to be settled on Day 4. If the entity uses the trade daten entity commits to sell a financial asset on Day 1. The sale isaccounting, which of the following statements is correct?The fair value change between Days 1 and 4 is recognized.aAn1.sesa. The asset is derecognized, and the gain or loss on the saleis recognized, on Day 4.The asset is derecognized, and the gain or loss on the saleis recognized, on Day 1.i The asset is derecognized only when the sale price isllyhecollected.

Trade Date Accounting:- It is accounting that helps in recording the transactions on the date on…

PROBLEM 2: MULTIPLE CHOICE - THEORY commits to sell a financial asset on Day 1. The sale is An entity to be settled on Day 4. If the entity uses the trade date accounting, which of the following statements is correct? The fair value change between Days 1 and 4 is recognized. a. The asset is derecognized, and the gain or loss on the sale is recognized, on Day 4. The asset is derecognized, and the gain or loss on the sale C. is recognized, on Day 1. 1 The asset is derecognized only when the sale price is collected.

PROBLEM 2: MULTIPLE CHOICE - THEORY commits to sell a financial asset on Day 1. The sale is An entity to be settled on Day 4. If the entity uses the trade date accounting, which of the following statements is correct? The fair value change between Days 1 and 4 is recognized. a. The asset is derecognized, and the gain or loss on the sale is recognized, on Day 4. The asset is derecognized, and the gain or loss on the sale C. is recognized, on Day 1. 1 The asset is derecognized only when the sale price is collected.

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter6: Audit Evidence

Section: Chapter Questions

Problem 15CYBK

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If a company incurs disposition obligations as a result of acquiring an asset:\\nQuestion 4 options:\\n\\nThe company recognizes the obligation at fair value when the asset is acquired.\\n\\nThe company recognizes the obligation at fair value when the asset is disposed.\\n\\nThe company records the difference between the fair value of the asset and the obligation when the asset is acquired.\\n\\nNone of the above.
Under PFRS 3, when is a gain recognized in consolidating financial information? Group of answer choices a.When the amount of a bargain purchase exceeds the value of the applicable liability held by the acquired company. b.In an acquisition when the value of all assets and liabilities cannot be determined. c.When any bargain purchased is created d.In a combination created in the middle of the fiscal year
Indicate whether each of the following statements is true or false. Companies account for the exchange of non-monetary assets on the basis of the book value of the asset given up or the fair value of the asset received. Under IFRS, all gains on non-monetary exchanges are recognized, regardless of whether the transaction has commercial substance or not.
Choose the correct. FASB ASC 805, “Business Combinations,” provides principles for allocating the fair value of an acquired business. When the collective fair values of the separately identified assets acquired and liabilities assumed exceed the fair value of the consideration transferred, the difference should be:a. Recognized as an ordinary gain from a bargain purchase.b. Treated as negative goodwill to be amortized over the period benefited, not to exceed 40 years.c. Treated as goodwill and tested for impairment on an annual basis.d. Applied pro rata to reduce, but not below zero, the amounts initially assigned to specific non-current assets of the acquired firm.
Entity A acquires a biological asset for P100, equal to fair value, and incurs transaction cost of P10 on the purchase. If the asset’s costs to sell is P20, Entity A will recognize a loss of P30 on the initial recognition of the purchased asset. True or False? Please explain.
Indicate whether each of the following statements is true or false. 1. Assets purchased on long-term credit contracts should be recorded at the present value of the consideration exchanged. 2. Companies account for the exchange of non-monetary assets on the basis of the book value of the asset given up or the fair value of the asset received. 3. Under IFRS, all gains on non-monetary exchanges are recognized, regardless of whether the transaction has commercial substance or not.
When the required balance of the loss allowance decreases, a. the entity recognizes gain. b. the entity recognizes loss. c. the entity recognizes unearned interest to be amortized over the remaining term of the instrument. d. the entity recognizes a deferred charge to be amortized over the remaining term of the instrument.
The cost of a nonmonetary asset acquired in exchange for another nonmonetary asset when the exchange has commercial substance is usually recorded at A) either the fair value of the asset given up or the asset received, whichever one results in the largest gain (smallest loss) to the company. B) the fair value of the asset received if it is equally reliable as the fair value of the asset given up. C) the fair value of the asset given up, and a gain or loss is recognized. D) the fair value of the asset given up, and a gain but not a loss may be recognized.
What should be done with the transaction on August 2019? a. Disclose as provision since the occurrence is probable. b. Recognize as provision since it is probable that Buwis Buhay will lose the case. c. Disclose as contingent asset because even if it is probable that the company will be successful, contingent asset is never recognized unless realized. d. Recognize as contingent liability since it is probable that Buwis Buhay will be indebted.
When nonmonetary assets are exchanged, a company records the cost of the nonmonetary asset acquired at: a.The fair value of the nonmonetary asset surrendered minus cash paid. b.The book value of the asset received minus cash paid. c.The fair value of the nonmonetary asset surrendered plus cash paid. d.The fair value of the nonmonetary asset surrendered plus cash received.
Under PFRS 3, when is a gain recognized in consolidating financial information? a. In a combination created in the middle of the fiscal year b. In an acquisition when the value of all assets and liabilities cannot be determined. c. When any bargain purchased is created d. When the amount of a bargain purchase exceeds the value of the applicable liability held by the acquired company.
How is goodwill or gain from bargain purchase computed? Group of answer choices a. The difference between the sum of (a) consideration transferred; (b) non-controlling interest in the acquiree; and (c) acquisition-date fair value of the acquirer’s previously held equity interest in the acquiree; and the acquisition-date fair value of net identifiable assets acquired. b. The excess of the acquisition-date fair value of net identifiable assets acquired and there carrying amounts in the acquiree's books. c. The difference between the consideration transferred, including non-controlling interest in the acquiree, and the acquisition-date fair value of net identifiable assets acquired. d. The difference between the purchase price and the acquisition-date fair value of net identifiable assets acquired.