Statement 1: Entities with qualifying assets shall disclosed in the financial statements the amount of borrowing costs capitalized as well as the amount of borrowing costs charged to profit or loss for the period. Statement 2: Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets.

Statement 1: Entities with qualifying assets shall disclosed in the financial statements the amount of borrowing costs capitalized as well as the amount of borrowing costs charged to profit or loss for the period. Statement 2: Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets.

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

Chapter10: Auditing Cash, Marketable Securities, And Complex Financial Instruments

Section: Chapter Questions

Problem 4CYBK: Which of the following assertions is relevant to whether the cash balances reflect the true...

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Which of the following assertions is relevant to whether the cash balances reflect the true underlying economic value of those assets? a. Existence/occurrence. b. Completeness. c. Rights and obligations. d. Valuation or allocation. e. All of the above.
Under the impairment of assets, value-in-use is * a. The undiscounted present value of future cash flows arising from the continuing use of the asset and from its disposal. b. The discounted present value of future cash flows arising from the continuing use of the asset and from its disposal. c. The higher of an asset's fair value less cost to sell and its market value d. The amount at which the asset is recognized in the statement of financial position
How should the amount of interest capitalized be disclosed in the notes to the financial statements? How should interest revenue from temporarily invested excess funds borrowed to finance the construction of assets be accounted for?
Evaluate the following statements:S1. The borrowing cost is capitalized when the entity undertakes activities that are necessary to prepare the asset for the intended use or sale.S2. Borrowing cost incurred while land acquired for building purposes is held without any associated development activity does not qualify for capitalization. a.False, False b.True, True c.False, True d.True, False
1. IAS 36 applies to which of the following assets? (a) Inventories. (b) Financial assets. (c) Assets held for sale. (d) Property, plant, and equipment. 2. Value-in-use is (a) The market value. (b) The discounted present value of future cash flows arising from use of the asset and from its disposal. (c) The higher of an asset’s fair value less cost to sell and its market value. (d) The amount at which the asset is recognized in the balance sheet. 3. If the fair value less costs to sell cannot be determined (a) The asset is not impaired. (b) The recoverable amount is the value-in-use. (c) The net realizable value is used. (d) The carrying value of the asset remains the same. 4. If assets are to be disposed of (a) The recoverable amount is the fair value less costs to sell. (b) The recoverable amount is the value-in-use. (c) The asset is not impaired. (d) The recoverable amount is the carrying value. 5. Estimates of future cash flows normally would cover projections over a maximum…
2. To be reported as “cash and cash equivalent”, the cash and cash equivalent must be a. Unrestricted in use for current operations b. Available for the purchase of property, plant and equipment c. Set aside for the liquidation of long-term debt d. Deposited in the bank
Statement 1: Estimates of future cash flows of a property, plant and equipment shall include estimated future cash inflows and outflows that are expected to arise from improving or enhancing the asset’s performance.Statement 2: Expenditures on a qualifying asset include only those expenditures that have resulted in payments of cash, transfers of other assets or the assumption of interest-bearing liabilities. Group of answer choices Only statement 1 is correct. Both statements are correct Only statement 2 is correct Both statements are incorrect.
Which statement is incorrect regarding reclassification of financial assets? a) Reclassifications to FVTPL measurement category result to amounts recognized in profit or loss. b.)The effective interest rate is determined on the basis of the fair value of the asset at the reclassification date when an entity reclassifies a financial asset out of FVTPL measurement category. c.) The effective interest rate and the measurement of expected credit losses are not adjusted as a result of the reclassification from AC measurement category to FVTOCI and vice versa. d.) All reclassifications out of FVTOCI measurement category result in ‘reclassification adjustm
Sometimes the value spent by a corporation is recorded as an asset and sometimes as an expense. Answer the following: • Define the two terms. How and why are these expenditures different from each other? • How are they different from Liabilities? •Describe the effects of assets and expenses on the company's financial statements. • About Current Assets. How do they affect the financial statements differently from fixed assets? • Comment on the statement that "all assets are eventually expenses"
When the contractual cash flows of a financial asset are renegotiated or otherwise modified and the renegotiation or modification does not result in the derecognition of that financial asset in accordance with PFRS 9, an entity shall I. Recalculate the gross carrying amount of the financial asset as the present value of the renegotiated or modified contractual cash flows that are discounted at the financial asset's original effective interest rate. II. Recognize a modification gain or loss in profit or loss. A. I only. B. Neither I nor II. C. ll only. D. Both I and II.
When funds are borrowed to pay for construction of assets that qualify for capitalization of interest, the excess funds not needed to pay for construction may be temporarily invested in interest-bearing securities. Interest earned on these temporary investments should be? A) multiplied by an appropriate interest rate to determine the amount of interest to be capitalized. B) offset against interest cost incurred during construction. C) recognized as revenue of the period. D) used to reduce the cost of assets being constructed.
Which of the following is not added to net income as an adjustment to reconcile net income to cash from operating activities in the statement of cash flows? A. Increase in deferred tax asset B. Increase in an accrued liability C. Loss on sale of operational asset D. Amortization of discount on bond payable