Student Number Note: PLEASE UPLOAD THE ASSIGNMENT TO THE MOODLE OTHERWISE THE ASSIGNMENT WILL NOT BE GRADED. Put your answer directly after each question! Question One: A year ago you bought shares of stock in an investment company. The investment company, in turn, buys, holds, and sells shares of business enterprises. You want to use the financial statements of the investment company to assess its performance over the past year a What financial information about the investment company's holdings would be most relevant to you? b. The investment company earns profits from appreciation of its investment securities and from dividends received. How would the concepts of recognition in the Conceptual Framework apply here? Question Two: IAS 2 Inventories allows producers of gold and silver to measure inventories of those commodities at selling price, even before they have sold it, which means a profit is recognised at production. In nearly all other industries, however, profit is recognised only when the inventories are sold to outside customers. What concept(s) in the conceptual Framework might the IASB have looked to with regard to accounting for gold and silver production? Question Three: An entity purchases a rental property for $10 000 000 as an investment. The building is fully rented, and is in a prosperous area. At the end of the current year, the enterprise hires an appraiser who reports that the fair value of the building is "$15 000 000 plus or minus ten per cent". Depreciating the building over 50 years would reduce the carrying amount to $9 800 000 a. What are the relevance and reliability accounting considerations in deciding how to measure the building in the entity's financial statements? b. Does the conceptual Framework lead clearly to measuring it at $15 000 000? Or at $9 800 000? Or at some other amount? Student Number Note: PLEASE UPLOAD THE ASSIGNMENT TO THE MOODLE OTHERWISE THE ASSIGNMENT WILL NOT BE GRADED. Put your answer directly after each question! Question One: A year ago you bought shares of stock in an investment company. The investment company, in turn, buys, holds, and sells shares of business enterprises. You want to use the financial statements of the investment company to assess its performance over the past year a What financial information about the investment company's holdings would be most relevant to you? b. The investment company earns profits from appreciation of its investment securities and from dividends received. How would the concepts of recognition in the Conceptual Framework apply here? Question Two: IAS 2 Inventories allows producers of gold and silver to measure inventories of those commodities at selling price, even before they have sold it, which means a profit is recognised at production. In nearly all other industries, however, profit is recognised only when the inventories are sold to outside customers. What concept(s) in the conceptual Framework might the IASB have looked to with regard to accounting for gold and silver production? Question Three: An entity purchases a rental property for $10 000 000 as an investment. The building is fully rented, and is in a prosperous area. At the end of the current year, the enterprise hires an appraiser who reports that the fair value of the building is "$15 000 000 plus or minus ten per cent". Depreciating the building over 50 years would reduce the carrying amount to $9 800 000 a. What are the relevance and reliability accounting considerations in deciding how to measure the building in the entity's financial statements? b. Does the conceptual Framework lead clearly to measuring it at $15 000 000? Or at $9 800 000? Or at some other amount
