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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? Under IFRS,
- 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?
- Under IFRS, the company should record bond payable of $103,000.
- Under US GAAP, the company should record bond payable of $100,000.
- Under IFRS, the company should record an equity component of $3,000.
- How often should goodwill acquired in a business combination be tested for impairment under US GAAP?
- Whenever there are external indications of impairment
- Every year
- Whenever there are internal indications of impairment
Answer and Brief Explanation:
- 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?
- True
- False
Answer and Brief Explanation:
- Which of the following statements is correct?
- Revaluation of PPE assets is through earnings under US GAAP but through comprehensive income under IFRS.
- Reversals of inventory write-downs are prohibited under IFRS.
- IFRS require reporting entities to review useful lives of PPE assets on a regular basis but US GAAP does not have a similar requirement.
- All of the above statements are incorrect.
Answer and Brief Explanation:
- 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:
- 2016 Other comprehensive income $30,000
2017 Negative other comprehensive income $30,000; Expense $40,000
- 2016 Other comprehensive income $30,000
2017 Negative other comprehensive income $70,000
- 2016 Other comprehensive income $30,000
2017 Expense $70,000
- 2016 Income $30,000
2017 Expense $70,000
Answer and Brief Explanation:
- Which of the following statements is correct?
- Both IFRS and US GAAP permit revaluation of property, plant, and equipment and intangible assets (except for goodwill).
- IFRS permits revaluation of property, plant, and equipment and intangible assets (except for goodwill).
- Both IFRS and GAAP permit revaluation of property, plant, and equipment but not intangible assets.
- GAAP permits revaluation of property, plant, and equipment and intangible assets (except for goodwill).
Answer and Brief Explanation:
- Which of the statements is true?
- All others being equal, companies that follow GAAP may expense the cost of a major overhaul sooner than companies that follow IFRS.
- All others being equal, companies that follow GAAP may expense advertising costs sooner than companies that follow IFRS.
- Neither a) nor b) is true.
Answer and Brief Explanation:
- 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?
- Under US GAAP, the company should credit liability of $400,000 upon the issuance of convertible bonds.
- Under IFRS, the company should credit liability of $420,000 upon the issuance of convertible bonds.
- Under IFRS, the company should credit equity $20,000 upon the issuance of convertible bonds.
- Under US GAAP, the company should debit equity $20,000 upon the issuance of convertible bonds.
Answer and Brief Explanation:
- Which of the following statements regarding equity investment under US GAAP is false?
- Equity investment are generally measured at fair value through other comprehensive income.
- Reporting entities can use net asset value to measure the fair value of investments in certain funds.
- Reporting entities can elect the measurement alternatives upon the acquisition of an equity instrument.
- All of the above statements are true.
Answer and Brief Explanation:
- Bank overdrafts are generally regarded as a component of an entitys cash and cash equivalent under IFRS. True or false?
- True
- Fales
Answer and Brief Explanation:
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