Question
Which of the following statements is incorrect? a) According to PAS 29, the financial statements of an entity whose functional currency is that of hyper-
Which of the following statements is incorrect? | |
a) | According to PAS 29, the financial statements of an entity whose functional currency is that of hyper- |
| inflationary economy shall restate its financial statements in terms of the measuring unit current at the end |
| of the reporting period only if those financial statements are prepared under the historical cost basis. |
b) | Entities whose functional currency is that of a hyperinflationary economy shall disregard the concept of |
| stable monetary unit assumption. |
c) | According to PAS 29, the determination of the absolute rate at which hyperinflation is deemed to arise is |
| a matter of judgment. |
d) | Only non-monetary items, statement of financial position amounts not already expressed in terms of the |
| measuring unit current at end of the reporting period, are restated when using the constant peso accounting |
An entity acquires equipment on January 1, 20x1 for P1M. General price index on that date was 100. In 20x2, | |
the average general price index is 120, while on December 31, 20x2, the general price index is 140. Which of the | |
following statements is incorrect when the entity restates its 20x2 financial statements following PAS 29? | |
a) | Restated depreciation expense in 20x2 is computed by multiplying historical cost depreciation by 140/120. |
b) | Restated depreciation expense in 20x2 is computed by multiplying historical cost depreciation by 140/100. |
c) | The restated cost of the equipment is computed by multiplying P1M by 140/100 |
d) | The restated accumulated depreciation is computed by multiplying the historical cost accumulated |
| depreciation by 140/100 |
Which of the following is restated by multiplying indices under constant peso accounting? | |||
a) | Share premium | c) | Retained earnings |
b) | Investment in bonds | d) | Petty cash fund |
PAS 32 - Financial Instruments: Presentations | |||
66 | Which of the following statements is incorrect? | ||
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| a) | The PAS 32 definition of "equity" reflects the basic accounting equation of "Assets-Liabilities = Equity" |
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| b) | According to PAS 32, a contract is an equity instrument if it may result in the receipt or delivery of the entity's |
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| own equity instruments. |
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| c) | Entity A issues a compound financial instrument for P1M. If the fair value of the liability component without |
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| the equity feature is P.8M, the value to be assigned to the equity component is P.2M. |
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| d) | An intention to settle a financial asset and a financial liability on a net basis without the legal right to do is |
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| not sufficient to justify offsetting because the rights and obligations associated with the individual financial |
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| asset and financial liability remain unaltered. |
A gain or loss may arise from which of the following? | |
a) | The initial recognition of the debt and equity components of a compound financial instrument. |
b) | The settlement of a liability at an amount below or above its carrying amount. |
c) | The conversion of bonds into the entity's own equity instrument. |
d) | The purchase, sale, issue or cancellation of the entity's own equity instruments. |
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