of time depending on the enterprise's choice
d.Over a period of time
16 According to IFRS 15, how many steps are there in accounting for revenue from
contracts with customers?
a.3
b.5
c.6
d.4
17 Rose is in the beauty industry. Rose offers a promotion that if customers buy X
cosmetics for $30,000, they will get 10 free massages. Know that the listed price of Rose
per massage is $500 and the normal selling price of Rose cosmetics without the
promotion is $26,000. According to experience, the manager estimates that there is a
90% chance that customers will use massage vouchers. Revenue of cosmetics will be
a. $4.426
b. $25.000
c. $26.000
d. $25.574
18 The retailer sells treadmills for $1,500 each and offers a 30% coupon to purchase
another sports equipment in-store within 1 month of the treadmill purchase. Based on
sales experience, the retailer estimates that 90% of customers will choose to purchase
from this coupon and an estimated $1,000 will be sold from this coupon. Revenue
recognized on the date of delivery of the treadmill will be:
a. $1,500
b. $270
c. $1,230
d. $1,050
19 Kien Tao construction company signed a construction contract with customer A,
including the following three construction items: classrooms, school grounds, and office
buildings. The amount will be paid according to each completed item. How many
performance obligations are there in the contract with customer A?
a. Other opinion
b. 3
c. 2
d. 1
20 Able sells and delivers a piece of equipment to Smythe for $2,000 on August 1 and
the equipment cost $1,300. The sale is a credit sale. How is this transaction accounted
for under a periodic system of inventory?
A. Sales Revenue 2,000 Accounts Receivable 2,000
B. Accounts Receivable 1,300 Sales Revenue 1,300
C. Sales Revenue 1,300 Accounts Receivable 1,300
D. Accounts Receivable 2,000 Sales Revenue 2,000
21 Approval of a contract by the parties must be in writing.
True
False
22 ABC Company is holding goods with a selling price of $110,000 which cost them
$70,000. On December 3, 2019, ABC sold the goods to Timmons under a bill-and-hold
arrangement. At the end of 2019 ABC still holds the goods. Assume ABC meets the four
conditions necessary under a bill-and-hold arrangement to claim it has transferred
control to the buyer. How much revenue should ABC recognize for 2019?
A. $40,000
B. $110,000
C. $70,000
D. $0
23 Able Company enters into a contract with a customer to provide them with an
accounts receivable program. Able will also provide installation services as part of the
contract. The customer is free to enlist the services of another entity to install the
software. What is the number of performance obligations for this contract?
A. 0
B. 1
C. 2
D. 3
24 Shady Equipment sells a truck to Fred for $180,000 on January 1, 2016. Payment of
$180,000 is received two years later and interest is paid at the end of two years. The
truck is delivered two years later. The market rate of interest is 7%. Refer to Shady
Equipment. How much sales revenue will Shady report on January 1, 2016?
A. $90,000
B. $0.00
C. $167,400
D. $180,000
25 Jones Corporation enters into a contract with Warner Video to add their programs
to Jones' network. Warner will pay Jones an upfront fixed fee of $250,000 for 12 months
of access, and will also pay a $130,000 bonus if Jones' users access Warner Video for at
least 10,000 hours during the 12 month period. Jones estimates that it has a 60% chance
of earning the $130,000 bonus. Ignore any constraints on variable consideration. Refer
to Jones Corporation. Using the most-likely-amount approach, the transaction price
would be ________.
A. $380,000 $380,000 = $250,000 + $130,000
B. $250,000
C. $328,000
D. $130,000
26 Derby Company sells season passes to its entertainment center. The passes sell for
$85 each and are good for the year. On January 1, Derby sells 3,000 passes and received
cash. The amount of revenue to be recognized on January 1 is ________.
A. $21,250
B. $127,500
C. $255,000
D. $0
27 Shady Equipment sells a truck to Fred for $160,000 on January 1, 2016. Payment of
$160,000 is received is received on January 1, 2016, and interest is incurred over two
years. The truck is delivered two years later. The market rate of interest is 9%. Refer to
Shady Equipment. How much interest expense will Shady report over the term of the
contract? (Do not round intermediary calculations, and round your final answer to the
nearest whole number.)
A. $160,000
B. $14,400
C. $47,205
D. $30,096
28 A good or service transferred at a point in time would include a ________.
A. gym membership
B. Sam's Club membership
C. magazine subscription
D. suit
29 If a seller receives cash before the appropriate time to recognize revenue, the seller
should treat the consideration as a liability.
True
False
30 .Pemco Enterprises sells annual memberships to its shooting lodge. The memberships
cost $310 each. On January 1, Pemco sold 2,800 memberships and received cash. What
journal entry should Pemco Enterprises make on January 31st if adjusting entries are
completed monthly.
A. Debit Cash; Credit Membership Revenue
B. Debit Unearned Revenue; Credit Cash
C. Debit Membership Revenue; Credit Unearned Revenue
D. Debit Unearned Revenue; Credit Membership Revenue
31 Which one of the following approaches is not a method for allocating a transaction
price to multiple performance obligations?
A. present cost basis
B. residual
C. expected-cost-plus-a-margin
D. adjusted market assessment
32 Fare Jewelry Company is holding goods on consignment from Tomko with a selling
price of $4,000,000. Fare is promised a commission of 25% for goods sold. By the end of
2019 Fare has sold $600,000 of Tomko's goods. Refer to Fare Jewelry. How much
revenue should Fare recognize for 2019 on this transaction?
A. $0
B. $600,000
C. $4,000,000
D. $150,000
33 If the seller does not meet the three criteria for revenue recognition, then it assumes
that goods or services are transferred over time.
True
False
34 Jones Corporation enters into a contract with Warner Video to add their programs
to Jones' network. Warner will pay Jones an upfront fixed fee of $250,000 for 12 months
of access, and will also pay a $110,000 bonus if Jones' users access Warner Video for at
least 10,000 hours during the 12 month period. Jones estimates that it has a 60% chance
of earning the $110,000 bonus. Refer to Jones Corporation. Upon collection of the
upfront fee, Jones would recognize a(n) ________
A. unearned revenue of $360,000
B. prepaid revenue of $250,000
C. unearned revenue of $250,000
D. prepaid revenue of $360,000
35 The transaction price is the amount of consideration the entity expects to be entitled
to as a result of providing goods or services to the customer.
True
False
36 .Pemco Enterprises sells annual memberships to its shooting lodge. The memberships
cost $200 each. On January 1, Pemco sold 3000 memberships and received cash. Refer
to Pemco Enterprises. How much revenue should Pemco recognize each month? (Round
your final answer to the nearest whole number.)
A. $50,000 $200 × 3000 = $600,000 × 1/12 = $50,000
B. $0
C. $60,000
D. $25,000
37 Which one of the following is not an indicator of a consignment arrangement?
A. Consignor controls product until a specific event occurs.
B. Consignor cannot require goods to be returned.
C. Consignee does not have an unconditional obligation to pay for product.
D. Consignor can require the goods be returned.
38 If noncash consideration such as stock of a publicly-traded company is given in a
revenue contract, then the value to be used for the transaction price should be ________
A. historical cost of stock
B. net present value of revenue
C. book value of stock
D. fair value of stock
39 A contract does not exist if …
a. The contract was not approved in a written form
b. Each party to the contract has the unilateral enforceable right to terminate a wholly
unperformed contract without compensating the other party
c. The parties of the contract have reached unanimous consent regarding termination of the
contract
d. The contract has no fixed duration and can be terminated or modified by either party at any
time
40 A contract is wholly unperformed if …
a. The entity has not yet transferred any promised goods or services to the customer
b. The entity has not yet received any consideration in exchange for promised goods or
services
c. The entity is not yet entitled to receive any consideration in exchange for promised goods
or services
d. All of the above
e. A and B
41 A performance obligation is satisfied over time if:
a. The entity's performance creates an asset which has an alternative use to the entity
b. The customer does not receive or consume the benefits provided by the entity's
performance until the obligation is completely satisfied
c. The entity's performance creates an asset that the customer controls as it is created
d. The entity does not have an enforceable right to payment for the performance that has been
completed to date
42 A company enters into a contract to supply three distinct products to a customer. The
promise to supply each of these products is regarded as a separate performance
obligation. The stand-alone prices of the three products (if sold singly) are:
Product X £12,500
Product Y £24,000
Product Z £27,500
The agreed contract price is £57,600. How should this price be allocated to performance
obligations?
a. Product X £10,367
Product Y £21,867
Product Z £25,366
b. Product X £11,250
Product Y £21,600
Product Z £24,750
c. Product X £19,200
Product Y £19,200
Product Z £19,200
d. Product X £12,500
Product Y £24,000
Product Z £27,500
43 An entity shall recognize a refund liability if the entity receives consideration from a
customer and expects to refund some or all of that consideration to the customer.
a. False
b. True
44 If a contract with a customer provides a warranty, then the warranty always
represents a separate performance obligation and part of the transaction price must be
allocated to it. True or False?
a. True
b. False
45 Entity shall recognise revenue to depict the transfer of promised goods or services to
customers in the________ amount that reflects the consideration to which the entity
expects to be entitled in exchange for those goods or services
a. Gross
b. cumulative
c. Net
d. Residual
46 A company enters into a contract to build a factory for a customer. The agreed price
is £2million (m) and the specified completion date is 31 October 2016. However, the
contract provides that the company should receive an incentive payment of a further
£250,000 if the factory is completed by 30 September 2016. Similarly, the price will be
reduced by £250,000 if the factory is not completed until after 30 November 2016.The
company estimates that there is a 15% probability that the factory will be completed by
30 September 2016, an 80% probability that it will be completed in October 2016 or
November 2016 and a 5% probability that it will not be completed until after 30
November 2016. What is the expected value of the transaction price for this contract?
a. 2.125m
b. 2.025m
c. 2m
d. 1.975m
47 A law firm enters into a contract to advise in a lawsuit for a client. If the client wins,
they will pay 2000 to the law firm. If not, the payment is 1500. The law firm estimates
that there is a 75% probability that the client will win and 25% probability that it will
lose in this lawsuit.
What is the expected value of the transaction price for this contract?
a. 1875
b. 1500
c. 2000
d. 1250
Which of the following is an exception for application of IFRS 15?
a. Lease contracts, Insurance contracts
b. Lease contracts
c. Financial audit contracts
d. Insurance contracts, Pharmaceutical contracts
2.What is the contract modification?
a.It is accounting for 2 or more contracts as for the single contract
b.It is a change in the scope or price (or both) of a contract.
c.It is the change in the contract resulting from deteriorating the customer’s credit risk
d.It is the change in the payment terms of a contract.
3.When a contract amendment should NOT be combined with the old contract and
accounted as a
single contract?
a.The contract amendment is approved and enforced by the two parties
b.Additional goods in the contract amendment is distinct and the price stated reflects market
price
c.Additional goods in the contract can be consumed by itself.
d.The price of additional goods is discounted due to high volume achievement.
4.Which of the following is NOT the example of costs to obtain a contract:
a.Bonuses to employees calculated based on the total sales volume
b.Salary of the employee who negotiated the contract allocated on a reasonable basis
c.Legal fees associated with the contract negotiation
d.Sales commissions paid to external agents
5.The company X entered into the contract with the customer to construct a warehouse.
The total
contract price is CU 100 000, but if X builds a warehouse within 3 months after the
contract’s
signature, the customer will pay the performance bonus of CU 10 000. Company X
estimates that
probability of meeting 3 months deadline is 90%. What is the transaction price?
Discount rate is
5%, discount factor for 1 year is 0,952.
a.CU 110,000
b.CU 100,000
c.CU 104,720
d.CU 109,000
6.Orange Store has just sold $2000 gift card to its customer. Base on historical
experience, gift card
holder discharges roughly $1900 for each card before the card is expired. How much
revenue should be recognized for one US$ claimed?
a.$0
b.$1.00
c.$1.05
d.$1.10
7.On 1 January 201X, a vendor enters into a contract with a customer to build an item
of specialised equipment, for delivery on 30 April 201X. The amount of consideration
specified in the contract is €300,000, but that amount will be decreased or increased by
€500 for each day, depending on whether the actual payment date is before or after 30
April 201X. How should a vendor determine a transaction price for this contract?
a.A vendor needs to apply the most likely amount method in order to predict the amount of
consideration
b.A vendor needs to apply expected value method in order to predict the amount of
consideration
c.The transaction price for this contract should be the same as specified in the contract with a
customer, which is €300,000
d.The transaction price may only be calculated when the consideration is paid and exact
amount of
consideration is known
8. Which of the following parties is “customer” in the scope of IFRS 15 Revenue from
contract with customer?
i. Lessee in a lease contract
ii. Purchaser of properties, plant and equipment
iii. Purchaser of inventory
iv. Member of a golf club
a.ii, and iii
b.ii, iii, and iv
c.ii, and iv
d.i, iii, and iv
9. Which of the following are among of the five steps for recognising revenue according
to IFRS 15 Revenue from Contracts with Customers?
i. Recognise revenue when (or as) the entity satisfies a performance obligation
ii. Ascertain whether control over the goods has passed or not
iii. Determine the transaction price
iv. Identify standalone selling price
a.all of above
b.i, ii, and iii
c.i, iii, and iv
d.i, and iii
10. Which of the following items are NOT part of the five-steps model for revenue
recognition in accordance with IFRS 15 Revenue from Contracts with Customers?
a.Allocate the total price between the separate performance obligations in the contract
b.All contracts must be in writing
c.Recognise revenue when a performance obligation is satisfied
d.Identify the contract
11. Which of the following is NOT the attribute of a contract?
a.Commercial substance
b.Consideration is probable
c.Be written and is committed to perform.
d.Payment term is identified
12. What is the definition of the contract under IFRS 15?
a.Agreement between two or more parties with defined rights and payment terms.
b.Agreement between two or more parties that creates enforceable rights and obligations.
c.Written or oral agreement between two or more parties to provide goods or services
d.Arrangement between two or more parties to provide goods or services.
13. What is the combination of contracts?
a.It is a combination of explicit and implicit promises within the contract.
b.It is accounting for 2 or more contracts as for the single contract.
c.It is a contract with more than one element while the elements need to be separated. One
element is accounted for under IFRS 15 and another one is accounted for under different
relevant standard (i.e. IFRS 9).
d.It is a change in the scope or price (or both) of a contract.
14. What is the contract modification?
a.It is accounting for 2 or more contracts as for the single contract
b.It is a change in the scope or price (or both) of a contract.
c.It is the change in the contract resulting from deteriorating the customer’s credit risk
d.It is the change in the payment terms of a contract.
15. When a contract amendment should NOT be combined with the old contract and
accounted as a single contract?
A. The contract amendment is approved and enforced by the two parties
B. Additional goods in the contract amendment is distinct and the price stated reflects market
price
C. Additional goods in the contract can be consumed by itself.
D. The price of additional goods is discounted due to high volume achievement.
16. How shall we account for a contract modification that decreases the scope of the
services provided?
a.As for the separate contract because the decrease in scope is distinct.
b.As for the part of existing contract with “catch-up adjustment”, because the decrease in
scope is NOT distinct.
c.As for the termination of old contract and creation of new contract.
d.As for the separate contract if the price for added services reflects their stand-alone price.
17. When additional goods in a contract amendment is distinct but their price depends
on the goods stated in the old contract, the entity should
a.Use catch-up adjustment
b.Termination of old contract, and creation of new contract
c.Create a new contract
d.Catch – up adjustment and create a new contract
18. A good or service that is promised to a customer is distinct if…
a.The customer can benefit from the good or service on its own
b.The customer can benefit from the good or service together with
other resources that are readily available to the customer
c.The entity’s promise to transfer the good or service to the customer is separately identifiable
from other promises in the contract
d.All of the above
19. According to IFRS 15, the asset is transferred to a customer…
a.When the asset is physically delivered to the customer’s premises
b.On the day specified by a contract with the customer
c.When the customer obtains control over it
d.On the day when the entity satisfies all performance obligations, specified in the contract
with the customer
20. What criteria separate a performance obligation form others, in IFRS 15 Revenue
from contract with customers?
a.Identifiable
b.Distinct
c.Separable
d.Different
21. What makes a service distinct from other?
a.The consumer could benefit from the service itself
b.The provider is willing to render the service separately
c.Naturally distinct and contractually distinct
d.Separable from their service
22. MWI offers a package of a second hand Iphone 5S, 12 months warranty, and 20%
discount for assessories purchase. 20% discount is special for this package only.
Nornally, MWI offers free sofware installation which is not stated in the package. How
many performance obligations exists?
A.1
B.2
C.3
D.4
23. I-sell sells a electric stove for $1000 to customers. The store commits to refund
customer if there is any other competitor offering lower price. How many performance
obligations exists?
A.1
B.2
C.3
D.4
24. Sunbuck is a coffee shop. It runs a loyalty program, in which customer will get a star
for a drink ordered. The stars collected will be exchange for drinkware sold by
Sunbuck. How many performance obligations exists when a customer order a drink at
Sunbuck?
A.1
B.2
C.3
D.4
25. Agent Ltd is preparing its financial statements for the year ended 31 December
20X0. During that year, Agent Ltd acted as an agent on behalf of Principle Ltd and
arranged a sale of goods on 1 August 20X0 at a price of $100,000. Agent Ltd is entitled
to 10% commission upon receipt of cash from the customer. The customer paid for the
goods on 28 November 20X0.How much revenue can be recognized by Agent Ltd in its
statement of profit or loss for the year ended 31 December 20X0?
a.$100,000
b.$90,000
c.$10,000
d.$0
26. What is the example of variable consideration?
a.The total transaction price depends on the future performance and bonus.
b.The total transaction price may change due to contract modification
c.T he total transaction price may change due to contract combination.
d.The total transaction price may change due to change in the standalone selling prices
27. On 1 January 201X, a vendor enters into a contract with a customer to build an item
of specialized equipment, for delivery on 30 April 201X. However, the exact delivery
date is hard to estimate. The amount of consideration specified in the contract is
€300,000, but that amount will be decreased or increased by €500 for each day,
depending on whether the actual delivery date is before or after 30 April 201X. How
should a vendor determine a transaction price for this contract?
a.A vendor needs to apply the most likely amount method in order to predict the amount of
consideration, because there is a range of possible outcomes
b.A vendor needs to apply expected value method in order to predict the amount of
consideration, because there is a range of possible outcomes
c.The transaction price for this contract should be the same as specified in the contract with a
customer, which is €300,000
d.The transaction price may only be calculated when the equipment is delivered and exact
amount of consideration is known
28. The company X sold a machine to the company Y for CU 200 000. The company Y
will pay CU 100 000 upon delivery and CU 100.000 after 1 year. The discount rate is 5%
and the discount factor for 1 year is 0,952. What is the transaction price?
a.CU 200,000
b.CU 195,200
c.CU 190,400
d.CU 205,000
29. The company X entered into the contract with the customer to construct a
warehouse. The total contract price is CU 100 000, but if X builds a warehouse within 3
months after the contract’s signature, the customer will pay the performance bonus of
CU 10 000. Company X estimates that probability of meeting 3 months deadline is 90%.
What is the transaction price? Discount rate is 5%, discount factor for 1 year is 0,952.
a.CU 110,000
b.CU 100,000
c.CU 104,720
d.CU 109,000
30. The cable company Z wishes to enter the new market and launches a promotion
campaign. It offers to reimburse the customer’s penalty paid to old TV provider for
early termination of the contract when the customer decides to sign up for 12-month of
cable TV services with Z. How shall Z account for the reimbursement of penalty?
a.As for the prepaid expenses
b.As for the purchases of inventories
c.As for the reduction in the transaction price
d.As for the distinct performance obligation.
31. PMSoft Co experts in ERP system. Normally, it provides a package of software
license, installation service and 1 month technical support for customer. The selling
price of each goods/service are $1000, $250, $200 respectively. PMSoft charges its
customers $1400 if they purchase in a package. How much revenue should be
recognised by PMSoft if a customer order the sofware license and installation service
only?
A.$1,250
B.$1,450
C.$1,207
D.$1,000
32. Orange Store has just sold $2000 gift card to its customer. Base on historical
experience, gift card holder discharges roughly $1900 for each card before the card is
expired. How much revenue should be recognized for one US$ claimed?
A.$0
B.$1.00
C.$1.05
D.$1.10
33. Under which curcumstances, revenue should always not be recognised by the seller
a.The sold inventory is still at the seller's wearhouse.
b.The seller has an option to repurchase the machine after 2 years. The purchaser is a bank.
c.Both the selling price and the repurchase price is below fair value.
d.The contract is a bill and hold arrangement.
34. The company V sells a machine to the company X for CU 100 000 (cost of machine is
CU95.000). The company can return the machine to the company V within 90 days and
in such a case, the company V will refund CU 98 000 to the company X. What journal
entries does the company V need to make initially?
a.Debit Cash: CU 100 000, Credit Refund liability: CU 100 000; Debit Asset – the right to
recover the machine: CU 95 000, Credit Inventories: CU 95 000
b.Debit Cash: CU 100 000, Credit Revenues: CU 2 000 and Credit Refund liability: CU 98
000; Debit Cost of sales: CU 95 000, Credit Inventories: CU 95 000
c.Debit Cash: CU 100 000, Credit Revenue from sales: CU 100 000; Debit Cost of sales: CU
95 000, Credit Inventories: CU 95 000
d.Debit Cash: CU 100 000, Credit Revenues: CU 2 000 and Credit Refund liability: CU 98
000; Debit Asset – the right to recover the machine: CU 95 000, Credit Inventories: CU 95
000
35. Within its promotional campaign, PC company sells a computer for CU 400 and
adds the free printer. The company normally sells these printers for CU 100. The
computer is delivered in December 20X1, but due to shortage of printers, the printer is
delivered in January 20X2. What journal entry shall PC company make in December
20X1 when the customer pays and takes the computer?
a.Debit Cash: 400, Credit Revenue from sales of computers: 320, Credit Contract liability: 80
b.Debit Cash: 400, Credit Revenue from sales of computers: 320, Credit Revenues from sales
of printer: 80
c.Debit Cash: 400, Credit Revenue from sales of computers: 400
d.Debit Cash: 320, Debit Contract Asset: 80, Credit Revenues from sales of goods: 400
36. How shall an agent recognize revenue in the principal-agent relationship?
a.Agent recognizes the revenue in gross amount and purchased goods or services from
principal are recognized as costs of sales.
b.Agent recognizes the revenue in net amount as revenues from the commissions
c. Agent recognizes the revenue in net amount as revenues from sales of underlying goods or
services.
d.Agent recognizes the revenue in gross amount and purchased goods or services from
principal are recognized as commissions paid to principal.
37. AQ Construction started a contract on 1 March 20X0. The contract was scheduled
to run for two years and has a sales value of $8 million. AQ Construction will satisfy the
performance obligation over time. At 31 December 20X0, the following details were
obtained from BL’s records:
Costs incurred to date $m3.2
Estimated costs to completion $m3.6
Progress at 31 October 20X0 45%
Applying IFRS 15 Revenue from contracts with customers, how much revenue and cost
of sales should BL recognise in its statement of profit or loss for the year ended 31
October 20X0?
 Revenue Cost of sales
A. $8 million $3.06 million
B. $8 million $6.8 million
C. $3.6 million $3.2 million
D. $3.6 million $3.06 million
38. XD is a construction company, recognising progress based on work certified over
total contract value. The following information relates to one of its long-term contracts
as at 31 December 20X1, XD’s year end:
Contract price $100,000
Costs incurred to date $65,000
Estimated cost to complete $45,000
Invoiced to customer $60,000
Work certified to date $90,000
In the year to 31 December 20X0 XD had recognised revenue of $30,000 and profit of
$10,000 in respect of this contract. What profit should appear in Malik’s Statement of
Profit or Loss as at 31 May 20X1 in respect of this contract?
A. Loss $1,000
B. Loss $9,000
C. Loss $10,000
D. Loss $20,000
39. Machiner Ltd sells machines, and also offers installation and technical support
services. The stand-alone selling price of each product is shown below.
Sale price of machine $750
Installation $100
One year service support agreement $120
Purchaser Ltd purchased a machine, along with the installation service and the service
agreement on 1 October 20X0 for $970. The machine was delivered and installed on 1
October 20X0 and the service support agreement also commenced from that date.
How much can Loc Co recognise as revenue for the year ended 31 December 20X1?
A.$100
B.$120
C.$750
D.$870
40. The following information relates to a construction contract, beginning on 31 March
20x1
Estimated contract revenue $800,000
Costs to date $320,000
Estimated costs to complete $280,000
Estimated stage of completion 60%
Which amount of revenue should be recorded?
A.$800,000
B.$480,000
C.$200,000
D.Nil
41. The following information relates to a construction contract, beginning on 31 March
20x1
Estimated contract revenue $800,000
Costs to date $320,000
Estimated costs to complete $280,000
Work certified up to date $600,000
If work progress is measure under input method, what amount of revenue should be
recorded as to 31 March 20x1?
A.$600,000
B.$426,667
C.$320,000
D.Nil
42. What contract costs does IFRS 15 arrange?
a. Initial direct costs and directly attributable costs
b.Costs to fulfill a contract and incremental costs of obtaining a contract
c. Direct and indirect contract costs
d. Finance costs within significant financing component and consideration payable to the
customer
—---------------------------------------------------------------------------------------------
Acct policies, estimates, errors-IAS 8

1 When a public shareholding company changes an accounting policy voluntarily, it has

to
a.Treat the effect of the change as an extraordinary item.
b.Treat it prospectively and adjust the effect of the change in the current period and future
periods.
c.Inform shareholders prior to taking the decision.
d.Account for it retrospectively.

2 When it is difficult to distinguish between a change of estimate and a change in

accounting policy, then an entity should

a.Since this change is a mixture of two types of changes, it is best if it is ignored in the year
of the change; the entity should then wait for the following year to see how the change
develops and then treat it accordingly.
b.Treat the entire change as a change in accounting policy.
c.Treat the entire change as a change in estimate with appropriate disclosure.
d.Apportion, on a reasonable basis, the relative amounts of change in estimate and the change
in accounting policy and treat each one accordingly.
3 XYZ Inc. changes its method of valuation of inventories from weighted-average
method to first-in, first-out (FIFO) method. XYZ Inc. should account for this change as
Select one:
a.Account for it as a correction of an error and account for it retrospectively.

b.A change in estimate and account for it prospectively.

c.A change in accounting policy and account for it retrospectively.

d.A change in accounting policy and account for it prospectively.

4 When an independent valuation expert advises an entity that the salvage value of its
plant and machinery had drastically changed and thus the change is material, the entity
should

a.Change the depreciation charge and treat it as a correction of an error.

b.Change the annual depreciation for the current year and future years.

c.Ignore the effect of the change on annual depreciation, because changes in salvage values
would normally affect the future only since these are expected to be recovered in future.

d.Retrospectively change the depreciation charge based on the revised salvage value.

5 Under IFRS, a voluntary change in accounting method may only be made by a

company if:

a.A new standard mandates the change in method.

b.There is no prohibition of the method in the standards.

c.Management prefers the new method.

d.The new method provides reliable and more relevant information.

6 How often should a cash generating unit to which goodwill has been assigned, be
tested for impairment?
a.Every six months
b.Every year
c.At management’s discretion
d.As often as practicable

7 Specific principles bases conventions rules and practices applied in presenting

financial statements. This defines:

a.Prospective application

b.Accounting policies

c.Accounting estimates

d.accounting errors

8 Adjustment of the carrying amount of an asset or a liability or the consumption of an

asset. This defines:

a.Misstatements

b.A change in accounting estimates

c.Acconting policies

d.A change in accounting policies

9 Applying a new policy to transactions other events and conditions as if that policy had
always been applied. This is:

a.Change in accounting policies

b.Retrospective restatement
c.Change in accounting estimate

d.Retrospective application

10 Correcting the recognition measurement and disclosure of amounts in financial

statements as if a prior-period error had never occurred. This is:

a.Change in accounting policies

b.Retrospective restatement

c.Retrospective application

d.Change in accounting estimate

11 Change in accounting policy does not include

a.Change of method of valuation of inventory from weighted-average to FIFO.

b.Change in useful life from 10 years to 7 years.

c.Change from the practice (convention) of paying as Christmas bonus one month’s salary to
staff before the end of the year to the new practice of paying one-half month’s salary only.

d.Change of method of valuation of inventory from FIFO to weighted-average.

12 Which one of the following would not be affected by a change in revenue recognition
requiring a retrospective change?
A. deferred taxes
B. unearned revenue
C. revenue
D. cash
13 Changes in accounting principles can be mandatory or voluntary.
True
False
14 Accounting changes are only permitted when ________.
A. adequate disclosures are made so financial statement users can restore comparability with
prioryears financial statements
B. the company has not made prior changes
C. the effect is material
D. the method used is prospective
15 Johnston Controls began operation in 2017 using FIFO inventory methods. In 2018,
management decided they should have chosen LIFO to more accurately portray
financial position and performance. The beginning 2018 inventory using FIFO was
$200,000. Under the LIFO method the beginning inventory would have been $240,000.
The adjustment to inventory for the accounting principle change for 2017 would be
________
A. $40,000 debit
B. $40,000 credit
C. $0
D. $20,000 debit
16 Firms account for material error corrections ________
A. only after they self-correct
B. only when both the income statement and balance sheet are affected
C. using the prospective method
D. with the retrospective method
17 A firm may choose to apply indirect effects of an accounting principle change either
prospectively or retrospectively.
True
False
18 A firm may choose to apply indirect effects of an accounting principle change either
prospectively or retrospectively.
True
False
19 Disclosures are required for all changes in accounting estimate made in normal
operations.
True
False
20 Which one of the following might be affected by a change in revenue recognition
requiring a prospective change?
A. deferred taxes
B. unearned revenue
C. management compensation
D. retained earnings
21 Accounting entity changes are handled prospectively.
True
False
22 John Pickens writes mystery novels. His publisher pays him royalties for the number
of books sold each year. He is paid royalties for the first half of the year on September
30 and the second half of the year on March 31 of the following year. He received
$42,000 in September, 2018. The publisher estimated that his royalties for the second
half of the year would be $53,000. On March 31, 2019, he received $57,500. Assuming
that he recorded $53,000 in royalties at December 31, 2018, what kind of change does
this represent?
A. prior period error correction
B. change in estimate
C. not a change
D. change in accounting principle
23 A change in depreciation method is a change in estimate effected by a change in
accounting principle, and is accounted for prospectively.
True
False
24 If a mandatory accounting change requires too much work for a firm to use the
retrospective approach, then the firm can choose to use the prospective approach.
True
False
25 The bookkeeper for Phillips, Inc. mistakenly recorded a $300,000 one-year trade
note receivable as a longterm note receivable in 2017. Interest revenue was correctly
recorded. The error was discovered in 2019 by the company's auditors. What is the
proper way to correct the error?
A. Correct the classification in 2019 retrospectively for comparative balance sheets.
B. Correct the classification and adjust retained earnings for 2017 and 2018
C. Ignore the error because it is not material in amount.
D. Use a footnote disclosure only because it does not change working capital.
26 Retrospective changes require all but which of the following?
A. adjustments to assets and liabilities to reflect the cumulative effect of the change on
periods prior to those presented
B. detailed numerical comparisons of all prior periods to restated statements
C. retained earnings restated for the cumulative effect of the change on income for periods
prior to those presented
D. restatement of financial statements to reflect the effects of the change for each period
presented
27 Which one of the following is a change in estimate effected by a change in an
accounting principle?
A. change in estimated life of an asset
B. change in salvage value of an asset
C. change from declining-balance to straight-line depreciation
D. changes in pension plan asset revenues
28 When a self-correcting error is discovered after closing the books for the second year
________.
A. an entry must be made to correct the income statement
B. no entry is necessary because all permanent accounts are correctly stated
C. an entry must be made to correct both the income statement and balance sheet accounts
D. an entry is necessary to correct the permanent accounts
29 Georgio, Inc. decided to move its business from its current location to another larger
plant. Management should examine the salvage value of the building in the future and
the change in the useful life to see if a change in the depreciation of the current building
is warranted.
True
False
30 Correcting the recognition measurement and disclosure of amounts in financial
statements as if a priorperiod error had never occurred. This is
a. Retrospective application
b. Change in accounting policies
c. Retrospective restatement
d. Change in accounting estimate

—---------------------------------------------------------------------------------------------
Events after the acct period-IAS 10
1 Which of the following is the correct definition in accordance with IAS 10?
a.Events arising between the reporting date and the date of the financial statements are
authorized for issue that are considered as non-adjusting events after the reporting date.
b.Events arising between the reporting date and the date of the financial statements are
authorised for issue that must not disclosed information in the note if they do not affect the
situations at the reporting date.
c.Events arising between the reporting date and the date of the financial statements are
authorised for issue that provide additional evidence of conditions existing at the reporting
date are considered as adjusting events.
d.Events arising between the reporting date and the date of the financial statements are
authorized for issue that are considered as adjusting events after the reporting date.

2. The management of Amboo Corp. was required to submit the financial statements to
the board of directors by 20/2/20x8. The board of directors reviewed and authorised for
them for issue on 01/3/20x8. The financial statements were then approved by
supervisory board on 18/3/20x8. On 20/3/20x8 these reports were sent to shareholders
and regulatory body. The authorized date for issue the financial statements was:
a.01/3/20x8
b.20/3/20x8
c.18/3/20x8
d.20/2/20x8
3 A non-adjusting event arising after the reporting date, but management cannot
estimate its financial effect. What disclosure is required?
a.No disclosure
b.A note regarding an estimate cannot be made
c.Adjusting in the financial statement as an adjusting event after the reporting period
d.Provision

4. Company Lagia declared dividends to their shareholders on 31/3/20x. The date of the
financial statements was approved for issue was on 20/2/20x1. Which of the below is
correct under IAS 10?
a.It is a non-adjusting event after the reporting date with disclosing information in the note
b.It is an adjusting event after the reporting date
c.It is a non-adjusting event after the reporting date without any disclosure
d.None of them
5. Under IAS 10, a non-adjusting event after the reporting period must be disclosed in
the notes if it is:
a.Material
b.Has influences on making decision of the financial statements’ users
c.All of them
d.Cannot estimate its financial effect

6. Which of the below is an adjusting event after the reporting period in the financial
statements under IAS 10?
a.The settlement of a court case which confirms a year-end obligation.
b.The destruction of assets after the reporting date by flood.
c.Major purchase of some tangible assets after the reporting date.
d.Declare dividends to shareholders after the reporting date.
7. Company Pender declared dividends to shareholders after the reporting date of the
year ended on 31/12/20x0 but before the date of the financial statements were approved
for issue. How should dividends be recognised in the financial statements on
31/12/20x0?
a.Disclosing in the notes (**)
b.A liability (*)
c.Do nothing
d.(*) & (**)

8. According to IAS 10, what information should an entity disclose in the notes to the
financial statements?
a.Information received after the reporting period
b.All of them
c.The date when the financial statements were authorised for issue.
d.Who gave that the authorisation for issue

9. The date that financial statements are authorised for issue may be given by:
a.The board of directors of the reporting entity
b.The procedures prescribed for the preparing and finalising of the financial statements
c.Statutory requirements
d.All of them
10. According to IAS 10, which of the following lists is considered as a non-adjusting
event after the reporting date.
a.The sale of inventories at a price lower than cost after the reporting date.
b.The bankruptcy of a major customer that confirms that a year-end receivable balance is
irrecoverable.
c.Discovery of errors that shows that the financial statements are incorrect.
d.Commencing a court case arising out of events after the reporting date.

—---------------------------------------------------------------------------------------------
PPE-IAS 16
1.What is the purpose of charging depreciation in accounts?
a.To account for the ‘wearing out’ of the asset over its life
b.To ensure that funds are available for the eventual replacement of the asset
c.To reduce the cost of the asset in the statement of financial position to its estimated market
value
d.To allocate the cost of a non-current asset over the accounting periods expected to benefit
from its use
2. A company bought a property 4 years ago from 1 Jan for $170,000. Since then
property prices have risen substantially and the property has been revalued at $210,000.
The property was estimated as having a useful life of 20 years when it was purchased.
What is the balance on the revaluation surplus reported in the statement of financial
position?
a.$210,000
b.$74,000
c.$136,000
d.$34,000

3. Which one of the following would occur if the purchase of computer stationary was
debited to the computer equipment at cost account?
a.An overstatement of profit and an understatement of non-current assets
b.An overstatement of profit and an understatement of non-current assets
c.An understatement of profit and an overstatement of non-current assets
d.An overstatement of profit and an overstatement of non-current assets

4. W bought a new printing machine. The cost of machine was $80,000. The installation
cost was $5,000 and the employees received training on how to use the machine, at a cost
of $2,000. Before using the machine to print customer’s order, a test was undertaken
and the paper and ink cost $1,000. What should be the cost of the machine in the
company’s statement of financial position?
a.$85,000
b.$88,000
c.$80,000
d.$86,000
5. B acquired a lorry on 1 May 20X0 at a cost of $30,000. The lorry has an estimated
useful life of four years, and an estimated resale value at the end of that time of $6,000.
B charges depreciation on the straight line basis, with a proportionate charge in the
period of acquisition. What will the depreciation charge for the lorry be in B’s
accounting period to 30 Sept 20X0?
a.$3,000
b.$2,000
c.$2,500
d.$5,000
6.Which one of the following statements correctly defines non-current assets?
a.Assets which are intended to be used by the business on a continuing basic, including both
tangible and intangible assets that do not meet the IASB definition of a current asset (đáp án
cô hiền)
b.Assets in the form of materials or supplies to be consumed in the production process
c.Assets that are held for use in the production of goods or services and are expected to be
used during more than one accounting period
d.Non-monetary assets without physical substance that are controlled by the entity and from
which future benefits are expected to flow

7. Which of the following should be disclosed for tangible non-current assets according
to IAS 16 Property, plant and equipment? 1/ Depreciation methods used and the total
depreciation allocated for the period. 2/ A reconciliation of the carrying amount of
non-current assets at the beginning and end of the period. 3/ For revalued assets,
whether an independent valuer was involved in the valuation. 4/ For revalued assets, the
effective date for the revaluation
a.1 and 2
b.1, 2, 3 and 4
c.1, 2 and 4
d.1, 3 and 4
8. The carrying value of a company’s non-current assets was $200,000 at August 20X0.
During the year ended 31 Jul 20X1, the company sold non-current assets for $25,000 on
which it made a loss of $5,000. The depreciation charge for the year was $20,000. What
was the carrying value of non-current assets at 31 Jul 20X1?
a.$155,000
b.$160,000
c.$180,000
d.$150,000
9. Which of the following statements are correct? 1/ IAS 16 Property, plant and
equipment requires entities to disclose the purchase date of each asset. 2/ The carrying
amount of a non-asset is the cost or valuation of that asset less accumulated
depreciation. 3/ IAS 16 Property, plant and equipment permits entities to make a
transfer from the revaluation surplus to retained earnings for excess depreciation on
revalued assets. 4/ Once decided, the useful life of a non-current asset should not be
changed.
a.2 and 3
b.1, 2 and 3
c.2 and 4
d.1, 2 and 4
10 A company sells machine B for $50,000 cash on 30 Apr 20X4. Machine B cost
$100,000 when it was purchased and has a carrying value of $65,000 at the date of
disposal. What are the journal entries to record the disposal of machine B?
a.Dr Accumulated depreciation: $35,000; Dr Cash: $50,000 / Cr Non-current assets – cost:
$65,000; Cr Profit on disposal (SPL): $20,000
b.Dr Accumulated depreciation: $35,000; Dr Non-current assets – cost: $65,000 / Cr Profit on
disposal (SPL): $50,000; Cr Cash: $50,000
c.Dr Accumulated depreciation: $35,000; Dr Loss on disposal (SPL): $15,000; Dr Cash:
$50,000 / Cr Non-current assets – cost: $100,000
d.Dr Accumulated depreciation: $65,000; Dr Loss on disposal (SPL): $35,000 / Cr
Non-current assets – cost: $100,000
11 Which of the following gives the best definition of Property, Plant and Equipment,
based on the provisions of IAS 16?
a. Tangible assets held by an enterprise for more than one accounting period for use in the
production or supply of goods or services, for rental to others, or for administrative purposes
b. Tangible assets held by an enterprise for more than 12 months for use in the production or
supply of goods or services, for rental to others, or for administrative purposes
c. Any assets held by an enterprise for more than 12 months for use in the production or
supply of goods or services, for rental to others, or for administrative purposes
d. Any assets held by an enterprise for more than one accounting period for use in the
production or supply of goods or services, for rental to others, or for administrative purposes
12 For the purposes of recognising a non-current property, plant and equipment asset,
the acquisition date is determined as the date:
a. on which the offer to acquire the asset becomes unconditional
b. on which the acquirer obtains control of the asset
c. on which the invoice is issued
d. the consideration is paid
e. the contract to exchange assets is signed
13 Revaluations under IAS 16 Property, Plant and Equipment apply to
a. all assets on an individual basis
b. assets on an item-by-item basis
c. assets on a class-by-class basis
d. individual non-current assets only
e. individual current assets only
14 On 1 October 20x1, Bash Co borrowed $6m for a term of one year, exclusively to
finance the construction of a new piece of production equipment. The interest rate on
the loan is 6% and is payable on maturity of the loan. The construction commenced on
1 November 20x1 but no construction took place between 1 December 20x1 to 31
January 20x2 due to employees taking industrial action. The asset was available for use
on 30 September 20x2 having a construction cost of $6m. What is the carrying amount
of the production equipment in Bash Co’s statement of financial position as at 30
September 20x2?
a. $6,360,000
b. $5,016,000
c. $6,330,000
d. $6,270,000
15 Which of the following statements is NOT correct in relation to disclosure of
property, plant and equipment balances? ‘
a. IAS 16 contains disclosure that are encouraged, but not required in relation to property,
plant & equipment
b. An entity must disclose the useful life estimates for each class of assets
c. IAS 16 requires disclosure, for each class of property, plant and equipment, the
measurement bases used for determining the gross carrying amount
d. A summary of movements in the revaluation surplus is required to be disclosed
e. Information on assets carried at revalued amounts must be disclosed on an individual asset
basis
16 Property, plant and equipment are assets that
a. are physical in nature
b. None are correct
c. have a remaining productive life of less than one financial year
d. are held for resale within the current period
e. are expected to be used up within the current financial period
17 Troubadour Limited had an existing revaluation surplus in respect to an item of
plant that had been derecognised. An appropriate journal entry to transfer the surplus
to retained earnings would include:
a. DR Gain on revaluation – OCI
b. CR Gain on revaluation – OCI
c. CR Retained earnings
d. CR Asset revaluation surplus
e. DR Retained earnings
18 Property, plant and equipment includes items that are:
a. held for rental to others
b. expected to be used up during the current period
c. held for resale
d. intangible
19 Property, plant and equipment includes items that are:
a. held for rental to others
b. expected to be used up during the current period
c. held for resale
d. intangible
20 Under the cost model, after initial recognition of a property, plant and equipment
asset, the item must be
carried at its:
a. cost less accumulated depreciation and less accumulated impairment losses
b. residual value
c. current value
d. initial cost
e. net present value
21 When applying a revaluation measurement model to assets, the model:
a. is applied to individual assets within a class of non-current assets
b. may only be applied to current assets
c. is applied permanently and may not be changed
d. applies to the entire class of non-current assets
22 Which of the following statements is correct?
Statement 1: If the revaluation model is used for property, plant and equipment,
revaluations must subsequently be made with sufficient regularity to ensure that the
carrying amount does not differ materially from the fair value at each reporting date.
Statement 2: When an item of property, plant and equipment is revalued, there is no
requirement that the entire class of assets to which the item belongs must be revalued.
a. Statement 2 only is correct
b. Neither statement is correct
c. Statement 1 only is correct
d. Both statements are correct
23 An aircraft requires a planned overhaul each year at a cost of $5,000. This is a
condition of being allowed to fly. How should the cost of the overhaul be treated in the
financial statements?
a. Provided for in advance and charged to maintenance expenses
b. Accrued for over the year and charged to maintenance expenses
c. Capitalised and depreciated over the period to the next overhaul
d. Charged to profit or loss when the expenditure takes place
The correct answer is: Capitalised and depreciated over the period to the next overhaul
24 Leclerc has borrowed $2.4 million to finance the building of a factory. Construction
is expected to take two years. The loan was drawn down and incurred on 1 January
20x9 and work began on 1 March 20x9. $1 million of the loan was not utilised until 1
July 20x9 so Leclerc was able to invest it until needed. Leclerc is paying 8% on the loan
and can invest surplus funds at 6%. Calculate the borrowing costs to be capitalised for
the year ended 31 December 20x9 in respect of this project.
a. $130,000
b. $100,000
c. $162,000
d. $192,000
25 An entity purchased an item of property for $6 million on 1 July 20x3. The value of
the land was $1 million and the buildings $5 million. The expected life of the building
was 50 years and its residual value nil. On 30 June 20x5 the property was revalued to $7
million (land $1.24 million, buildings $5.76 million). On 30 June 20x7, the property was
sold for $6.8 million. Which TWO of the following are true regarding the treatment of
the disposal of the property for the year to 30 June 20x7?
a. Release the revaluation reserve of $1,200,000
b. Gain on disposal of $40,000
c. Release the revaluation reserve of $1,240,000
d. Gain on disposal of $200,000
e. Gain on disposal of $84,800
26 Although most items in financial statements are shown at their historical cost,
increasingly the IASB is requiring or allowing current cost to be used in many areas of
financial reporting. Drexler acquired an item of plant on 1 October 2012 at a cost of
$500,000. It has an expected life of five years (straight-line depreciation) and an
estimated residual value of 10% of its historical cost or current cost as appropriate. As
at 30 September 2014, the manufacturer of the plant still makes the same item of plant
and its current price is $600,000. What is the correct carrying amount to be shown in
the statement of financial position of Drexler as at 30 September 2014 under historical
cost and current cost?
a. Historical cost: $300,000 - Current cost: $600,000
b. Historical cost: $320,000 - Current cost: $600,000
c. Historical cost: $300,000 - Current cost: $384,000
d. Historical cost: $320,000 - Current cost: $384,000
27 Solar Products purchased a computer for $13,000 on July 1, 2018. The company
intends to depreciate it over 4 years using the double-declining balance method.
Residual value is $1,000. Depreciation for 2018 is
a. $4,875
b. $6,500
c. $3,250
d. $3,000
28 Plant assets purchased on long-term credit contracts should be accounted for at
a. The total value of the future payments.
b. The future amount of the future payments.
c. The present value of the future payments.
d. None of these answer choices are correct.
29 Ferguson Company purchased a depreciable asset for $100,000. The estimated
residual value is $10,000, and the estimated useful life is 10 years. The straight-line
method will be used for depreciation. What is the depreciation base of this asset?
a. $90,000
b. $10,000
c. $100,000
d. $9,000
30 The sale of a depreciable asset resulting in a loss indicates that the proceeds from the
sale were:
a. Less than book value.
b. Greater than cost.
c. Less than current fair value.
d. Greater than book value
31 The term "depreciable base," or "depreciation base," as it is used in accounting,
refers to
a. The acquisition cost of the asset.
b. The cost of the asset less the related depreciation recorded to date.
c. The estimated fair value of the asset at the end of its useful life.
d. The total amount to be charged (debited) to expense over an asset's useful life.
32 Peterson Company purchased machinery for $160,000 on January 1, 2015.
Straight-line depreciation has been recorded based on a $10,000 salvage value and a
5-year useful life. The machinery was sold on May 1, 2019 at a gain of $3,000. How
much cash did Peterson receive from the sale of the machinery?
a. $33,000
b. $23,000
c. $43,000
d. $27,000
33 Worthington Chandler Company purchased equipment for $10,000. Sales tax on the
purchase was $500. Other costs incurred were freight charges of $200, repairs of $350
for damage during installation, and installation costs of $225. What is the cost of the
equipment?
a. $11,275
b. $10,500
c. $10,925
d. $10,000
34 The carrying value of a company’s non-current assets was $200,000 at August 20X0.
During the year ended 31 Jul 20X1, the company sold non-current assets for $25,000 on
which it made a loss of $5,000. The depreciation charge for the year was $20,000. What
was the carrying value of non-current assets at 31 Jul 20X1?
a. $155,000
b. $160,000
c. $150,000
d. $180,000
35 In an exchange with commercial substance, Huang Company traded equipment with
a cost of $8,200,000 and book value of $3,120,000 and gave $4,698,000 cash. The old
machine had a fair value of $2,960,000. Which of the following journal entries would
Huang make to record the exchange?
a. Dr Equipment: 7,658,000; Dr Accumulated Depreciation: 542,000/ Cr Equipment:
8,200,000
b. Dr Equipment: 7,658,000; Dr Loss on disposal: 160,000; Dr Accumualted Depreciation:
5,080,000 / Cr Equipment: 8,200,000; Cr Cash: 4,689,000
c. Dr Accumulated Depreciation: 5,080,000; Dr Equipment: 7,818,000/ Cr Equipment:
8,200,000; Cr Cash: 4,689,000
d. Dr Equipment: 8,208,000 / Cr Equipment: 8,200,000; Cr Cash: 8,000
36 Which of the following is not a capital expenditure?
a. Repairs that maintain an asset in operating condition
b. An addition
c. A replacement
d. A betterment
37 Ecker Company purchased a new machine on May 1, 2010 for $176,000. At the time
of acquisition, the machine was estimated to have a useful life of ten years and an
estimated salvage value of $8,000. The company has recorded monthly depreciation
using the straight-line method. On March 1, 2019, the machine was sold for $24,000.
What should be the loss recognized from the sale of the machine?
a. $8,000
b. $3,600
c. $0
d. $11,600.25
38.The carrying value of a company’s non-current assets was $200,000 at August 20X0. During
the year ended 31 Jul 20X1, the company sold non-current assets for $25,000 on which it made a
loss of $5,000. The depreciation charge for the year was $20,000. What was the carrying value of
non-current assets at 31 Jul 20X1?
a.$150,000 b.$155,000 c. $160,000 d.$180,000
 39.If an entity uses part of a building for their own use, and rents the remainder. How should
this be treated?
a. All as investment property under IAS 40.
b. Account for separately under IAS 16-PPE and IAS 40
c. All under IAS 16 –PPE
d. None of these
40.A company acquired a machine and incurred the following expenses:
● Purchase cost of €100,000
● Transport and installation cost of €2,500
● Cost of employees’ training to use the machine of €2,000
● Stamp duty (tax is levied on document): €4,000
What is the cost of machine in line with IAS 16?
a. €106,500 b. €108,500 c. €102,500 d. €100,000

41 An entity imported machinery to install in its new factory premises before year-end.
However, due to circumstances beyond its control, the machinery was delayed by a few months
but reached the factory premises before year-end. While this was happening, the entity learned
from the bank that it was being charged interest on the loan it had taken to fund the cost of the
plant. What is the proper treatment of freight and interest expense under IAS 16?
a. Both expenses should be capitalized
b. Interest may be capitalized but freight should be expensed
c. Freight charges should be capitalized but interest cannot be capitalized under these circumstances
d. Both expenses should be expensed
.42 An item of plant was purchased on 1/1/2008 for €200,000 and is being depreciated at 25% on
a reducing balance basis. What would be its carrying value at the year-end 31/12/2012?
a. €NIL b. €47,461 c. €40,000 d. €63,281
43 Which of the following statements is NOT correct:
a.Major spare parts and stand-by equipment qualify as property, plant and equipment when they are
expected to be used during more than one period.
b.Repairs and maintenance costs are normally Expensed in the income statement as incurred
c.Spare parts and servicing equipment are usually accounted for as inventory
d.Repairs and maintenance costs are normally Recorded as deferred expenses

44 An entity imported machinery to install in its new factory premises before year-end.
However, due to circumstances beyond its control, the machinery was delayed by a few months
but reached the factory premises before year-end. While this was happening, the entity learned
from the bank that it was being charged interest on the loan it had taken to fund the cost of the
plant. What is the proper treatment of freight and interest expense under IAS 16?
a.Both expenses should be capitalized.
b.Interest may be capitalized but freight should be expensed.
c.Freight charges should be capitalized but interest cannot be capitalized under these
circumstances.
d.Both expenses should be expensed.

45.An item of plant was purchased on 1 April 2008 for CU 200,000 and is being depreciated at
25% on a reducing balance basis. What would be its residual value after its useful life of 5
years?
a.CU NIL b. CU 47.461 c. CU 40.000 d. CU 63.281

45.Property held under an operating lease is classified as investment property if?

a.All property held under operating leases are classified as investment properties.
b.All investment property will be accounted for using the fair value model.
c.Depreciation will no longer be charged.
d.All property held under operating are not classified as investment properties.
46.When a bank completes the construction, or development, of a self-built investment property
that will be carried at fair value, any difference between the fair value of the property at that
date, and its previous carrying amount be recognised in?
a.Recognised in income statement.
b.Discounted to present value.
c.Noted it as a contingent liability.
d.Written off over the life of the asset

47 .An enterprise sells on 1 January 20X5 a van which it bought on 1 January 20X2 for €3,000,
and has been depreciating the van each year at 25% per annum on a straight line basis. It
trades this van in for a new van costing €5,000 and pays the supplier €4,600 cash. What is the
gain or loss on the disposal of the old van?
a. €750 loss b. €750 gain c. €350 loss d. €350 gain

1. Which of the following is an adjusting event in accordance with IAS 10?

a.An increase in selling price of inventory
b.A decrease in market value of an investment
c.A decision by the entity to distribute dividend to shareholders
d.A client declared bankruptcy, and a receivable is not recoverable
2.ABC Ltd. decided to operate a new amusement park that will cost $1 million to build
in the year
2005. Its financial year-end is December 31, 2005. ABC Ltd. has applied for a letter of
guarantee
for $700,000. The letter of guarantee was issued on March 31, 2006. The audited
financial
statements have been authorized to be issued on April 18, 2006. The adjustment
required to be made to the financial statement for the year ended December 31, 2005,
should be
a. Booking a $700,000 long-term payable.
b.Disclosing $700,000 as a contingent liability in 2005 financial statement.
c.Increasing the contingency reserve by $700,000.
d.Do nothing.
3. A new drug named “EEE” was introduced by Genius Inc. in the market on December
1, 2005.
Genius Inc.’s financial year ends on December 31, 2005. It was the only company that
was
permitted to manufacture this patented drug. The drug is used by patients suffering
from an irregular heartbeat. On March 31, 2006, after the drug was introduced, more
than 1,000 patients died. After a series of investigations, authorities discovered that
when this drug was simultaneously used with “BBB,” a drug used to regulate
hypertension, the patient’s blood would clot and the patient suffered a stroke. A lawsuit
for $100,000,000 has been filed against Genius Inc. The financial statements were
authorized for issuance on April 30, 2006. Which of the following options is the
appropriate accounting treatment for this post– balance sheet event under IAS 10?
a.The entity should provide $100,000,000 because this is an “adjusting event” and the
financial statements were authorized to be issued after the accident.
b.The entity should disclose $100,000,000 as a contingent liability because it is an “adjusting
event.”
c.The entity should disclose $100,000,000 as a “contingent liability” because it is a present
obligation with an improbable outflow.
d.Assuming the probability of the lawsuit being decided against Genius Inc. is remote,
the entity should disclose it in the footnotes, because it is a nonadjusting material event.
4. At the balance sheet date, December 31, 2005, ABC Inc. carried a receivable from
XYZ, a major
customer, at $10 million. The “authorization date” of the financial statements is on
February 16,
2006. XYZ declared bankruptcy on Valentine’s Day (February 14, 2006). ABC Inc. will
a. Disclose the fact that XYZ has declared bankruptcy in the footnotes.
b.Make a provision for this post–balance sheet event in its financial statements (as opposed to
disclosure in footnotes).
c.Ignore the event and wait for the outcome of the bankruptcy because the event took place
after
the year-end.
d.Reverse the sale pertaining to this receivable in the comparatives for the prior period and
treat this
as an “error” under IAS 8.
5. Excellent Inc. built a new factory building during 2005 at a cost of $20 million. At
December 31,
2005, the net book value of the building was $19 million. Subsequent to year-end, on
March 15,
2006, the building was destroyed by fire and the claim against. the insurance company
proved futile
because the cause of the fire was negligence on the part of the caretaker of the building.
If the date
of authorization of the financial statements for the year ended December 31, 2005, was
March 31,
2006, Excellent Inc. Should:
a. Write off the net book value to its scrap value because the insurance claim would not fetch
any
compensation.
b. Make a provision for one-half of the net book value of the building.
c. Make a provision for three-fourths of the net book value of the building based on prudence.
d. Disclose this nonadjusting event in the footnotes.
6. International Inc. deals extensively with foreign entities, and its financial statements
reflect these
foreign currency transactions. Subsequent to the balance sheet date, and before the
“date of
authorization” of the issuance of the financial statements, there were abnormal
fluctuations in
foreign currency rates. International Inc. should
a.Adjust the foreign exchange year-end balances to reflect the abnormal adverse fluctuations
in
foreign exchange rates.
b.Adjust the foreign exchange year-end balances to reflect all the abnormal fluctuations
in foreign exchange rates (and not just adverse movements).
c.Disclose the post–balance sheet event in footnotes as a nonadjusting event.
d.Ignore the post–balance sheet event.
7.Which of the above dates marks the end of the period covered by IAS 10?
a.On 14 February 2XX8, the management of a bank approves financial statements for issue to
its
supervisory board. The supervisory board is made up solely of non-executives, and may
include
representatives of employees, and other outside interests.
b.On 21 February 2XX8, the supervisory board approves the financial statements.
c.On 10 March 2XX8, the financial statements are made available to shareholders, and
others.
d.On 17 April 2XX8, the shareholders approve the financial statements at their annual
meeting.
8.On 29 January 2007, a draft financial statements was completed for the year to 31
December 2006. On 4 February 2007, the board of directors reviews the financial
statements and approves them for issue. On 18 March 2007, the financial statements are
made available to shareholders and others. On 25 April 2007, the shareholders approve
the financial statements at the annual meeting. On 29 April 2007, the approved financial
statements are then filed with a regulatory body. Which is the date the financial
statements were authorised for issue in accordance with IAS 10?
a. 29 April b. 04 February c. 25 April d. 18 March

19. Which of the following items qualifies as property, plant and

equipment?
a. A machine bought for resale to a customer
b. A machine bought for use during a single accounting period
c. A machine bought for use in more than one accounting period
d. Computer software bought for use in more than one accounting
period
22. Which of the following statements is correct:
a.Depreciation is defined as the fall in value of an asset during an
accounting period.
b.Borrowing costs that are directly attributable to the acquisition
of a qualifying asset must be capitalised as part of the cost of
that asset
c.Residual value is specifically the gross cash amount that you
will receive from the ultimate sale of the asset, at the end of its
life
d.Useful life of an asset refers to the life of the asset throughout its
life, in the hands of any number of owners.
23. Cost of property, plant and equipment (IAS 16) is calculated
as:
a.Purchase price net of any discounts + directly attributable costs
– accumulated depreciation.
b.Purchase price + transport costs + installation cost.
c.Purchase price net of any discounts + directly attributable costs
– accumulated depreciation – impairment loss.
d.Purchase price net of any discounts + directly attributable costs
+ the initial estimate of costs for dismantling and removing the
asset and restoring the site.
24. DN mua một TBSX và có các chi phí phát sinh như sau:
- giá mua: 100.000CU
-Chi phí vận chuyển, lắp đặt: 2.500CU
- Chi phí huấn luyện nhân viên vận hành máy:2.000 CU
-Chi phí đăng ký sở hữu: 4.000CU. Giá gốc của TBSX này theo IAS
16 là:
a. CU 106.500
b. CU 108.500
c. CU 102.500
d. CU 100.000
25.An entity imported machinery to install in its new factory premises
before year-end. However, due to circumstances beyond its control, the
machinery was delayed by a few months but reached the factory premises
before year-end. While this was happening, the entity learned from the
bank that it was being charged interest on the loan it had taken to fund
the cost of the plant. What is the proper treatment of freight and interest
expense under IAS 16?
a. Both expenses should be capitalized
b. Interest may be capitalized but freight should be expensed
c. Freight charges should be capitalized but interest cannot be capitalized
under these circumstances
d. Both expenses should be expensed
thuhien-21 28
26. Vào ngày 1/1/X1, DN mua một tòa nhà với giá CU95,000
(bao gồm cả thuế không được hoàn lại). Theo thỏa thuận, DN
phải thanh toán toàn bộ số tiền này cho người bán vào ngày
31/12/X1. Chi cho thủ tục pháp lý liên quan đến toán nhà là
CU2,000 và DN đã trả khoản phí này vào 1/1/X1. Lãi suất chiết
khấu thích hợp là 10%/năm. DN sẽ đo lường giá gốc ban đầu
của TS này là:
a. CU102,000
b. CU97,000
c. CU107,000.
d. CU88,364
27.On 1 March 2010 Yucca purchased an upgrade package from Plant at a cost
of CU18,000 for the machine it originally purchased in 2008. The upgrade took
a total of two days where new components were added to the machine. Yucca
agreed to purchase the package as the new components would lead to a
reduction in production time per unit of 15%. This will enable Yucca to
increase production without the need to purchase a new machine. What is
appropriate accounting treatment?
a. Yucca should expense this additional expenditure
b. None of the above is appropriate treatment
c. Yucca should capitalize this additional expenditure in the cost in
the cost of existing plant
d. Yucca should capitalize the 15 % of CU18.000 in the cost of
existing plant
28.What is the journal entry for upward revaluation of
property, plant and equipment (PPE) under revaluation model
in line with IAS 16?
a. Debit PPE and credit Revaluation surplus in Equity
b. Debit Revaluation surplus in equity and credit PPE
c. Debit Revaluation surplus in Profit or loss and credit PPE.
d. Debit PPE and credit Revaluation surplus in Profit or loss.
29. DN mua một nhà xưởng vào 1/4/X8 với giá CU 200,000
và khấu hao với tỷ lệ 25%/năm theo số dư giảm dần. Giá trị
của TS còn lại sau 5 năm hữu dụng của TS là:
a. CU NIL
b. CU 47.461
c. CU 40.000
d. CU 63.281
30. What is the journal entry for annual depreciation expense of
property, plant and equipment (PPE) under cost model in line
with IAS 16?
a.Debit PPE (accumulated depreciation) and credit Profit or loss.
b.Debit Profit or loss and credit PPE (accumulated depreciation). If
another IFRS allows including the depreciation in the cost of
another asset, then the debit goes to the cost of another asset.
c.Debit Profit or loss and credit PPE (accumulated depreciation).
No exceptions
d.Debit Other comprehensive income and credit PPE (accumulated
depreciation
31. DN mua một TBSX vào 1/4/X7 với giá CU120,000. DN
ước tính giá trị còn lại (thu hồi khi thanh lý) của TS là
CU20,000. Thời gian kinh tế của TS tính từ ngày mua là 10
năm. Vào ngày 1/4/X9 (sau hai năm) DN đánh giá lại giá trị
còn lại của TS (khi kết thúc TG sử dụng) là 15.000CU và thời
gian kinh tế còn lại của TS là 5 năm. Tính giá trị khấu hao TS
này cho các năm kết thúc ngày 31/3/X8; X9 & X10.
a. CU 10.000, CU 10.000 & CU 21.000
b. CU 15.000, CU 15.000 & CU 15.000
c. CU 10.000, CU 10.000 & CU 17.000
d. CU 10.000, CU 10.000 & CU 28.333
32. Vào ngày 1/1/X1, DN (có năm tài chính kết thúc ngày 31/12)
mua một TBSX với giá 20.000CU. Thời gian hữu ích của TS là 6
năm; giá trị thu hồi (còn lại) dự kiến là 1,500CU. DN sử dụng
phương pháp khấu hao số dư giảm dần với lãi suất 35%/năm. Giá
trị KH (gần đúng) TBSX này cho năm TC kết thúc ngày 31/12/X2
là:
a. CU 3,083
b. CU 7,000
c. CU 4,550
d. CU 4,209
thuhien-21 47
33. Cty chi trả CU 40,000 cho việc thay thế một bộ phận quan
trọng của 1 TBSX. DN bán Chi tiết lỗi được thay thế với giá
CU 2,000. Giá trị ghi sổ của TB này trước khi thực hiện thay
thế này là CU 450,000, trong đó bộ phận thay thế là CU 10,000.
GTGS của TB này sau khi thay thế và kết quả thanh lý bộ
phận thay thế là:
a. Carrying amount CU 490,000, Loss CU 8,000
b. Carrying amount CU 480,000, Loss CU 8,000
c. Carrying amount CU 480,000, Loss CU 10,000
d. Carrying amount CU 490,000, Profit CU 2,000
34. Giá trị ghi sổ BĐS của Zen vào cuối năm là CU108,000.
Vào ngày này DN đánh giá lại BĐS theo GTHL là CU 95,000.
Số dư – Thặng dư đánh giá lại (OCI) liên quan đến đánh giá
tăng BĐS này trước đây là CU 10,000. Bút toán ghi nhận
đánh giá lại là:
a. Dr Profit or loss: CU 3.000
Dr Other comprehensive income: CU 10.000
Cr: Property: CU 13.000
b. Dr Profit or loss: CU 13.000
Cr Property: CU 13.000
c. Dr Profit or loss: CU 10.000
Dr Other comprehensive income: CU 3.000
Cr Property: 13.000
d.Dr Profit or loss: CU 3.000
Dr Other comprehensive income: CU 10.000
Cr Property: 13.000

—---------------------------------------------------------------------------------------------
Intangible assets-IAS38
1 Goodwill is:
a.Amortized over the greater of its estimated life or forty years.
b.None of the above.
c.Only recorded by the seller of a business.
d.The excess of the fair value of a business over the fair value of all net identifiable assets.
2 Mini Corp. acquires a patent from Maxi Co. in exchange for 2,500 shares of Mini
Corp.’s €5 par value ordinary shares and €85,000 cash. When the patent was initially
issued to Maxi Co., Mini Corp.’s shares were selling at €7.50 per share. When Mini
Corp. acquired the patent, its shares were selling for €9 a share. Mini Corp. should
record the patent at what amount?
a.€85,000
b.€107,500
c.€103,750
d.€97,500
3 Which of the following costs should be capitalized in the year incurred?
a.Costs to internally generate goodwill.
b.Organizational costs.
c.Costs to successfully defend a patent.
d.Development costs.
4 An exclusive 20-year right to manufacture a product or use a process is a:
a.Patent.
b.Trademark.
c.Copyright.
d.Franchise.
5 IFRS requires that start-up costs and initial operating losses during the early years be
capitalized.
a.True
b.False
6 Impairment testing is conducted annually for both limited–life and indefinite-life
intangible assets.
a.False
b.True
7 Under International Financial Reporting Standards, research expenditures are:
a.Capitalized if certain criteria are met.
b.Expensed in the period incurred.
c.Expensed if unsuccessful, capitalized if successful.
d.Expensed in the period they are determined to be unsuccessful.

8 According to IAS 38 Intangible assets, which of the following are intangible

non-current assets in the accounts of Ita Co? 1. A patent for a new glue purchased for
$20,000 by Ita Co; 2. Development costs capitalized in accordance with IAS 38; 3. A
licence to broadcast a television series, purchased by Ita Co for $150,000; 4. A state of
the art factory purchased by Ita Co for $1.5 million.
a.2, 3 and 4
b.2 and 4
c.1 and 3
d.1, 2 and 3
9 If a new patent is acquired through modification of an existing patent, the remaining
book value of the original patent may be amortized over the life of the new patent.
a.False
b.True
10 Which of the following methods of amortization is normally used for intangible
assets?
a.Double-declining-balance
b.Straight-line
c.Units of production
d.Sum-of-the-years'-digits
11 January of 2013, Vega Corporation purchased a patent at a cost of $200,000. Legal
and filing fees of $50,000 were paid to acquire the patent. The company estimated a
10-year useful life for the patent and uses the straight-line amortization method for all
intangible assets. In 2016, Vega spent $40,000 in legal fees for an unsuccessful defense of
the patent. The amount charged to income (expense and loss) in 2016 related to the
patent should be:
a.$65,000.
b.$25,000.
c.$215,000.
d.$40,000.
12 Depreciation, depletion, and amortization:
a.All of the above are correct.
b.Are all handled the same in arriving at taxable income.
c.All generally utilize the same methods of cost allocation.
dAll refer to the process of allocating the cost of long-term assets used in the business over
future periods.
13 Cromartie LTD. prepares its financial statements according to International
Financial Reporting Standards. During 2013 the company incurred $1,245,000 in
research expenditures to develop a new product. An additional $756,000 in development
expenditures were incurred after technological and commercial feasibility was
established and after the future economic benefits were deemed probable. The project
was successfully completed and the new product was patented before the end of the
2013 fiscal year. Sale of the product began in 2014. What amount of the above
expenditures would Cromartie expense in its 2013 income statement?
a.$1,245,000.
b.$756,000.
c.$0.
d.$2,001,000.
14 Short Corporation purchased Hathaway Co. for $52,000,000. The fair value of all
Hathaway's identifiable tangible and intangible assets was $48,000,000. Short will
amortize any goodwill over the maximum number of years allowed. What is the annual
amortization of goodwill for this acquisition?
a.0.
b.$100,000.
c.$400,000.
d.$200,000.
16 Under International Financial Reporting Standards, research expenditures are:
a.Expensed in the period they are determined to be unsuccessful.
b.Expensed in the period incurred.
c.Expensed if unsuccessful, capitalized if successful.
d.Capitalized if certain criteria are met.
17 Rich Corporation purchased a limited-life intangible asset for €270,000 on May 1,
2017. It has a useful life of 10 years. What total amount of amortization expense should
have been recorded on the intangible asset by December 31, 2019?
a.€72,000
b.€0
c.€81,000
d.€54,000(sai)
18 According to IAS 38 Intangible assets, which of the following statements about
research and development expenditure are correct? 1.Research expenditure, other than
capital expenditure on research facilties, should be recognised as an expense as
incurred; 2.In deciding whether development expenditure qualifies to be regconised as
an asset, it is necessary to consider whether there will be adequate finance available to
complete the project; 3.Development expenditure regconised as an asset must be
amortised over a period not exceeding five years.

a.1,3
b.2, 3
c.1, 2, 3
d.1, 2
19 When an intangible asset is acquired by an exchange of assets, which of the following
measures will need to be considered in the determination of that cost?
a. The initial cost of the asset given up
b. The replacement cost of the asset received
c. The carrying amount of the asset received
d. The fair value of the asset given up
20 Harrel Company acquired a patent on an oil extraction technique on January 1, 2018
for €6,000,000. It was expected to have a 10 year life and no residual value. Harrel uses
straight-line amortization for patents. On December 31, 2019, the recoverable amount
of the patent was estimated to be €5,400,000. At what amount should the patent be
carried on the December 31, 2019 statement of financial position?
a. All are incorrect
b. €3,360,000
c. €5,400,000
d. €6,000,000
e. €4,800,000
21 Which of the elements below cannot be recognized as an intangible asset on the
statement of financial position of a company Alpha for the reporting period that ends on
the 30th of September 20X4?
a. Alpha acquired an entity X on the first of October 20X3. The goodwill on acquisition
amounted up to €15,000.
b. Alpha bought a brand name on the first of November 20X3 from a competitor for an
amount of €65,000
c. Alpha incurred €8,000 of research costs for a new type of product. Company management
hopes that within four years' time this research will lead to the development of a new product
line for the company
d. Alpha spent €21,000 on the development of a new product during the reporting period.
This product will be launched on the first of December 20X4 and the product is expected to
be highly profitable
22 Unless acquired under a business combination, intangible assets must be initially
measured using which of the following measurement approaches?\
a. discounted cash flows
b. net present value
c. cost
d. fair value
23 Lynne Corporation acquired a patent on May 1, 2019. Lynne paid cash of €40,000 to
the seller. Legal fees of €1,000 were paid related to the acquisition. What amount should
be debited to the patent account?\
a. €1,000
b. €40,000
c. €39,000
d. €41,000
e. All are incorrect
24 IAS 38 Intangibles, requires that an intangible asset with a finite life:
a. be amortised across its useful life
b. not be amortised in periods when it is been properly maintained
c. be amortised across a period of no greater than 20 years
d. not be subject to amortisation charge

25 On January 1, 2015, Russell Company purchased a copyright for £1,200,000,

having an estimated useful life of 16 years. In January 2019, Russell paid £180,000 for
legal fees in a successful defense of the copyright. Copyright amortization expense for
the year ended December 31, 2019, should be
a. £0
b. £86,250
c. £90,000
d. £75,000
e. All are incorrect
26 Malrom Manufacturing Company acquired a patent on a manufacturing process
on January 1, 2018 for €4,000,000. It was expected to have a 10 year life and no
residual value. Malrom uses straight-line amortization for patents. On December 31,
2019, the recoverable amount of the patent was estimated to be €2,720,000. At what
amount should the patent be carried on the December 31, 2019 statement of financial
position?
a. €2,720,000
b. All are incorrect
c. €3,600,000
d. €3,200,000
e. €4,000,000
27 Parsons Limited was involved in a highly successful plastics manufacturing
business. It commenced a project to design a more efficient extrusion system for its
plastic pipes. The following outlays occurred: January: Research salaries £50,000;
February: Research materials £30,000; March: Re-development of the extrusion plant
£400,000; April: Final adjustments to the extrusion plant £25,000. The amount to be
expensed by this company at the end of the financial year, 30 June, is:
a. £480,000
b. £80,000
c. £30,000
d. All are incorrect
e. £50,000
28 Under IAS38 the measurement of intangible assets subsequent to initial recognition
must be measured by
a. either the cost model or the revaluation model
b. the cost model
c. the same basis used when it was acquired
d. the revaluation model
29 On June 30, 2019, Cey Inc. exchanged 2,000 shares of Seely Corp. €25 par value
ordinary shares for a patent owned by Gore Co. The Seely stock was acquired in 2019
at a cost of €55,000. At the exchange date, Seely ordinary shares had a fair value of
€48 per share, and the patent had a net carrying value of €110,000 on Gore's books.
Cey should record the patent at:
a. €110,000
b. €55,000
c. All are incorrect
d. €96,000
e. €50,000

30 Thompson Company incurred research and development costs of €100,000 and

legal fees of €50,000 to acquire a patent. The patent has a legal life of 20 years and a
useful life of 10 years. What amount should Thompson record as Patent Amortization
Expense in the first year?
a. €15,000
b. €0
c. €5,000
d. All are incorrect
e. €7,500 The correct answer is: €5,000
31 Which of the following statements is correct?
a. Disclosures about the useful lives of intangibles are required with explanations being
required where assets are assessed to have finite useful lives
b. Separate disclosures are required for internally generated intangibles
c. Where the cost model is used, specific disclosures are required including assumptions
made on estimating fair values
d. IAS 38 requires disclosures about an entity’s intangible assets, with disclosures being
made on an asset by asset basis
32 A key characteristic that separates assets such as property, plant and equipment
from intangible assets is:
a. reliability
b. lack of physical substance
c. length of useful life
d. separability
33 Under IAS 38 Intangibles, an intangible asset with an indefinite useful life is:\
a. not subject to annual amortisation charges
b. amortised using the straight-line method over a period of no more than 20 years
c. not able to be recognised by an entity as an asset
d. amortised using the reducing balance method over a period not exceeding 5 years
34 Items such as market knowledge, effective advertising programs, fundraising
capabilities and trained staff are NOT regarded as assets because they:
a. cannot be measured
b. are monetary items
c. are too difficult to manage
d. are not controlled by the entity
35 A company finished the development of a new product on the 31st of December
20X0. The development costs amounted up to € 75 million. The sales of the product
started on the first of January 20X1 and the future profits that will be realized with
this new product are estimated at €105 million. The life cycle of the product is
estimated to be 10 years. The total profit of the product will be spread equally over the
life span of the product. Which value will the company present on the Statement of
Financial Position as Intangible Assets for this product on the 31St of December
20X1?
a. € 67.5 Million
b. € 75 Million
c. All are incorrect
d. € 94.5 Million
e. € 105 Million
36 The general ledger of Vance Corporation as of December 31, 2019, includes the
following accounts: Copyrights: £30,000; Deposits with advertising agency (will be
used to promote goodwill) £27,000; Bond sinking fund: £70,000; Excess of cost over
fair value of identifiable net assets of acquired subsidiary £390,000 and trademarks
£120,000. In the preparation of Vance's statement of financial position as of December
31, 2019, what should be reported as total intangible assets?
a. £537,000
b. All are incorrect
c. £510,000
d. £537,000
e. £540,000
37 When subsequent expenditure on intangible assets occurs the costs are:
a. recognised directly in retained earnings account
b. capitalised
c. transferred to a revaluation reserve account
d. immediately expensed
38 On August 1, 2017, Wei Inc. purchased a license with a cost of HK$4,212,000 and a
useful life of 10 years. At December 31, 2019, when the carrying value of the asset was
HK$3,194,100, the company determined that impairment indicators were present.
The fair less costs to sell the license was estimated to be HK$2,954,560. The asset's
value-in-use is estimated to be HK$3,042,000. Wei's 2019 income statement will report
Loss on Impairment of:
a. HK$152,100
b. HK$54,650
c. HK$636,250
d. HK$149,712
e. All are incorrect
10.Which one of the following would occur if the purchase of computer stationary was debited
to the computer equipment at cost account?
a.An overstatement of profit and an overstatement of non-current assets
b.An understatement of profit and an overstatement of non-current assets
c.An overstatement of profit and an understatement of non-current assets
d.An overstatement of profit and an understatement of non-current assets

2.Which of the following costs must be expensed as they are incurred and not
recognized as an intangible asset in line with IAS 38?
a.The design, construction and testing of pre-production prototypes and models
b.The design of tools involving new technology
c.The design evaluation and selection of possible alternatives for new or improved products
d.The testing of a chosen alternative for new or improved products
4.Which item listed below does not qualify as an intangible asset?
a. Computer software.
b. Registered patent.
c.Copyrights that are protected.
d.Notebook computer.
5.Goodwill does not fall within the IAS38 definition of an intangible asset because:
a.It is a monetary asset
b.It is not separable
c.It may not generate future economic benefits
d.None of the above
6.Which of the following costs must be expensed as they are incurred and not
recognized as an
intangible asset in line with IAS 38?
a.The design, construction and testing of pre-production prototypes and models
b.The design of tools involving new technology
c.The design evaluation and selection of possible alternatives for new or improved products
d.The testing of a chosen alternative for new or improved products
7.Which models are permitted by IAS 38 for subsequent measurement of intangible
assets?
a.Revaluation model and fair value model
b.Cost model and revaluation model
c.Cost model and fair value model
d.Cost model, revaluation model and fair value model
13. The legal life of a patent is generally:
a. Forty years.
b. Twenty years.
c. Life of the inventor plus fifty years.
d. Indefinite.
16. Which of the following items qualify as an intangible asset under IAS 38?
a. Advertising and promotion on the launch of a huge product.
b.College tuition fees paid to employees who decide to enroll in an executive M.B.A.
program at Harvard University while working with the company.
c.Operating losses during the initial stages of the project.
d.Legal costs paid to intellectual property lawyers to register a patent.
18. Expenditure to train employees of a consulting company:
a. Cannot be capitalized unless the employees have legal binding contract to repay the cost
of training to employer when they leave
b. Can be capitalized as an intangible asset in line with IAS 38, because consulting
company will get future economic benefits when the employees provide services to clients
c. Can be capitalized into a cost of some property, plant and equipment (IAS 16), but not as
a separate intangible asset
d. Cannot be capitalized, because the company does not control the future actions of its
employees and therefore, control condition in IAS 38 is not met.
19. Which of the following costs must be expensed as they are incurred and not
recognized as an intangible asset in line with IAS 38?
a. The design, construction and testing of pre-production prototypes and models
b. The design of tools involving new technology
c. The design evaluation and selection of possible alternatives for new or improved
products
d. The testing of a chosen alternative for new or improved products
20. How should research and development expenditure be dealt with in an entity's
financial statements?
a. Research and development expenditure should always be written off as an expense
b. Research and development expenditure should always be capitalised as an intangible
asset
c. Research expenditure should always be written off as an expense but development
expenditure should always be capitalised as an intangible asset
d. Research expenditure should always be written off as an expense but development
expenditure should be capitalised as an intangible asset if it satisfies certain conditions
21. Cty C lập BCTC theo IFRS. Trong năm X3 Cty đã chi $1,245,000 để nghiên cứu
phát triển sản phẩm mới. Cty cũng đã chi $756,000 cho phát triển dự án sau khi đảm
bảo tính khả thi của dự án cả về kỹ thuật và kinh tế cũng như đánh giá có thể thu
được lợi ích kinh tế tương lai từ dự án. Dự án đã hoàn thành và sản phẩm mới được
cấp bằng sáng chế vào cuối năm X3. Cty sẽ bắt đầu bán sản phẩm mới trong năm X4.
GIá trị nào sau đây được ghi nhận vào chi phí của cty năm X3:
a. $2,001,000.
b. $756,000.
c. $1,245,000.
d. $0.
22. The revaluation model cannot be used for the measurement of an intangible asset
unless:
a. The asset is revalued every year
b. The fair value of the asset is determined by a professional valuer
c. There is an active market in that type of asset
d. The revaluation model is also used for tangible assets
23. On 31 December 2011, a company acquires land for £500,000. The land is revalued
at £530,000 on 31 December 2012 and £460,000 on 31 December 2013. The company
prepares financial statements to 31 December each year and uses the revaluation
model in relation to land. The correct accounting treatment of each revaluation in the
statement of comprehensive income is as follows:
a. 2012: Income £30,000 & 2013: Expense £70,000
b. 2012: Other comprehensive income £30,000 & 2013: Expense £70,000
c. 2012: Other comprehensive income £30,000 & 2013: Negative other
comprehensive income £70,000
d. 2012: Other comprehensive income £30,000 and 2013: Negative other
comprehensive income £30,000 & Expense £40,000
24.When does amortisation of an intangible asset commence?
a. When the asset is substantially complete
b. When the asset is available for use
c. When management determine
d. At the start of the accounting period.
25. How often should the useful life of an intangible asset with a finite useful life be
reviewed?
a. Every six months
b. Every year
c. Every five years
d. At management’s discretion
26.Trong tháng 1 năm X3, Cty Vega đã mua một bằng sáng chế với giá gốc là
200.000$. Chi phí pháp lý đã chi trả cho việc mua bang sáng chế này là $50,000. Cty
ước tính thời gian sử dụng bằng sáng chế này ước tính là 10 năm và sử dụng phương
pháp khấu hao đường thẳng cho tất cả các TS vô hình. Vào năm X6, Vega đã chi trả
$40,000 cho việc bảo vệ bằng sáng chế không thành công. Giá trị ghi nhận vào kết quả
kinh doanh (chi phí) năm X6 liên quan đến bằng sáng chế sẽ là:
A. $40,000. B. $65,000.
C. $215,000. D. $25,000
—---------------------------------------------------------------------------------------------
Impairment of asset-IAS36

1 When the recoverable amount of an asset is less than its carrying value in the
Statement of Financial Poisition, the asset is…
a.in a revaluation deficit
b.impaired
c.flawed
d.in negative equity
2 IAS 36 presumes that budgets and forecasts while arriving at cash flow projections
should be…
a.not more than five years
b.not more than three years
c.more than ten years
d.not more than ten years
3 Which of the following is an external indication of impairment?
a.Decline in market value
b.Ongoing losses
c.Damage to an asset
d.Management commitment to undergo a restructuring
4 An asset is said to be impaired if…
a.Its recoverable amount exceeds its carrying amount
b.Its carrying amount is less than its market value
c.Its carrying amount exceeds its net discounted cash inflows
d.Its carrying amount exceeds its recoverable amount
5 Value in use is…
a.The undiscounted future value of present cash flows expected to arise from continuing use
of asset, and from its disposal at the end of its useful life.
b.The discounted present value of historical cash flows expected to arise from continuing use
of asset, and from its disposal at the end of its useful life.
c.The discounted future value of future cash flows expected to arise from continuing use of
asset, and from its disposal at the end of its useful life
d.The discounted present value of future cash flows expected to arise from continuing use of
asset, and from its disposal at the end of its useful life
6 In measuring Value in Use, the discount rate used for discounting the cash flows
should be the….
a.Pre-tax rate that reflects the market assessment of time value of money and risks specific to
the entity’s competitors
b.Pre-tax rate that reflects the entity’s assessment of time value of money and risks specific to
the asset
c.Post-tax rate that reflects the entity’s assessment of time value of money and risks specific
to the asset
d.Pre-tax rate that reflects the market assessment of time value of money and risks specific to
the asset
7 Which of the following is not permitted as a cost to sell under IAS 36?
a.Standard wages for employees
b.Transport costs for machine
c.Auctioneers fees
d.Cost to dismantle machine
8 If the fair value less costs to sell for an asset cannot be determined, then recoverable
amount is its…
a.Market value
b.Replacement value
c.Value in use
d.Fair value
9 The carrying amount of an asset is defined under IAS 36 as…
a.The amount at which an asset is recognised after adding any revaluation gains and
accumulated impairment losses
b.The amount at which an asset is recognised after deducting any accumulated depreciation
and adding back any accumulated impairment losses
c.The amount at which an asset is recognised after deducting any accumulated depreciation
and accumulated impairment losses
d.The amount at which an asset is recognised after adding any accumulated depreciation and
accumulated impairment losses
10 What is the treatment of an impairment loss under IAS 36?
a.Record it in Equity under “Revaluations”
b.Write it off against profit immediately
c.Record a liability in the SOFP for “Impairment losses”
d.Write it off against profit over a defined period agreed by management

11 Which of the following is not covered by IAS 36 – Impairment?

a.Property, Plant and Equipment
b.Inventory
c.Motor Vehicles
d.Intangible assets
12 When should an impairment loss be recognised?
a.Immediately
b.At management’s discretion
c.Over a number of accounting periods
d..When requested by the entity’s auditors
13 The amount, which an asset is recorded in the Statement of Financial Position, less
any accumulated depreciation and impairment losses, is called…
a.Fair value
b.Present value
c.Carrying amount
d.Net realisable value
14 The present value of expected future cash flows generated by an asset, plus its
expected disposal value is called…
a.Market value
b.Net present value
c.Value in use
d.Fair value
15 Under IAS 36, when it is not possible to calculate the recoverable amount of a single
asset, what should be done?
a.The value should remain unchanged
b.The recoverable amount of its cash generating unit should be calculated
c.A disclosure should be provided in the notes to the financial statements
d.A rough estimate should be provided

16 When should a reversal of an impairment loss be recognised?

a.None of these
b.Never
c.Immediately
d.When approved by the board of directors
17 When an impairment loss occurs, the carrying amount of the asset should be reduced
to its ____
a.Recoverable amount
b.Value in use
c.Net present value
d.Market value
18 A cash-generating unit is defined as…
a.the easiest identifiable group of assets that generates cash inflows that are largely
independent from the cash inflows of other assets
b.the largest identifiable group of assets that generates cash inflows that is largely
independent from the cash inflows of other assets.
c.the smallest identifiable group of assets that generates cash inflows that are largely
independent from the cash inflows of other assets.
d.the smallest identifiable group of assets that generates cash outflows that are largely
independent from the cash outflows of other assets
19 On January 1, 2018, Fredrichs Inc. purchased equipment with a cost of €3,060,000, a
useful life of 12 years and no salvage value. The company uses straight-line
depreciation. At December 31, 2018, the company determines that impairment
indicators are present. The fair value less cost to sell the asset is estimated to be
€2,600,000. The asset’s value-in-use is estimated to be €2,365,000. There is no change in
the asset’s useful life or salvage value. The 2019 (second year) income statement will
report depreciation expense for the equipment of:
a. €255,000
b. €216,667
c. All are incorrect
d. €260,000
e. €236,364
20 The impairment test for goodwill must be conducted:
a. once every three years at balance date
b. only if it is reasonable to expect that goodwill has been impaired
c. annually, at the same time every year.
d. annually, at balance date
21 At reporting date Guilder Limited estimated an impairment loss of €50,000 against
its single cashgenerating unit. The company had the following assets: Headquarters
Building €100,000; Plant €60,000; Equipment €40,000. The net carrying amount of
Plant after allocation of the impairment loss is:
a. €35,000
b. €45,000
c. €10,000
d. All are incorrect e. €60,000
22 Where an asset is measured using the cost model, any impairment loss is:
a. added to the balance of the accumulated depreciation account
b. accumulated in a separate ‘accumulated impairment losses’ account
c. taken directly to equity
d. set off against the balance of revenue
23 Lynch Printing Company determines that a printing press used in its operations has
suffered an impairment in value because of technological changes. An entry to record
the impairment should
a. include a credit to the equipment account.
b. recognize extra depreciation expense for the period.
c. include a credit to the equipment accumulated depreciation account.
d. not be made if the equipment is still being used. The correct answer is: include a credit to
the equipment accumulated depreciation account.
24 In allocating an impairment loss, an entity shall not reduce the carrying amount of
an asset below the highest of:
a. initial cost and fair value
b. value in use and zero
c. present value and value in use
d. cost and market value
25 On January 1, 2018, Fredrichs Inc. purchased equipment with a cost of €3,060,000, a
useful life of 12 years and no salvage value. The company uses straight-line
depreciation. At December 31, 2018, the company determines that impairment
indicators are present. The fair value less cost to sell the asset is estimated to be
€2,600,000. The asset’s value-in-use is estimated to be €2,365,000. There is no change in
the asset’s useful life or salvage value. The 2018 income statement will report Loss on
Impairment of:
a. €460,000
b. €0
c. All are incorrect
d. €440,000
e €205,000
26 The impairment test must be applied to tangible assets:
a. only if there is an indication that the asset may be impaired
b. every three years
c. at each balance date
d. at each reporting date including interim reporting dates such as half-year
27 The following measures relate to a non-current asset: (i) carrying amount $20,000;
(ii): net realisable value $18,000; (iii): value in use $22,000; (iv): replacement cost
$50,000. The recoverable amount of the asset is:
a. $50,000
b. $20,000
c. $18,000
d. $22,000
28 .What is an impairment loss?
a.The amount by which the carrying amount of an asset exceeds the recoverable amount
b.The amount by which the market value of an asset exceeds the net present value
c.The difference between the fair value of an asset and the net realisable value of the asset
d.The amount by which the carrying amount of an asset exceeds the book value
29.Which one of the following statements best describes 'value in use'?
a.The net amount an enterprise expects to obtain for an asset at the end of its useful life
b.The amount at which an asset could be exchanged between knowledgeable, willing parties
in an
arm's length transaction
c.The present value of estimated future cash flows expected to arise from the continuing use
of an
asset and from its ultimate disposal.
d.The higher of an asset's NRV and its recoverable amount
30.What is an external indicator of impairment loss?
a.Plans to discontinue or restructure the operation to which an asset belongs
b.Changes in interest rates that would reduce fair value calculations involving future cash
flows
c.The carrying amount of net assets is less than the entity's market capitalisation
d.All of the above
31. The smallest identifiable group of assets that generates cash
inflows that are largely independent of the cash inflows from
other group assets or groups of assets are called…
a. Division
b. Cash-generating unit
c. Department
d. Operating Segment
32.External sources of information indicating possible impairment
include:
(i) An asset’s market value has declined significantly.
(ii) Significant changes have taken place in the technological
environment.
(iii) Interest rates, or other market rates, have increased during
the period.
(iv) The carrying amount of the net assets of the undertaking is
more than its market capitalisation.
(v) A change in the group structure.
a. (i) – (v) b.(i)-(iii) c.(ii)-(iii) d. (i)-(iv)
33. If the fair value less costs to sell cannot be determined
a. The asset is not impaired.
b. The recoverable amount is the value-in-use.
c. The net realizable value is used.
d. The carrying value of the asset remains the same.
34 .If no indication of an impairment loss is present:
a. IAS 36 still requires an undertaking to make a formal estimate of recoverable amount.
b. IAS 36 does not require an undertaking to make a formal estimate of recoverable amount.
c. IAS 36 does not require an undertaking to make an assessment as to whether an asset may
be impaired.
35. An asset's recoverable amount is equal to:
a. The lower of the asset's fair value less costs to sell and its value in use
b. The lower of the asset's value in use and its carrying amount
c. The higher of the asset's value in use and its carrying amount
d. The higher of the asset's fair value less costs to sell and its value in use
36. Your asset is impaired: (i) its ‘fair value less costs to sell’ = loss of $4k; (ii) its ‘value
in use’ = $6k; Which value do you use?
a. $6k
b. Loss of $4k
c. $1k (average of the two figures).
d. Zero.
37. The best evidence of an asset’s ‘fair value less costs to sell’ is:
a. A recent transaction.
b. An active market.
c. A binding sale agreement.
d. A market
38. Estimates of future cash flows for measuring value in use in line
with IAS 36 shall incorporate:
a. Projections of cash inflows from continuing use of the asset
b. Projections of cash flows that are expected to arise from improving or enhancing asset’s
performance.
c. Projections of cash outflows from income tax paid on the revenues from the asset
d. Projections of cash outflows from interest paid on the loan acquired to use the asset
39. Estimates of cash flows must include:
(i) Projections of cash inflows, from the continuing use of the asset;
(ii) Projections of cash outflows to generate the inflows, from continuing use of the asset.
(iii) Net cash flows from the disposal of the asset.
(iv) Finance costs.
(v) Income taxes.
a. (i) – (iii);
b. (i)-(iv)
c. (ii)-(iii),
d. (i)-(v)
40. In measuring Value in Use, the discount rate used for
discounting the cash flows should be the…
a. Pre-tax rate that reflects the market assessment of time value of money and risks specific to
the asset
b. Pre-tax rate that reflects the market assessment of time value of money and risks specific to
the entity’s competitors
c. Post-tax rate that reflects the entity’s assessment of time value of money and risks specific
to the asset
d. Pre-tax rate that reflects the entity’s assessment of time value of money and risks specific
to the asset
41.If an impairment loss is recognised,
a. The depreciation charge should be adjusted for future periods.
b. The residual value should be reviewed.
c. Both a &b.
d. Neither a nor b
42. When a reversal of an impairment loss occurs, which of the following adjustments
are to be made?
a. Recognise in the income statement and adjust the depreciation for future periods
b. Recognise in the income statement without adjustment to the depreciation for future
periods
c. Recognise in the statement of changes in equity and adjust the depreciation for future
periods
d. Recognise in the statement of changes in equity without adjustment to the depreciation for
future periods
43.When a cash-generating unit has an impairment loss, the loss must first be applied
to…
a.goodwill
b. any assets obviously impaired
c.against all assets on a pro-rata basis
d. on the entire cash generating unit on a pro-rata basis

—---------------------------------------------------------------------------------------------
Investment properties-IAS40
1 Investment property can be held by: 1. The owner; 2. A lessor, under a finance lease;
3. A lessee, under a finance lease.
a.1 and 3 only
b.1 to 3 all
c.1 and 2 only
2 ABC Ltd. owns a property which has two parts, part A and part B. Part A is used to
earn rental income; Part B is used for administrative purpose. These two parts cannot
be sold separately. How should ABC classify this property?

a.Part A should be classified as Investment property; part B should be classified as

Owner-occupied property
b.Part A should be classified as Investment property; part B should be classified as
Inventories
c.Entire property should be classified as Owner-occupied property if the portion of B is
insignificant
d.Entire property should be classified as Investment property if the portion of B is
insignificant
3 Choose the correct statement:
a.Fair value of investment property carried under cost model should be disclosed in the
Statement of financial position.
b.Fair value of investment property carried under cost model should be disclosed in the
Disclosure note.
c.Fair value of investment property carried under cost model should not be disclosed in any
financial statement.
d.Fair value of investment property carried under cost model should be disclosed in the
Statement of Other Comprehensive Income.
4 The following costs should be accounted for as: 1. Start-up cost (unless they are
necessary to bring the property to the condition necessary for it to be capable of
operating tin the manner intended by management); 2. Operating losses incurred before
the investment property achieves the planned level of occupancy; 3. Abnormal amounts
of wasted material, labour or other resources incurred in constructing or developing the
property.
a.Extraordinary items
b.Expenses
c.(Capitalised as) fixed assets
5 ABC Ltd. chooses cost model for its investment property. At 1 Jan 20X8, ABC Ltd.
transferred an investment property to an owner-occupied property. Investment
property has originally cost of $20 million; accumulated depreciation up to the date of
transfer was $12 million, there was no impairment loss; property’s fair value at 1 Jan
20X8 was $14 million. What was the carrying value of the Owner-occupied property
recorded at 1 Jan 20X8?
a.$2 million
b.$8 million
c.$14 million
d.$12 million
6 Which of the following does not define investment property?
a.Property used in the production or supply of goods or services (**)
b.(*) and (**).
c.Property held for capital appreciation (***)
d.Property held to earn rentals (*)
7 ABC Ltd. chooses cost model for its investment property. It sold an investment
property that originally cost $20 million. The selling price was $6 million. Depreciation
of $12 million had been recorded up to the date of sale. There was no accumulated
impairment loss. What does this disposal result in?
a.$14 million loss
b.$2 million loss
c.$2 million gain
d.$14 million gain
8 ABC Ltd. chooses fair value model for its investment property. At 1 Jan 20X8, ABC
Ltd. transferred an investment property to an owner-occupied property. Investment
property has originally cost of $20 million; accumulated depreciation up to the date of
transfer was $12 million, there was no impairment loss; property’s fair value at 1 Jan
20X8 was $14 million. What was the carrying value of the Owner-occupied property
recorded at 1 Jan 20X8?
a.$14 million
b.$2 million
c.$8 million
d.$12 million
9 Entity measures its investment property under:
a.Cost model, fair value model or revaluation model
b.Cost model only
c.Cost model or Revaluation model
d.Cost model or Fair value model
10 Which of the following should be classified as Investment property?

a.Land and building held for short-term sale in the ordinary course of business
b.Land and building held for used in the production of goods
c.Land and building held for long-term capital appreciation
d.Land and building held for administrative purposes.
11 Which of the following term does this statement define: “the amount of
cash or cash equivalents paid or the fair value of other consideration given to
acquire an asset at the time of its acquisition or construction”?

a.Cost
b.Fair value
c.Deemed cost
d.Present value
12 Which of the following properties owned by an entity would be classified as an
investment property?

a.Land purchased for its investment potential. Planning permission has not been obtained for
building construction of any kind
b.A property that had been leased to a tenant, but which is no longer required and is now
being held for resale
c.A bungalow used for executive training.
d.A new office building used as entity’s head office, purchased specifically in order to exploit
its capital gains potential
13 An investment property should initially be measured at:

a.Market value
b.Fair value
c.Cost
d.Net realizable value

14 Which of the following are examples of investment properties: 1. Land held for
long-term capital appreciation; 2. Land held for an undetermined future use but not
currently in use; 3. A building owned by the undertaking (or held by the undertaking
under a finance lease) and leased out, via one, or more, operating leases; 4. A building
that is vacant, but is held to be leased out via one, or more, operating leases; 5. Property
held for sale in the ordinary course of business; 6. Property being built on behalf of
third parties; 7. Owner-occupied property; 8. Property that is being built for use as
investment property; 9. Existing investment property that is being redeveloped for
continued use as investment property; 10 Property that is leased to another
undertaking, under a finance lease?

a.1 to 7 and 10 only

b.1 to 4 and 8 to 9 only
c.1 to 4 only
d.1 to 10 all

15 An entity purchased land and building for leasing out under operating lease.
Following expenditures related to the acquisition: purchase price: 100; broker’s
commission: 10; property transfer tax: 20. What is the cost of the property?
a. 100
b. 130
c. 110
d. 120
16 Which of the following statements is true with regards to an investment property?
a. The value in use of investment property is significantly higher than of owner-occupied
property
b. An investment property unlike owner-occupied property shall always be depreciated over
its useful life.
c. An investment property generates cash flows largely independently of the other assets held
by an entity.
d. An investment property unlike owner-occupied property shall always be measured at its
historical cost

17 Which of the following properties fall under the definition of investment property?
a. A building owned by an entity and leased out under an operating lease
b. Property being constructed on behalf of third party
c. Property occupied by an employee.
d. None of them
18 . For a transfer from investment property, carried at fair value, to owner-occupied
property or inventories, the property’s cost for subsequent accounting is:
a. Its original cost, less accumulated depreciation
b. Its fair value, at the date of change in use
c. Its orginal cost
19. For a transfer from inventories to investment property that will be carried at fair
value, any difference between the fair value of the property at that date and its previous
carrying amount is:
a. Discounted to present value
b. Written off over the life of the asset
c. Recognised in statement of profit or loss
d. Noted it as a contingent liability
20.Which of the following is not an example of investment property?
a.Land held for undetermined future use
b.Property leased to another entity under a finance lease
c.Property leased to another entity under an operating lease
d.Property being constructed for future use as an investment property
21 A parent leases an office building to a subsidiary. In which financial statements will
the property appear as investment property?
a.Parent company
b.Consolidated financial statements
c.Subsidiary
d.None of these
22.Which of the following is not a transfer from or to investment property under IAS
40?
a.Commencement of owner occupation
b.Transfer from undetermined use to an operating lease
c.Commencement of development with a view to sale
d.End of construction of development
23 .ABC Ltd. owns a property which has two parts: part A and part B. Part A is used to
earn rental income; Part B is used for administrative purpose. Each part can be sold
separately. How should ABC classify this property?
a.Part A should be classified as Investment property & part B should be classified as
Inventories
b.Entire property should be classified as Owner-occupied property if the portion of B is
significant
c.Entire property should be classified as Investment property if the portion of B is
insignificant (đáp án cô hiền)
d.Part A should be classified as Investment property & part B should be classified as
Owneroccupied property
24 . Which of the following statements is true with regards to an investment property?
a. An investment property generates cash flows largely independently of the other assets held
by an entity
b. The value in use of investment property is significantly higher than of owner-occupied
property
c. An investment property unlike owner-occupied property shall not be depreciated over its
useful life
d. An investment property unlike owner-occupied property shall always be measured at its
historical cost
25. If payment for an investment property is deferred beyond normal credit terms, any
additional payment above the cash cost of the asset will be accounted for as:
a. Repairs and maintenance
b. Borrowing cost
c. Cost fixed asse
26. If one or more assets are exchanged for a new asset, the new asset is valued at:
a. Residual value
b. Replacement cost
c. Fair value
d. Orginal cost
27 . An investment property shall be measured initially at its
a. Cost
b. Fair value
c. Deemed cost
d. Value in use
6.Under IAS 40 – Investment Property, where should a gain or loss on disposal be
recognised?
a.Income Statement b.Statement of Changes in Equity
c.Statement of Changes in Equity d.Statement of Financial Position
7.Which of the following should be classified as Investment property?
a.An equipment held to earn rental income b.Land and building held to earn rental income
c.Land and building held for sale in the ordinary course of business
d.Property being constructed on behalf of third parties.

—---------------------------------------------------------------------------------------------
Leases-IFRS 16
1 Which situation leads to a lease being classified as finance by the lessor in line with
IFRS 16?
a.Ownership is transferred to the lessee by the end of the lease term.
b.The lessor does not classify the lease under IFRS 16 anymore.
c.There is an option to purchase the asset at the price equal to its fair value at the end of the
lease term.
d.The lease term is for at least 50% of asset’s economic life.

2 Which item is NOT included in the lease payments?

a.Penalties for terminating the lease
b.Residual value guarantees
c.Variable payments NOT depending on an index or a rate
d.Variable payments depending on an index or a rate

3 The lease of land and buildings when split causes difficulty in the allocation of the
minimum lease payments. In this case the minimum lease payments should be split
a.By the entity based on the useful life of the two elements.
b.According to any fair method devised by the entity.
c.Using the sum of the digits method.
d.According to the relative fair value of two elements.

4 The arrangement contains a lease when the customer has the following right
throughout the period of use:
a.The protective right to an identified asset
b.The right to design an identified asset
c.The right to control the use of an identified asset
d.The right to obtain the asset’s by-products

5 The classification of a lease as either an operating or finance lease is based on

a.The transfer of the risks and rewards of ownership.
b.The minimum lease payments being at least 50% of the fair value.
c.The economic life of the asset.
d.The length of the lease.

6 When there is a change in the lease term, the lessee needs to:
a.Remeasure the lease liability with difference recognized in profit or loss, by discounting the
revised lease payments by the revised discount rate.
b.Remeasure the lease liability as an adjustment of the right-of-use asset, by discounting the
revised lease payments by the revised discount rate.
c.Remeasure the lease liability with difference recognized in profit or loss, by discounting the
revised lease payments by the unchanged discount rate.
d.Remeasure the lease liability as an adjustment of the right-of-use asset, by discounting the
revised lease payments by the unchanged discount rate.

7 At the commencement of the lease, IFRS 16 requires lessee to:

Select one:
a.Assess if the contract contains the lease. The accounting starts at the inception date.
b.Recognize the underlying asset under IAS 16 or IAS 38, and the finance lease liability
c.Recognize the right-of-use asset and the lease liability
d.Classify the lease as either finance and operating

8 Where there is a lease of land and buildings and the title to the land is not
transferred, generally the lease is treated as if
a.The land is an operating lease, the building is an operating lease.
b.The land is a finance lease, the building is an operating lease.
c.The land is a finance lease, the building is a finance lease.
d.The land is an operating lease, the building is a finance lease.

9 What is the most important factor to decide how to account for the sale & leaseback
transaction?
a.Whether the resulting lease is operating or finance.
b.Whether the lease payments are at market rentals, below market or above market.
c.Whether the transfer of asset is a sale under IFRS 15 Revenue from Contracts with
Customers.
d.Whether the sales price is at fair value, above fair value or below fair value.

10 At the commencement of the lease, IFRS 16 requires lessee to:

Select one:
a.Assess if the contract contains the lease. The accounting starts at the inception date.
b.Recognize the right-of-use asset and the lease liability
c.Recognize the underlying asset under IAS 16 or IAS 38, and the finance lease liability
d.Classify the lease as either finance and operating

—---------------------------------------------------------------------------------------------
Ias 37 (updated)
1. Which of the following best describes a provision according to of IAS 37
Provisions, contingent liabilities and contigent assets ?
a.A provision is a liability of uncertain timing or amount

b.A provision is a possible asset that arise from past events.

c.A provision is a credit balance set up to offset a contingent asset so that the effect on the statement
of financial position is nil.

d.A provision is a possible obligation of uncertain timing or amount

2. When a restructuring involves the sale of an operation, at what point may an

obligation arise under IAS 37?
a.When a preferred buyer is located
b.When a binding sale agreement is executed

c.When an expression of interest is filed

d.When business is marketed for sale

3. IAS 37 provisions include:

a.Depreciation.

b.Environmental provisions.

c.Impairment of assets.

d.Doubtful debts.

4. Manufacturer of chemical products applies strong environmental policy

worldwide and undertakes to clean up the contaminated water and land. This
company causes an environmental damage in the country A, in which there is
no legislation that would oblige the company to remove contamination. Should
the company recognize provision for cleanup costs in line with IAS 37?
Select one:

a.Yes, because there is a constructive obligation arising from past event (contamination).

b.Yes, because there is a legal obligation arising from past event.

c.No, because there is no legislation in the country A to enforce the removal of contamination.

d.No, because there is no obligation arising from past event.

5. If the possibility of a penalty is remote:

a.Record a contingent liability.

b.Record a provision

c.Disclosure a contingent liability.

d.Do nothing.

6. Which of the following statements about contingent assets and contingent

liabilities are correct? 1. A contingent asset should be disclosed by note if an
inflow of economic benefits is probable; 2. A contingent liability should be
disclosed by note if it is probable that a transfer of economic benefits to settle
it will be required, with no provision being made; 3. No disclosure is required
for a contingent liability if it is not probable that a transfer of economic
benefits to settle it will be required; 4. No disclosure is required for either a
contingent liability or a contingent asset if the likelihood of a payment or
receipt is remote.
a.1, 2 and 4

b.1 and 4 only

c.2, 3 and 4
d.2 and 3 only

7. Which of the following statements about the requirements of IAS 37

Provisions, contingent liabilities and contigent assets are correct? 1. A
contingent assets should be disclosed by note if an inflow of economic
benefits is probable; 2. No disclosure of contingent liability is required if the
possibility of a transfer of economic benefits arising is remote; 3. Contingent
assets must not be recognised in financial statements unless an inflow of
economic benefits is virtually certain to arise.
a.2 and 3

b.1 and 3

c.All are correct

d.1 and 2

8. A provision should be recorded when:

a.1-3 are all present.

b.It is probable that payment will be required.

c.An undertaking has a present obligation legal, or constructive.

d.An estimate can be made of the obligation.

9. Contingent asset is recorded when cash inflows are:

a.Virtually certain.

b.Uncertain

c.Received.

d.Probable.

10. Which of the following is not a disclosure requirement for a contingent liability?
a.Possibility of any reimbursement

b.Indication of uncertainties relating to the amount

c.Estimated financial effect

d.Exact timing of outflow

—----------------------------------

11 Which of the following measurement base(s) should be used by an entity according to the
conceptual framework for financial reporting?

a. Historical cost

b. Any of the above

c. Current cost

d. Present value
12 A contract in which the costs exceed the benefits is:
a.An onerous contract.
c. A contingent liability.
b.A contingent asset.
d. Regular contract
13.IAS 37 recognizes 2 types of obligations. Which ones?
a.Present and contingent
b.Legal and constructive.
c. Possible and remote
d. Legislative and contractual.
14.A car manufacturer provides 2-year warranty related to all repairs of its products.
Should car manufacturer recognize the provision for warranty repairs in line with IAS
37?
a.Yes, because there is a constructive obligation as a result of past event (production of a
defective car),
b.Yes, because a past event is a sale of a product with warranty and based on past statistics a
car manufacturer can assess the probability of having to pay for the repairs and estimate the
costs.
c.No, because it is impossible to measure the amount that will be paid for the repairs.
d.No, because at the time of sale, there is no present obligation to pay for the repairs. Car
manufacturer will need to pay only when there is some claim from customers in the future
15.In order that a provision should be recognised in an entity's financial statements, it is
necessary that:
a.The entity has a present obligation
b.The entity has a legally enforceable obligation
c.The entity has a constructive obligation
d.It is possible that an outflow of economic benefits will be required
16.According to IAS 37, a constructive obligation arises:
a.As a result of a construction contract in line with IAS 11 Construction contracts.
b.When an entity has indicated to other parties that it will accept certain responsibilities and
as a result, an entity has created a valid expectation of those other parties that it will discharge
those responsibilities.
c.As a result of a contract, some legislation or other operation of law.
d.When an entity has created valid expectations in the affected parties based on the previous
experience, best practices or legislation.
17.When shall the provision be recognized in line with IAS 37?
a.When it is probable that the outflow of resources embodying economic benefits will be
required
to settle the obligation
b.When an entity has a present obligation as a result of past event
c.When a reliable estimate can be made of the amount of the obligation
d.When all other conditions are met
18.Discount rates should be:
a.Pre-tax.
b. Post-tax.
c. Changed annually.
d. Pre-tax & post- tax
19.If a provision relates to a large population of items, the amount of the provision
should be calculated as:
a.The maximum expenditure that could possibly be required to settle the obligation
b.The expected value of the expenditure that will be required to settle the obligation
c.The minimum expenditure that could possibly be required to settle the obligation
d.The present value of the maximum expenditure that could possibly be required to settle the
obligation
20.Which of the following definitions is NOT a contingent liability in line with IAS 37?
a. A possible obligation that arises from past events and whose existence will be confirmed
only by the occurrence or nonoccurrence of one or more future events not wholly within the
control of the entity.
b. A possible obligation that arises from past events, but is not recognized because either its
amount cannot be measured with sufficient reliability, or the outflow of economic benefits to
settle the obligation is remote.
c. A present obligation arising from past events, but is not recognized because it is not
probable that an outflow of resources embodying economic benefits will be required to settle
the obligation.
d. A present obligation arising from past events, but is not recognized because the amount of
the obligation cannot be measured with sufficient reliability
21. According to IAS 37, a provision for restructuring shall incorporate:
a. Costs for termination benefits provided to employees as a result of restructuring.
b. Costs for introducing new products as a result of restructuring to the existing customers
c. Costs for necessary investments in the new systems and distribution networks
d. Costs for relocating and retraining staff as a result of restructuring
22. Future operating losses indicate a need to:
a. Test for impairment.
b. Consider making a contingent liability.
c. Consider making a provision.
d. Consider making a contingent asset.
23. A company runs a fun park but due to overall economic crisis, the newest
management forecasts project the operating losses of CU 6 million per year during the
next 3 years. How shall this company recognize the provision in line with IAS 37?
a. No provision should be recognized because IAS 37 prohibits recognizing provisions for
future operating losses
b. A provision shall be discounted to present value and then recognized immediately to profit
or loss
c. A provision of CU 18 million shall be recognized to profit or loss immediately
d. No provision shall be recognized because IAS 37 deems management estimates as
insufficient evidence for measuring the provision
24. The amount of a provision should be the "best estimate" of the expenditure required
to settle the obligation concerned. This estimate:
a. Should be the amount that would rationally be paid to settle or transfer the obligation
b. Should always be discounted to present value
c. Should not be adjusted to reflect future events that may affect the amount of the required
expenditure, whether or not those events are likely to occur
d. Must always be made on the basis of advice from independent experts
25. When can a “provision” be recognized in accordance with IAS 37?
a. When there is a legal obligation arising from a past (obligating) event, the probability of
the outflow of resources is more than remote (but less than probable), and a reliable estimate
can be made of the amount of the obligation.
b. When there is a constructive obligation as a result of a past (obligating) event, the outflow
of resources is probable, and a reliable estimate can be made of the amount of the obligation.
c. When there is a possible obligation arising from a past event, the outflow of resources is
probable, and an approximate amount can be set aside toward the obligation.
d. When management decides that it is essential that a provision be made for unforeseen
circumstances and keeping in mind this year the profits were enough but next year there may
be losses

IFRS 16
1. What is/are the key feature(s) of IFRS 16 -Leases?
a.Assets and liabilities must be recognized for all leases longer than 12 months
b.There is no distinction between finance leases and operating leases
c.Finance leases must be capitalized as assets in the statement of financial position, and
operating lease payments must be recognized on a straightline basic or another systematic
basic in the statement of financial performance
d.Both (A & B apply for lessees, and C) for lessors
2. What is the effective date of IFRS 16 Leases?
a.1 january 2018
b.1 july 2018
c.1. January 2019
d.july 2019
3. Company X needed storage for its products and rented the unit 1B of 60 meter
squared in the warehouse Y. The unit 1B is dedicated to the company X, but the
warehouse Y can relocate the company X’s inventories in the case of fire or flood.
Which of the following statements is true?
a.There is no lease in the contract, because no asset is identified.
b.There is a lease in the contract, because the asset is identified and X can control its use.
c.There is a lease in the contract, because although no asset is identified, X will still need to
pay the lease payments throughout the lease term.
d.There’s no lease in the contract. There is an identified asset, but X cannot control its use,
because Y can relocate its inventories
4. .Inception of lease contract :
a. Date of lease agreement
b. Date of commitment by the parties
c. Earlier of (a) & (b)
d. Later of (a) & (b)
5. Conmmencement date of lease contract:
a. Date of lease agreement
b. Date of commitment by the parties
c. Date of contract sign
d. Date- when lessor makes an underlying asset available for use by lessee
6. The lessee M entered into the lease of office space with the lessor N on 1 February
20X1. The lessee will pay CU 500 per month, but the first 3 months are rent-free as a
bonus from the lessor. The lessor hands out the office space on 1 March 20X1, but the
lessee moves in and starts to use the office space on 1 April 20X1. When should the
lessee start accounting for the lease?
a.On 1 March, when the lessor made the office space available for use.
b.On 1 June, when the lessee starts making payments after 3-months rent-free period.
c.On 1 April, when the lessee moves in and starts to use the office space.
d.On 1 February, when the contract was signed.
7. All leases must be restated if which transition approach is selected?
a.Full retrospective
b.Modified retrospective approach where the ROU asset is calculated as if IFRS 16 was
always applied
c.Modified retrospective approach where the ROU asset is calculated based on the
measurement of the lease liability
d.None of the above
8. Lease payments include:
I. fixed payments.
II. variable payments based on an index.
III a bargain purchase option.
IV. a guaranteed residual value.
a.I, II, and III.
b.II, III, and IV.
c.I, II, and IV.
d.I, II, III, and IV.
9. Which of the following shall a lessee recognise at the commencement date?
a.A right-of use asset & Deferred income
b.A lease liability & A right-of use asset
c.Deferred income& A lease liability
d. Deferred income& A lease liability & A right-of use asset
10. When does the lessee need NOT to recognize the right-of-use asset and
corresponding lease liability under IFRS 16?
a.When the lease term is 12 months or less, or when the underlying asset is of low value
when new.
b.The lessee never needs to recognize the right-of-use asset and the lease liability.
c.The lessee always needs to recognize the right-of-use asset and the lease liability.
d.When the lease is operating.
11. At the commencement date, a lessee shall measure the rightof-use asset at
__________.
a.Cost
b.Fair value
c.Present value
d.Value in use
12. How shall the lessee determine the appropriate discount rate to measure the lease
liability?
a.It is the interest rate implicit in the lease or the lessee’s incremental borrowing rate.
b.It is the market rate of interest on the borrowings with similar terms as the lease.
c.It is the market yield with securities from the same industry with the same maturity dates as
the lease term.
d.I t is the interest rate implicit in the lease while taking the lessee’s initial direct cost into
account.
13. In computing the present value of the lease payments, the lessee should
a.use its incremental borrowing rate in all cases.
b.use both its incremental borrowing rate and the implicit rate of the lessor, assuming that the
implicit rate is known to the lessee.
c.use the implicit rate of the lessor, assuming that the implicit rate is known to the lessee.
d.use the implicit rate in all cases.
14. If the lease transfers ownership of the underlying asset to the lessee A leased asset
should be depreciated over the…
a.Shorter of the lease term and the asset’s useful life
b.Longer of the lease term and the asset’s useful life
c. Entire lease term
d.Useful life of the asset
15. A leased asset should be depreciated over the…
a.Shorter of the lease term and the asset’s useful life
b.Longer of the lease term and the asset’s useful life
c. Entire lease term
d.Useful life of the asset
16. In computing depreciation of a leased asset where there is no bargain purchase
option, the lessee should subtract
a.no residual value and depreciate over the term of the lease.
b.an unguaranteed residual value and depreciate over the term of the lease.
c.a guaranteed residual value and depreciate over the life of the asset.
d.an unguaranteed residual value and depreciate over the life of the asset
17. The lease liability should be remeasured by discounting the new lease payments
using an unchanged discount rate when which of the following situation occurs?
a.The lease term is extended
b.There is a change in the assessment of an option to purchase
c.There is a change in the amount expected to be payable under a residual value guarantee
d.The lease term is reduced
18. Additional lease adjustments that affect the measurement of lease assets and
liabilities include each of the following except?
a.executory costs.
b.initial direct costs.
c.internal costs.
d.lease prepayments and incentives.
19. When a lease transfers substantially all the risks and rewards of ownership to lessee,
this is called…
a.A finance lease
b.An operating lease
c.A buy-to-let agreement
d.A rental agreement
20.Which of the following is not an indication a lease is a finance lease?
a.The lease transfers ownership of the asset to the lessee at the end of the
b.The lease term is for a short part of the economic life of the asset
c.The leased assets are specialised in nature
d.The present value of minimum lease payment amounts to substantially all of the fair value
of the asset
21. Which of the following situations would normally lead to a lease being classified as a
finance lease?
a.The lease does not transfer ownership of the leased asset to the lessee by the end of the
lease term
b.The lessee has the option to purchase the asset at a price which makes it reasonably certain
that this option will be exercised
c.The lease term is not for the major part of the asset's economic life
d.At the inception of the lease, the present value of the minimum lease payments does not
amount to substantially all of the fair value of the asset
22. Which of the following would be included in the Lease Receivable account?
I. Guaranteed residual value.
II. Unguaranteed residual value.
III. Executory costs
IV. Rental payments.
a.I and III only.
b.II, III, and IV.
c.I and II only.
d.I, II, and IV.
23.The lease receivable amount includes the present value of
a.rental payments plus the present value of guaranteed and unguaranteed residual values.
b.rental payments only.
c.rental payments plus the present value of the unguaranteed residual value only.
d.rental payments plus the present value of the guaranteed residual value only
24. How should lessor recognize lease payments received in the finance lease from the
lessee?
a.As a rental income directly to profit or loss.
b.Each payment shall be split into 2 parts: a reduction of the finance lease receivable and
interest income in profit or loss.
c.Each payment shall be split into 2 parts: a reduction of the finance lease liability and
interest expense in profit or loss
d.As a rental expense directly to profit or loss
25. How should lessor recognize lease payments received in the operating lease from the
lessee?
a.Each payment shall be split into 2 parts: a reduction of the finance lease liability and
interest expense in profit or loss
b.Each payment shall be split into 2 parts: a reduction of the finance lease receivable and
interest income in profit or loss
c.As a rental income directly in profit or loss
d.As a rental expense directly in profit or loss
26. A lessor with a sales-type lease involving an unguaranteed residual value at the end
of the lease term will report sales revenue in the period of inception of the lease at which
of the following amounts?
a.The minimum lease payments plus the unguaranteed residual value.
b.The sales price less the present value of the residual value.
c.The cost of the asset to the lessor, less the present value of any unguaranteed residual value.
d.The present value of the minimum lease payments plus the present value of the
unguaranteed residual value.
27.When a company sells property and then leases it back, any gain on the sale should
usually be
a.deferred and recognized as income over the term of the lease.
b.recognized as a prior period adjustment.
c.recognized at the end of the lease.
d.recognized in the current year.
—-------------------------------------------------------------------------------------------------------------------------------

MULTIPLE CHOICE—Conceptual
31. Which of the following does not describe intangible assets?
a. They lack physical existence.
b. They are monetary assets.
c. They provide long-term benefits.
d. They are classified as long-term assets.

32. Which of the following characteristics do intangible assets possess? a. Physical

existence.
b. Claim to a specific amount of cash in the future.
c. Long-lived.
d. Held for resale.

33. Which characteristic is not possessed by intangible assets?

a. Physical existence.
b. Identifiable.
c. Result in future benefits.
d. Expensed over current and/or future years.

34. Costs incurred internally to create intangibles are

a. capitalized.
b. capitalized if they have an indefinite life.
c. expensed as incurred.
d. expensed only if they have a limited life.

35. Which of the following costs incurred internally to create an intangible asset is generally
expensed?
a. Research phase costs.
b. Filing costs.
c. Legal costs.
d. All of the above.

36. The major problem of accounting for intangibles is determining

a. fair value.
b. separability.
c. salvage value.
d. useful life.
37. Copyrights should be amortized over
a. their legal life.
b. the life of the creator plus fifty years.
c. twenty years.
d. their useful life or legal life, whichever is shorter.

38. A patent should be amortized over

a. twenty years.
b. its useful life.
c. its useful life or twenty years, whichever is longer.
d. its useful life or twenty years, whichever is shorter.

39. Limited-life intangibles are reported at their

a. replacement cost.
b. carrying amount unless impaired.
c. acquisition cost.
d. liquidation value.

40. Which of the following methods of amortization is normally used for intangible assets? a.
Sum-of-the-years'-digits
b. Straight-line
c. Units of production
d. Double-declining-balance

41. The cost of an intangible asset includes all of the following except a. purchase price.
b. legal fees.
c. other incidental expenses.
d. all of these are included.

42. Factors considered in determining an intangible asset’s useful life include all of the
following except
a. the expected use of the asset.
b. any legal or contractual provisions that may limit the useful life.
c. any provisions for renewal or extension of the asset’s legal life.
d. the amortization method used.

43. Under current accounting practice, intangible assets are classified as a. amortizable or
unamortizable.
b. limited-life or indefinite-life.
c. specifically identifiable or goodwill-type.
d. legally restricted or goodwill-type.

44. Companies should evaluate indefinite life intangible assets at least annually for: a.
recoverability.
b. amortization.
c. impairment.
d. estimated useful life.
S
45. One factor that is not considered in determining the useful life of an intangible asset is
a. salvage value.
b. provisions for renewal or extension.
c. legal life.
d. expected actions of competitors.

46. Which intangible assets are amortized?

Limited-Life Indefinite-Life
a. Yes Yes
b. Yes No
c. No Yes
d. No No
47. The cost of purchasing patent rights for a product that might otherwise have seriously
l

competed with one of the purchaser's patented products should be

a. charged off in the current period.
b. amortized over the legal life of the purchased patent.
c. added to factory overhead and allocated to production of the purchaser's product. d.
amortized over the remaining estimated life of the original patent covering the product whose
market would have been impaired by competition from the newly patented product.

48. Broadway Corporation was granted a patent on a product on January 1, 2000. To protect
its patent, the corporation purchased on January 1, 2011 a patent on a competing product
which was originally issued on January 10, 2007. Because of its unique plant, Broadway
Corporation does not feel the competing patent can be used in producing a product. The
cost of the competing patent should be
a. amortized over a maximum period of 20 years.
b. amortized over a maximum period of 16 years.
c. amortized over a maximum period of 9 years.
d. expensed in 2011.

49. Wriglee, Inc. went to court this year and successfully defended its patent from infringe
ment by a competitor. The cost of this defense should be charged to
a. patents and amortized over the legal life of the patent.
b. legal fees and amortized over 5 years or less.
c. expenses of the period.
d. patents and amortized over the remaining useful life of the patent.

50. Which of the following is not an intangible asset?

a. Trade name
b. Research and development costs
c. Franchise
d. Copyrights

51. Which of the following intangible assets should not be amortized? a. Copyrights
b. Customer lists
c. Perpetual franchises
d. All of these intangible assets should be amortized.

52. When a patent is amortized, the credit is usually made to

a. the Patent account.
b. an Accumulated Amortization account.
c. an Accumulated Depreciation account.
d. an expense account.

53. When a company develops a trademark the costs directly related to securing it should
generally be capitalized. Which of the following costs associated with a trademark would not
be allowed to be capitalized?
a. Attorney fees.
b. Consulting fees.
c. Research and development fees.
d. Design costs.
lOMoARcPSD|12217761
54. In a business combination, the excess of the cost of the purchase over the fair value of
the identifiable net assets purchased is:
a. other assets.
b. indirect costs.
c. goodwill.
d. a bargain purchase.

55. Goodwill may be recorded when:

a. it is identified within a company.
b. one company acquires another in a business combination.
c. the fair value of a company’s assets exceeds their cost.
d. a company has exceptional customer relations.

56. When a new company is acquired, which of these intangible assets, unrecorded on the
acquired company’s books, might be recorded in addition to goodwill?
a. A trade name.
b. A patent.
c. A customer list.
d. All of the above.

57. Which of the following intangible assets could not be sold by a business to raise needed
cash for a capital project?
a. Patent.
b. Copyright.
c. Goodwill.
d. Trade name.

58. The reason goodwill is sometimes referred to as a master valuation account is because
a. it represents the purchase price of a business that is about to be sold. b. it is the
difference between the fair value of the net identifiable assets as compared with the
purchase price of the acquired business.
c. the value of a business is computed without consideration of goodwill and then goodwill is
added to arrive at a master valuation.
d. it is the only account in the financial statements that is based on value, all other accounts
are recorded at an amount other than their value.

59. Purchased goodwill should

a. be written off as soon as possible against retained earnings.
b. be written off as soon as possible as an other expense item.
c. be written off by systematic charges as a regular operating expense over the period
benefited.
d. not be amortized.

60. The intangible asset goodwill may be

a. capitalized only when purchased.
b. capitalized either when purchased or created internally.
c. capitalized only when created internally.
d. written off directly to retained earnings.
cPSD|12217761

61. A loss on impairment of an intangible asset is the difference between the asset’s a.
carrying amount and the expected future net cash flows.
b. carrying amount and its recoverable amount.
c. recoverable amount and the expected future net cash flows.
d. book value and its fair value.

62. Recovery of impairment is recognized for all the following except

a. Patent held for sale.
b. Patent held for use.
c. Trademark.
d. Goodwill.

63. All of the following are true regarding recovery of impairments for intangible assets
except:
a. After a recovery of impairment has been recognized, the carrying value of the asset
reported on the statement of financial position will be the higher of the fair value less cost to
sell or the value-in-use.
b. No recovery of impairment is allowed for Goodwill.
c. A recovery of impairment will be reported in the "Other income and expense" section of
the income statement.
d. The amount of the recovery is limited to the carrying value of the asset that would have
been reported had no impairment occurred.

64. Which of the following is not a criteria which must be met before development costs can
be capitalized?
a. The company has sufficient financial resources to complete the project. b. The company
intends to complete the project and either use or sell the intangible asset.
c. The company can reliably identify the research costs incurred to bring the project to
economic feasibility.
d. The project has achieved technical feasibility.

65. Which of the following research and development related costs should be capitalized and
depreciated over current and future periods?
a. Research and development general laboratory building which can be put to alternative
uses in the future
b. Inventory used for a specific research project
c. Administrative salaries allocated to research and development
d. Research findings purchased from another company to aid a particular research project
currently in process

66. Which of the following principles best describes the current method of accounting for
research and development costs?
a. Associating cause and effect
b. Systematic and rational allocation
c. Income tax minimization
d. Immediate recognition as an expense

67. How should research and development costs be accounted for, according to an IASB
Statement?
a. Must be capitalized when incurred and then amortized over their estimated useful lives.
b. Must be expensed in the period incurred.
c. May be either capitalized or expensed when incurred, depending upon the materiality of
the amounts involved.
d. Must be expensed in the period incurred unless it can be clearly demonstrated that the
expenditure will have alternative future uses or unless contractually reimbursable.

68. Which of the following would be considered research and development? a. Routine
efforts to refine an existing product.
b. Periodic alterations to existing production lines.
c. Marketing research to promote a new product.
d. Construction of prototypes.

69. Research and development costs

a. are intangible assets.
b. may result in the development of a patent.
c. are easily identified with specific projects.
d. all of the above.

70. Which of the following is considered research and development costs? a. Laboratory
research aimed at discovery of new knowledge.
b. Application of research findings or other knowledge to a plan or design for a new product
or process.
c. Conceptual formulation and design of possible product or process alternatives. d. all of the
above.

71. Which of the following is considered research and development costs? a. Planned
investigation undertaken with the prospect of gaining new scientific or technical knowledge
and understanding.
b. Application of research findings or other knowledge to a plan or design for a new product
or process.
c. Neither a nor b.
d. Both a and b.

72. Which of the following costs should be capitalized in the year incurred? a. Research and
development costs.
b. Costs to internally generate goodwill.
c. Organizational costs.
d. Costs to successfully defend a patent.

73. Which of the following costs would be capitalized?

a. Acquisition cost of equipment to be used on current research project only. b. Engineering
costs incurred to advance the product to the full production stage. c. Cost of research to
determine whether a market for the product exists. d. Salaries of research staff.
lOMoARcPSD|12217761

74. Which of the following costs would be capitalized?

a. Acquisition cost of equipment to be used on current and future research projects. b.
Engineering costs incurred to advance the project to the full production stage. c. Cost
incurred to file for patent.
d. Cost of testing prototype before economic feasibility has been demonstration.
75. Which of the following costs should be excluded from research and development
expense?
a. Modification of the design of a product
b. Acquisition of R & D equipment for use on a current project only
c. Cost of marketing research for a new product
d. Engineering activity required to advance the design of a product to the manufacturing
stage

76. If a company constructs a laboratory building to be used as a research and development

facility, the cost of the laboratory building is matched against earnings as a. research and
development expense in the period(s) of construction.
b. depreciation deducted as part of research and development costs.
c. depreciation or immediate write-off depending on company policy.
d. an expense at such time as productive research and development has been obtained
from the facility.

77. Operating losses incurred during the start-up years of a new business should be a.
accounted for and reported like the operating losses of any other business. b. written off
directly against retained earnings.
c. capitalized as a deferred charge and amortized over five years.
d. capitalized as an intangible asset and amortized over a period not to exceed 20 years.

78. Start-up costs include organizational costs, such as legal and state fees incurred to
organize a new business entity. These costs should be
a. capitalized and never amortized.
b. capitalized and amortized over 40 years.
c. capitalized and amortized over 5 years.
d. expensed as incurred.

79. Which of the following would not be considered an R & D activity?

a. Adaptation of an existing capability to a particular requirement or customer's need. b.
Application of research findings or other knowledge to a plan for a new product or process.
c. Laboratory research aimed at discovery of new knowledge.
d. Conceptual formulation and design of possible product or process alternatives.

80. Which of the following intangible assets should be shown as a separate item on the
statement of financial position?
a. Goodwill
b. Franchise
c. Patent
d. Trademark

81. Which of the following should not be reported under the “Other income and expense”
section of the income statement?
a. Goodwill impairment losses.
b. Trade name amortization expense.
c. Recovery of impairment losses
d. All of the above.

82. The total amount of patent cost amortized to date is usually

a. shown in a separate Accumulated Patent Amortization account which is shown contra to
the Patent account.
b. shown in the current income statement.
c. reflected as credits in the Patent account.
d. reflected as a contra property, plant and equipment item.

83. Intangible assets are reported on the statement of financial position a. with an
accumulated depreciation account.
b. in the property, plant, and equipment section.
c. as a separate item.
d. none of the above.

—-------------------------------------------------------------------------------------------------------------
Exam:

1 Company AB enters into a contract with customer X for the provision of a standard
software license. After reviewing several other similar service providers, customer X
also require AB to install the software on the customer's computer and provide
technical support for 3 years (same contract with s software license). How many
performance obligations are there in the contract with customer X?

a.2
b.3
c.Not enough information to determine
d.1

2 During 2019, Noller Co. sold equipment that had cost $98,000 for $58,800. This
resulted in a gain of $4,300. The balance in Accumulated Depreciation—Equipment was
$325,000 on January 1, 2019, and $310,000 on December 31. No other equipment was
disposed of during 2015. Depreciation expense for 2019 was

a.$58,500

b.$19,300

c.$15,000

d.$28,500

3 Company ASD received a judge’s unfavourable decision on a court case which

occur after the reporting date but before the financial statements are authorised for
issue with a high payment to its customer. This lawsuit does not affect the situation at
the reporting date. However, this information indicates that ASB’s going concern
assumption may be inappropriate. How should ASD recognise in this situation under
IAS 10?
a.Adjust the financial statements to present on the break-up basis

b.Recognise as a liability in the financial statements on the reporting date

c.Do nothing

d.Disclose in the notes

4 Change in accounting policy does not include

a.Change in useful life from 10 years to 7 years

b.Change from the practice (convention) of paying as Christmas bonus one month’s salary to staff
before the end of the year to the new practice of paying one-half month’s salary only.

c.Change of method of valuation of inventory from weighted-average to FIFO

d.Change of method of valuation of inventory from FIFO to weighted-average

5 Limited-life intangibles are reported at their

a.acquisition cost.

b.liquidation value.

c.replacement cost.

d.carrying amount unless impaired.

6 During the lifetime of an entity, accountants produce financial statements at

arbitrary points in time in accordance with which basic accounting concept?

a.Periodicity assumption

b.Expense recognition principle

c.Conservation

d.Cost constraint

7 When cash is involved in an exchange having commercial substance

a.Only losses should be recognized

b.Only gains should be recognized

c.A gain or loss is computed by comparing the fair value of the asset received with the fair value of the
asset given up

d.Gains or losses are recognized in their entirety

8 Fogelberg Company purchased equipment for $12,000. Sales tax on the purchase
was $600. Other costs incurred were freight charges of $240, repairs of $420 for
damage during installation, and installation costs of $270. What is the cost of the
equipment?

a.$12,600

b.$12,000

c.$13,530

d.$13,110

9 Which of the following is an external indication of impairment?

a.Worse economic performance than expected

b.Decline in market value

c.Asset is part of a restructuring or held for disposal

d.Physical damage

10 Which characteristic is not possessed by intangible assets?

a.Expensed over current and/or future years.

b.Physical existence.

c.Identifiable.

d.Result in future benefits.

11 Which of the following is NOT a component of the statement of changes in equity?

a.The amount of cash that the company has on hand

b.Total comprehensive income for the period

c.Dividends paid to shareholders during the period

d.The effect of changes in accounting policy related to equity component

12 If an entity wishes to change from a cost model to fair value model under IAS 40 –
Investment Property, when may it do so?

a. When the value of the assets will improve with a revised model

b.When a change will result in a more appropriate presentation

c.When the market for these properties is fluctuation.

d.When the board of directors approves a change

13 In general, contract costs incurred in in fulfilling a contract with a customer that

are not within the scope of another Standard must be:

a. Recognised as an asset if they are not expected to be recovered

b. Recognised as an asset if they relate to a performance obligation which has been satisfied

c. Recognised as an expense when incurred

d. Recognised as an asset if they relate to a performance obligation which has not yet been satisfied

14 ABC performed the impairment test for a machine with the following outcome:
Fair value of the machine = CU 10.000, Cost of disposal = CU 150, Value in use =
12.000. Machine’s carrying amount is CU 11.000. What is the impairment loss of the
machine in line with IAS 36?

a.CU 0

b.CU 1.000

c.CU 1.150

d.CU 2.000

15 Under IFRS, what are the item(s) that are separately reported under income from
continuing operations?

a.Discontinued operations and extraordinary items.

b.Extraordinary items.

c.None of the above is correct.

d.Discontinued operations.

16 Which of the following costs incurred internally to create an intangible asset is

generally expensed?

a.Research phase costs.

b.Legal costs.

c.All of these choices are correct.

d.Filing costs.

17 Which of the following would be reported as items of other comprehensive

income:

a.None of the answer are correct

b.Gains from the sale of goods.

c.Dividends paid to shareholders.

d.Foreign currency translation gains.

18 IAS 36 lists 8 indicators of impairment, both external and internal. If an entity

assesses that at least one indicator is present, what should this entity do?

a.An entity shall test an asset for impairment and estimate its recoverable amount.

b.An entity must perform annual impairment tests of all assets regardless the existence of impairment
indicators.

c.An entity must recognize an impairment loss

d.IAS 36 states that at least 2 indicators must be present in order to recognize impairment loss and
therefore this entity does not need to do anything

19 When information about two different enterprises has been prepared and
presented in a similar manner, the information exhibits the characteristic of

a.relevance.

b.faithful representation

c.consistency

d.none of these - Comparability

20 If an entity uses part of a building for their own use, and rents the remainder (these
parts can be sold separately). How should this be treated?

a.Account for separately under ‘IAS – 16 Property, Plant and Equipment’ and ‘IAS – 40 Investment
Property’

b.All under IAS 16 – Property, Plant and Equipment

c.None of these

d.All as investment property under IAS 40 – Investment Property

21 If a firm provides significant ancillary services to tenants in its property:

a.It may have to be classified as investment property, rather than as owner-occupied

b.It may have to be classified as inventories.

c.It may have to be classified as owner – occupied, rather than an investment property

d.The service fees should be capitalised

22 The International Accounting Standards Board (IASB) defines one of the 5

elements as follows: “the residual interest in the assets of the entity after
deducting all its liabilities” Which element matches this description?

a.Retained earnings

b.Income

c.All of the choices match this definition

d.Equity

23 Which of the following is NOT a basic assumption underlying the financial

accounting structure?

a.Historical cost assumption

b.Going concern assumption

c.Periodicity assumption

d.Economic entity assumption

24 Which of the following is an external indication of impairment?

a.Decline in market value

b.Physical damage

c.Worse economic performance than expected

d.Asset is part of a restructuring or held for disposal

25 CD Company signed a contract to build a property for customers with a

consideration of $10 million. If construction is completed on time, CD will
receive a $2 million reward from the customer. There is a 75% chance the
construction is completed on time. What is the transaction price related to the
above contract?

a.$9 mil

b.$10 mil
c.$12 mil

d.$11.5 mil

IFRS 16 TV
1. Vào ngày 1/1/20X1, Worker thuê 1 chiếc xe hơi theo HĐ thuê với kỳ hạn năm
với quyền chọn kéo dài HĐ thuê thêm 1 năm với cùng mức giá thuê thấp hơn
giá thuê thị trường. Khoản tiền thuê phải thanh toán hàng tháng là 10.000 CU
và Worker phải gánh chịu một khoản chi phí pháp lý là 1.200 CU/năm. Ngay từ
đầu HĐ thuê, Worker dự kiến thực hiện quyền chọn mở rộng kỳ hạn thuê với
giá thuê CU 5.000/tháng (1/2 giá thị trường). Giả sử lãi suất đi vay của Worker
là 3%/năm, lãi suất chiết khấu tháng là 0,247%, GTHL của xe hơi là 230.000 CU.
Quyền sử dụng tài sản và nợ phải trả tương ứng ghi nhận vào ngày bắt đầu
thuê (TS sẵn sàng sử dụng):

a. 230.000$ và 180.000$

b. 176.627 $ và 175.427 $

c. 176.627 $ và 176.627 $

d. 181.200$ và 180.000$

2. Vào ngày 1/1/20X1, Stamper Co sản xuất hợp kim đúc, có một HĐ thuê máy
dập. Giá mua máy dập này là 500.000 EUR và Stamper phải chịu chi phí cho
HĐ thuê là 2.000 EUR. Chi phí trực tiếp ban đầu bên cho thuê chịu là 3.000CU.
Thời gian kinh tế của máy dập là 6 năm, kỳ hạn HĐ thuê là 5 năm, tiền thuê
hàng năm là 110.000 EUR trả vao ngày 31/12 hàng năm. Khi kết thúc HĐ thuê
Stamper có quyền mua lại máy dập với giá 1.000 EUR. Không có giá trị còn lại
của TS không được đảm bảo đối với bên cho thuê. Giao dịch này được xử lý
như thế nào trên BCTC ngày 31/12/20X1 của Stamper. Lãi suất ngầm định của
HĐ thuê:

A.3,11%

B. 3,5%

C.3,5%

D. 4,11%

3. Vào ngày 01/01/20x0, Công ty K thuê một thiết bị từ công ty N. Tại ngày bắt
đầu hợp đồng thuê, thiết bị có giá trị hợp lý $1,100,000. Ngoài ra, chi phí vận
chuyển thiết bị bên cho thuê phải chịu là 20.000$, bên thuê chịu là 10,000 $.
Thời gian kinh tế hữu hích là 6 năm và giá trị còn lại sau khi kết thúc thời gian
kinh tế hữu ích được ước tính là $0. Thiết bị có giá trị còn lại khi kết thúc hợp
đồng thuê là $200.000, trong đó giá trị còn lại đảm bảo là $150,000, giá trị còn
lại không được đảm bảo là 50.000$. Kỳ hạn thuê là 4 năm, thanh toán $303,920
vào cuối mỗi năm. Hợp đồng thuê là không huỷ ngang. Lãi suất ngầm định của
HĐ là:

1,100+20 = 303.920/1+IRR

+ 303.920/(1+IRR)^2

+ 303.920/(1+IRR)^3

+ 503.920/(1+IRR)^4

=> IRR=9.24%

a. 9,24%

b. 9,62%

c. 5,33%

d. 8,26%

4. Vào ngày 01/01/20x0, Công ty K thuê một thiết bị từ công ty N. Tại ngày bắt
đầu hợp đồng thuê, thiết bị có giá trị hợp lý $1,100,000. Ngoài ra, chi phí vận
chuyển thiết bị bên cho thuê phải chịu là 20.000$, bên thuê chịu là 10,000 $.
Thời gian kinh tế hữu hích là 6 năm và giá trị còn lại sau khi kết thúc thời gian
kinh tế hữu ích được ước tính là $0. Thiết bị có giá trị còn lại khi kết thúc hợp
đồng thuê là $200.000, trong đó giá trị còn lại đảm bảo là $150,000, giá trị còn
lại không được đảm bảo là 50.000$. Kỳ hạn thuê là 4 năm, thanh toán $303,920
vào cuối mỗi năm. Hợp đồng thuê là không huỷ ngang. Hãy cho biết giá trị
quyền sử dụng tài sản và nợ phải trả khi bắt đầu thuê:

Payment PV

1 303,920 278,213

2 303,920 254,681

3 303,920 233,139

4 303,920+150,000 318,752

1,084,784
Dr. ROU 1,094,784

Cr. Liability 1,084,784

Cr. Cash 10,000

a. 1.084.884 & 1.104.884

b. 1.084.884 & 1.094.884

c. 1.215.680 & 1.225.680

d. 1.215.680 & 1.235.680

5. Vào ngày 01/01/20x0, Công ty K thuê một thiết bị từ công ty N. Tại ngày bắt
đầu hợp đồng thuê,

thiết bị có giá trị hợp lý $1,100,000. Ngoài ra, chi phí vận chuyển thiết bị bên
cho thuê phải chịu

là 20.000$, bên thuê chịu là 10,000 $. Thời gian kinh tế hữu hích là 6 năm và
giá trị còn lại sau

khi kết thúc thời gian kinh tế hữu ích được ước tính là $0. Thiết bị có giá trị
còn lại khi kết thúc

hợp đồng thuê là $200.000, trong đó giá trị còn lại đảm bảo là $150,000, giá trị
còn lại không

được đảm bảo là 50.000$. Kỳ hạn thuê là 4 năm, thanh toán $303,920 vào cuối
mỗi năm. Hợp

đồng thuê là không huỷ ngang. Kết thúc HĐ thuê, bên đi thuê trả lại tài sản cho
bên cho thuê.Hãy

cho biết chi phí khấu hao và chi phí tài chính năm 20X2:

ROU = 1,094,784/4

Financial Expense (X0) = 1,084,784 * 9,24%

a. 273.721$ & 100.200$

b. 182.481$ 60.831 $

c. 182.481$ &100.200$

d. 273.721 & 60.831 $

6. Vào ngày 01/01/20x0, Công ty K thuê một thiết bị từ công ty N. Tại ngày bắt đầu hợp
đồng thuê, thiết bị có giá trị hợp lý $1,100,000. Ngoài ra, chi phí vận chuyển thiết bị bên
cho thuê phải chịu là 20.000$, bên thuê chịu là 10,000 $. Thời gian kinh tế hữu hích là 6
năm và giá trị còn lại sau khi kết thúc thời gian kinh tế hữu ích được ước tính là $0.
Thiết bị có giá trị còn lại khi kết thúc hợp đồng thuê là $200.000, trong đó giá trị còn lại
đảm bảo là $150,000, giá trị còn lại không được đảm bảo là 50.000$. Kỳ hạn thuê là 4
năm, thanh toán $303,920 vào cuối mỗi năm. Hợp đồng thuê là không huỷ ngang. Kết
thúc HĐ thuê, bên đi thuê được ưu tiên mua lại tài sản.Hãy cho biết chi phí khấu hao và
chi phí tài chính năm 20X2
a. 273.721$ & 100.200$
b. 182.481$ 60.831 $
c. 182.481$ &100.200$
d. 273.721 & 60.831 $
7. Vào ngày 01/01/20x0, Công ty K thuê một thiết bị từ công ty N. Tại ngày bắt đầu hợp
đồng thuê, thiết bị có giá trị hợp lý $1,100,000. Ngoài ra, chi phí vận chuyển thiết bị bên
cho thuê phải chịu là 20.000$, bên thuê chịu là 10,000 $. Thời gian kinh tế hữu hích là 6
năm và giá trị còn lại sau khi kết thúc thời gian kinh tế hữu ích được ước tính là $0.
Thiết bị có giá trị còn lại khi kết thúc hợp đồng thuê là $200.000, trong đó giá trị còn lại
đảm bảo là $150,000, giá trị còn lại không được đảm bảo là 50.000$. Kỳ hạn thuê là 4
năm, thanh toán $303,920 vào cuối mỗi năm. Hợp đồng thuê là không huỷ ngang. Kết
thúc HĐ thuê, bên đi thuê được ưu tiên mua lại tài sản. Hãy cho biết giá trị ROU và nợ
phải trả trên BCĐKT năm 20X1:
a. 729.923 $& 881.164$
b. 729.923 $&658.629$
c. 912.403 & 658.629 $
d. 541.441 & 881.164 $