Question 10. Public sector entity A has incurred the following expenditure prior to commercial production of a new fire resistant door for use in public buildings.

Marketing campaign	30,000
Royalty payment to inventor	15,000
Training staff in door production	10,500

What cost can public sector entity A include as an intangible development asset in accordance with IPSAS 31 'Intangible Assets'?

Nil

15,000

25,500

55,500

Note: You will be able to review all of your answers on a summary sheet at the end of the assessment. To highlight entries for specific review in the summary sheet, click the 'Mark question for review box' below.

Question 11. Which of the following statements regarding intangible assets is NOT true?

Development expenditure that meets the qualifying criteria must be capitalized

Intangible assets can only be revalued if there is an active market for the asset

The useful economic life of intangible assets cannot exceed 10 years

Internally generated goodwill should not be recognized as an asset

Question 12. A service concession arrangement under IPSAS 32 'Service concession arrangements: grantor' is a binding arrangement between a grantor and an operator in which:

The operator owns the service concession asset to provide a public service on behalf of the grantor for a specified period of time AND the operator is compensated for its services over the period of the service concession arrangement.

The operator uses the service concession asset to provide a public service on behalf of the grantor for a specified period of time AND the operator is compensated for its services over the period of the service concession arrangement.

The operator owns or leases the service concession asset to provide a public service on behalf of the grantor for a specified period of time

None of the above

Question 13. A local medical authority has several agreements with hospitals for the sale and maintenance of medical equipment. In the year to 31 December 20X0 the following information related to its revenue stream:

	$m
Sale of equipment	100
Maintenance agreements for a four year period	120
	220

What should be the figure for revenue recorded in the statement of financial performance for the year ended 31 December 20X0 for the above sale?

$220 million

$130 million

$120 million

$100 million

Question 14. IPSAS 1 'Presentation of Financial Statements' provides that certain disclosures shall be made in circumstances of uncertainty. IPSAS 1 therefore states that which of the below shall be disclosed:

Key sources of estimation of uncertainty at the reporting date

The key assumptions concerning the future

If there is a risk of causing a material adjustment to the carrying amounts of assets/liabilities then the nature and carrying amount as at the reporting date to the assets/liabilities shall be included in the notes

All of the above are required disclosures when addressing sources of estimating uncertainty

Question 15. Which of the following statements is not correct following the Cash Basis IPSAS?

Shall provide additional information which is not presented on the face of the financial statements but is necessary for a fair presentation of the entitys cash receipts, cash payments and cash balances

Financial statements are to be presented on at least a bi-annual basis

Shall present information about the basis of preparation of the financial statements and the specific accounting policies selected and applied for significant transactions and other events

If an entity chooses to disclose information prepared on a different basis from the cash basis of accounting as defined in the Cash Basis IPSAS such information should be disclosed in the notes to the financial statements

Question 16. According to IPSAS 23 'Non-exchange revenue' which of the following statements are true in relation to services in-kind?

The fair value of services in-kind must always be disclosed in the financial statements

The nature of significant services in-kind must be disclosed

The fair value of material services in-kind must be recognized in the financial statements

The disclosure regarding the nature and the type of services-in-kind is encouraged

Question 17. Which one of the following statements is correct for defining a segment under IPSAS 18 'Segment reporting'? A segment is a distinguishable activity or group of activities of an entity for which it is appropriate to report financial information separately for the purpose of evaluating the entitys past performance in achieving its objectives A segment is a distinguishable activity or group of activities of an entity for which it is appropriate to report financial information separately for the purpose of making decisions about the future allocation of resources A and B None of the options meet the definition of a segment

Question 18. Following IPSAS 4 The effects of changes in foreign exchange rates, at which rate should an entity's non-current assets be translated when its functional currency figures are being translated into a different presentation currency?

Today's exchange rate

Average of the exchange rate for the month

The closing rate

The average exchange rate for the financial reporting period