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Question 21 pts

Cooper Company has spent P20,000 research new cleaning chemicals in the year ended 31 December 20x0. They have also spent P40,000 developing a new cleaning product which will not go into commercial production until next year.The development project meets the criteria laid down in IAS 38 Intangible Assets.How should these cost be treated in the financial statements of Cooper Company for the year ended 31 December 20x0?

Group of answer choices

P40,000 should be capitalized as an intangible asset and should not be amortized; P20,000 should be written off to the statement of profit or loss.

P40,000 should be capitalized as an intangible asset and should be amortized; P20,000 should be written off to the statement of profit or loss.

P60,000 should be capitalized as an intangible asset on the statement of financial position.

P60,000 should be written off to the statement of profit or loss.

Question 31 pts

Which of the following is required to be disclosed regarding risk and uncertainties that exist?

Group of answer choices

A description of operations both within and outside of the home country.

Factor causing an estimate to be sensitive.

The potential impact of estimate when it is reasonably possible that the estimate will change in the future.

The potential impact of estimate when it is remotely possible that the estimate will change in the future

Question 41 pts

Financial liability at fair value through profit or loss is a financial liability that

Group of answer choices

a. Meets the definition of held for trading.

d. Neither a nor b.

c. Either a or b.

b. Is designated by the entity as at fair value through profit or loss.

Amazon Inc. has been served a legal notice on December 15, 20X1, by the local environmental protection agency (EPA) to fit smoke detectors in its factory on or before June 30, 20X2 (before June 30 of the following year). The cost of fitting smoke detectors in its factory is estimated at P250,000. How should Amazon Inc. treat this in its financial statements for the year ended December 31, 20X1?

Group of answer choices

Recognize a provision for P250,000 in the financial statements for the year ended December 31, 20X1.

Ignore this for the purposes of the financial statements for the year ended December 31, 20X1, and neither disclose nor provide the estimated amount of P250,000.

Because Amazon Inc. can avoid the future expenditure by changing the method of operations and thus there is no present obligation for the future expenditure, no provision is required at December 31, 20X1, but as there is a possible obligation, this warrants disclosure in footnotes to the financial statements for the year ended December 31, 20X1.

Recognize a provision for P125,000 in the financial statements for the year ended December 31, 20X1, because the other 50% of the estimated amount will be recognized next year in the financial statement for the year ended December 31, 20X2.

Question 61 pts

Which TWO of the following statements about provision are true?

A. Future operating losses cannot be provided for

B. Changes in provisions should be applied retrospectively, adjusting the prior year financial statements

C. Provisions should be accounted prudently, reflecting the maximum that could possibly be paid out

D. Provisions should be discounted to present value if the effect of the time value of money is material.

Group of answer choices

A and C

A and B

C and D

A and D

Question 71 pts

Which of the following parties cannot be granted shares or share options by the entity?

Group of answer choices

Supplier of goods and services

None

Non-executive director

Chief Accountant

Executive director

Question 81 pts

To which of the following items does IAS 41 Agriculture apply?

I. A change in fair value of a herd of animals relating to the unit price of the animals.

II. Logs held in a wood yard.

III. Farm land which is used for growing vegetables.

IV. The cost of developing a new type of crop seed which is resistant to tropical diseases.

Group of answer choices

II and III only

I and II only

All four

I only

Question 91 pts

Which statement is incorrect regarding accounting for financial liabilities in accordance with PFRS 9?

Group of answer choices

An entity shall classify all financial liabilities as subsequently measured at amortized cost using the effective interest method, except as specified in PFRS 9.

An entity may reclassify financial liabilities when, and only when, it changes its business model for managing financial liabilities.

An entity shall measure a financial liability at initial recognition at its fair value minus, in the case of financial liability not at fair value through profit or loss, transaction costs.

An entity shall recognize a financial liability in its statement of financial position when, and only when, the entity becomes party to the contractual provisions of the instrument.

Question 101 pts

Which TWO of the following items should be capitalized within the initial carrying amount of an item of plant?

A. Cost of transporting the plant to the factory

B. Cost of installing a new power supply required to operate the plant

C. A deduction to reflect the estimated realizable value

D. Cost of a three-year maintenance agreement

E. Cost of a three-week training course for staff to operate the plant

Group of answer choices

A and E

D and A

B and C

A and B

C and E

B and E

D and E

C and D

Question 111 pts

A factory owned by XYZ Inc. was destroyed by fire. XYZ Inc. lodged an insurance claim for the value of the factory building, plant, and an amount equal to one year's net profit. During the year there were a number of meetings with the representatives of the insurance company. Finally, before year-end, it was decided that XYZ Inc. would receive compensation for 90% of its claim. XYZ Inc. received a letter that the settlement check for that amount had been mailed, but it was not received before year-end. How should XYZ Inc. treat this in its financial statements?

Group of answer choices

Disclose the contingent asset in the footnotes.

Because the settlement of the claim was conveyed by a letter from the insurance company that also stated that the settlement check was in the mail for 90% of the claim, record 100% of the claim as a receivable at year-end as it is virtually certain that the contingent asset will be received, and adjust the 10% next year when the settlement check is actually received.

Because the settlement of the claim was conveyed by a letter from the insurance company that also stated that the settlement check was in the mail for 90% of the claim, record 90% of the claim as a receivable as it is virtually certain that the contingent asset will be received.

Wait until next year when the settlement check is actually received and not recognize or disclose this receivable at all since at year-end it is a contingent asset.

Question 121 pts

When can a "provision" be recognized in accordance with IAS 37

Group of answer choices

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.

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.

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.

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.

Question 131 pts

For equity-settled share-based payment transactions, the entity shall measure the goods or services received, and the corresponding increase in equity, directly, at the __________ of the goods or services received, unless that it cannot be estimated reliably

Group of answer choices

Net selling price

Fair Value

Net book value

Amortised cost

Fair value and net selling price

Net book value

Question 141 pts

Which of the following statement about expected vesting period agrees with IFRS 2?

Group of answer choices

The entity shall revise its estimate of the length of the vesting period annually

The estimate of the length of the expected vesting period shall be consistent with the assumptions used in estimating the fair value of the options granted, and may be subsequently revised

The entity shall estimate the length of the expected vesting period at grant date, based on the most likely outcome of the performance condition

The entity shall estimate the length of the expected vesting period at measurement date based on the contractual obligations