Chapter 1, Problem 8Q

In which of the following areas does the IASB not allow firms to choose between two acceptable treatments?a. Measuring property, plant, and equipment subsequent to acquisition.b. Measuring noncontrolling interest in a business combination.c. Recognizing development costs that meet criteria for capitalization as an asset.d. Classifying interest paid in the statement of cash flows.

What is the appropriate accounting treatment for the value assigned to in-process research and development acquired in a business combination?a. Expense upon acquisition.b. Capitalize as an asset.c. Expense if there is no alternative use for the assets used in the research and development and technological feasibility has yet to be reached.d. Expense until future economic benefits become certain and then capitalize as an asset.

Choose the correct. What is the appropriate accounting treatment for the value assigned to in-process research and development acquired in a business combination?a. Expense upon acquisition.b. Capitalize as an asset.c. Expense if there is no alternative use for the assets used in the research and development and technological feasibility has yet to be reached.d. Expense until future economic benefits become certain and then capitalize as an asset.

How should research and development expenditure be dealt with in an entity's financial statements?   a-  Research expenditure should always be written off as an expense but development expenditure should always be capitalised as an intangible asset b- Research and development expenditure should always be written off as an expense c- Research expenditure should always be written off as an expense but development expenditure should be capitalized as an intangible asset if it satisfies certain conditions d- Research and development expenditure should always be capitalised as an intangible asset

What is the role of financial intermediaries in asset transformation? Briefly explain along with the types of asset transformation undertaken by the financial intermediaries.

In order for an asset to be recognized in the financial statements, which of the following definition is consistent with the IASB framework?  Select one: a. Asset is a resource controlled by the entity from which future economic benefits are expected to flow to the entity. b. Asset is a resource controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity. c. Asset is a resource controlled by the entity as a result of future events and from which future economic benefits are expected to flow to the entity. d. Asset is a resource controlled by the entity as a result of present events and from which future economic benefits are expected to flow to the entity.

What are the reasons that cause a firm to construct fixed assets for its own use?

If an organization’s operations rely heavily on the specialized expertise of its management team, would you expect there to be a higher or a lower correspondence between the net assets recognized in the statement of financial position (balance sheet) and the total market value of the organization’s securities, relative to an organization that relies more on tangible assets (for example, commonly used plant and machinery) to generate its income?

Assess the nature of the risks that an organisation can be exposed to when undertaking a new investment?