1. On September 30, 2016, a company issued bonds with par value of $100,000 for $103,000. Which of the following statement is not correct?

1. Under IFRS, the company should record bond payable of $103,000.
2. Under US GAAP, the company should record bond payable of $100,000.
3. Under IFRS, the company should record an equity component of $3,000.

2. How often should goodwill acquired in a business combination be tested for impairment under US GAAP?

1. Whenever there are external indications of impairment
2. Every year
3. Whenever there are internal indications of impairment

Answer and Brief Explanation:

3. Under IFRS, if a company classifies dividend paid in the financing section in the statement of cash flows, it cannot classify interest paid in the operating cash flows. True or false?

1. True
2. False

Answer and Brief Explanation:

4. Which of the following statements is correct?

1. Revaluation of PPE assets is through earnings under US GAAP but through comprehensive income under IFRS.
2. Reversals of inventory write-downs are prohibited under IFRS.
3. IFRS require reporting entities to review useful lives of PPE assets on a regular basis but US GAAP does not have a similar requirement.
4. All of the above statements are incorrect.

Answer and Brief Explanation:

5. On December 31, 2015, a company acquires land for $1,000,000. The land is revalued at $1,030,000 on December 31, 2016 and $960,000 on December 31, 2017. The companys fiscal year-end is December 31. It follows IFRS and uses the revaluation model in relation to land. The correct accounting treatment of each revaluation in 2016 and 2017 is as follows:

1. 2016 Other comprehensive income $30,000

2017 Negative other comprehensive income $30,000; Expense $40,000

2. 2016 Other comprehensive income $30,000

2017 Negative other comprehensive income $70,000

3. 2016 Other comprehensive income $30,000

2017 Expense $70,000

4. 2016 Income $30,000

2017 Expense $70,000

Answer and Brief Explanation:

6. Which of the following statements is correct?

1. Both IFRS and US GAAP permit revaluation of property, plant, and equipment and intangible assets (except for goodwill).
2. IFRS permits revaluation of property, plant, and equipment and intangible assets (except for goodwill).
3. Both IFRS and GAAP permit revaluation of property, plant, and equipment but not intangible assets.
4. GAAP permits revaluation of property, plant, and equipment and intangible assets (except for goodwill).

Answer and Brief Explanation:

7. Which of the statements is true?

1. All others being equal, companies that follow GAAP may expense the cost of a major overhaul sooner than companies that follow IFRS.
2. All others being equal, companies that follow GAAP may expense advertising costs sooner than companies that follow IFRS.
3. Neither a) nor b) is true.

Answer and Brief Explanation:

8. On May 1 2016, a company issued convertible bonds for $420,000. The value of the equity component is $20,000 and the value of the debt component is $400,000. Which of the following statements is correct?

1. Under US GAAP, the company should credit liability of $400,000 upon the issuance of convertible bonds.
2. Under IFRS, the company should credit liability of $420,000 upon the issuance of convertible bonds.
3. Under IFRS, the company should credit equity $20,000 upon the issuance of convertible bonds.
4. Under US GAAP, the company should debit equity $20,000 upon the issuance of convertible bonds.

Answer and Brief Explanation:

9. Which of the following statements regarding equity investment under US GAAP is false?

1. Equity investment are generally measured at fair value through other comprehensive income.
2. Reporting entities can use net asset value to measure the fair value of investments in certain funds.
3. Reporting entities can elect the measurement alternatives upon the acquisition of an equity instrument.
4. All of the above statements are true.

Answer and Brief Explanation:

10. Bank overdrafts are generally regarded as a component of an entitys cash and cash equivalent under IFRS. True or false?

1. True
2. Fales

Answer and Brief Explanation: