Multiple Choice - Choose the best option. Clearly label your response in your answer document/file. 1. Which of the following statements best describes when previously recognized goodwill impairment may be reversed? a. Reversals are permitted under both ASPE and IFRS. b. Reversals are permitted under ASPE but are not allowed under IFRS c. Reversals are not permitted under either standard. d. None of these 2. Negative goodwill arises when: a. the book value of identifiable net assets acquired exceeds the purchase price. b. the fair value of identifiable net assets acquired exceeds the purchase price. c. the fair value of identifiable net assets acquired is less than the purchase price. d. the fair value of identifiable net assets acquired exceeds the book value. 3. Monkey Shines Ltd., a Canadian public corporation (uses IFRS), owns equipment for which the following year-end information is available: Carrying amount (book value) $120,000 Value in use............................. $102,000 Fair value less disposal costs ..... $108,000 The recoverable amount to be used in the determination of impairment is a. $102,000. b. $108,000. c. $120,000. d. Cannot be determined from the information given. 4. Which of the following is NOT one of the 5 steps in the revenue recognition process under IFRS: a. assess risks and rewards to customers b. identify the separate performance obligations of the contract. c. identify the contract with customers. d. allocate the transaction price to the separate performance obligations. 5. IFRS gives you the choice in expensing or capitalizing borrowing costs during construction of an asset. a. True b. False 6. Recording separately parts of an asset with different useful lives is an example of Componentization a. True b. False 8 7. Research costs can be capitalized if they meet 6 capitalization criteria a. True b. False 8. Gibbon Corp., a Canadian private corporation using ASPE, owns equipment for which the following year-end information is available: Carrying amount (book value) $59,000 Undiscounted future net cash $52,000 Fair value .............. $55,000 Which of the following best describes the proper accounting treatment for Gibbon's equipment? a. It is not impaired and a loss should not be recognized. b. It is impaired but a loss will not be recognized. c. It is not impaired, but a loss must be recognized. d. It is impaired and a loss must be recognized, but the loss cannot be reversed in future periods. 9. Grieves Company has the following items at year end: Cash in bank ............................................................ $42,000 Petty cash ................................................................ 1,500 Short-term paper with maturity of 2 months .............. 6,500 Postdated cheques .................................................. 3,400 Grieves should report cash and cash equivalents of a. $42,000. b. $43,500. c. $50,000. d. $46,600. 10. For the year ended December 31, 2020, Ferguson Corp. estimated its allowance for doubtful accounts using the year-end aging of accounts receivable. Additional information for calendar 2020 follows: Allowance for doubtful accounts, beginning ......................... $74,000 Estimated uncollectible accounts during 2020 (1% of credit sales of $8,000,000) .......................... 80,000 Uncollectible accounts written off during year ...................... 104,000 Estimated uncollectible accounts per year-end aging .......... 148,000 For the year ended December 31, 2020, Fergusons bad debt expense should be a. $74,000. b. $104,000. c. $178,000. d. $252,000. 9 11. Washington Distribution Co. has determined its December 31, 2020, inventory on a FIFO basis at $240,000. Information pertaining to that inventory follows: Estimated selling price $255,000 Estimated cost of disposal 10,000 Washington records losses that result from applying the lower of cost and net realizable value rule. At December 31, 2020, the loss that Washington should recognize is a. $0. b. $5,000. c. $15,000. d. $25,000. 12. For calendar 2020, Gomez Corporation reported pre-tax income of $70,000. A recount of the company's inventory revealed that 2020 ending inventory was overstated by $10,000. What is Gomez's corrected pre-tax income for 2020? a. $60,000 b. $80,000 c. $70,000 d. $75,000