FINANCIAL ACCOUNTING: TOOLS FOR BUSINES
9th Edition
ISBN: 9781119595649
Author: Kimmel
Publisher: WILEY
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Companies that use IFRS:
a. may report all their assets on the statement of financial position at fair value.
b. are not allowed to net assets (assets − liabilities) on their statement of financial positions.
c. may report non-current assets before current assets on the statement of financial position.
d. do not have any guidelines as to what should be reported on the statement of financial position.
Which statement is incorrect regarding classification of financial assets?
a. An entity can classify financial assets that meet the amortized cost criteria as at FVPL if doing so eliminates or reduces an accounting mismatch.
B. In order to be classified at fair value through OCI, a debt instrument needs to have either simple principal and interest cash flows or be held in a business model in which both holding and selling financial assets are integral to meeting management’s objectives.
C. An investment in equity instrument may not be classified as financial asset subsequently measured at amortized cost.
D. Reclassifications of financial assets are only permitted on the change of an entity’s business model and are expected to occur only infrequently.
Which of the following is correct about subsequent measurement of financial asset at fair value?
a. the financial asset shall be measured at fair value if the business model is not to collect contractual cash flows on specified dates and the contractual cash flow ae not solely payment of principal and interest.
b. An entity may designate a finacncial asset as measured at fair value through profit or loss even if the financial asset satisfies the amortized cost measurement.
c. both are correct
d. both are incorrect
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- Which of the following statements about IFRS and U.S. GAAP accounting and reporting requirements for the balance sheet is not correct? a. Both IFRS and GAAP allow the use of title “balance sheet” or “statement of financial position.” b. One difference between the reporting requirements under IFRS and those of U.S. GAAP balance sheet is that an IFRS balance sheet may list long-term assets first. c. Both IFRS and U.S. GAAP require that comparative information be reported. d. Both IFRS and U.S. GAAP require that property, plant and equipment be revalued on the balance sheet.arrow_forwardIFRS requires companies to measure their financial assets at fair value except when based on: a. whether the equity method of accounting is used. b. whether the financial asset is a debt investment. c. whether the financial asset is an equity investment. d. whether an investment is classified as trading.arrow_forwardWhich 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 adjustmarrow_forward
- Companies that use IFRS: a. must report all their assets on the statement of financial position (balance sheet) at fair value. b. may report property, plant, and equipment and natural resources at fair value. c. may not use a mixed-attribute system for its balance sheet. d. may only use historical cost as the measurement basis in financial reporting.arrow_forwardDirections: Please select the appropriate answer on the statement below;B - If the statement is trueS - When the statement is false or part of the statement is false Equity is the residual interest in the company's assets after deducting all liabilitiesarrow_forwardTRUE OR FLASE?An entity must make the current and noncurrent presentation of assets and liabilities, except when a presentation based on liquidity provides information that is reliable and more relevant.arrow_forward
- Why can’t investors automatically accept balance sheet entries, as written, from a GAAP balance sheet? a. Companies may use a variety of methods to measure assets and liabilities. b. Companies report the estimated value of the assets and liabilities. c. Companies overstate the true value of certain tangible assets. d. The financial statement may not have been audited.arrow_forwardWhich of the following statements about IFRS and GAAP accounting and reporting requirements for the balance sheet is not correct? a. Both IFRS and GAAP distinguish between current and non-current assets and liabilities. b. The presentation formats required by IFRS and GAAP for the balance sheet are similar. c. Both IFRS and GAAP require that comparative information be reported.arrow_forward1. How to determine whether a company's assets have been overstated using only its financial statements? Provide concreate answers with examplesarrow_forward
- Please answer the True/False questions below to the best of your knowledge. Under IFRS, a company may classify expenses by function, but must also disclose the classification of expenses by nature. Although the presentation formats for the balance sheet and statement of cash flows are similar under IFRS and U.S. GAAP, IFRS requires far more extensive disclosure. One significant difference between a balance sheet prepared using IFRS rather than U.S. GAAP is that long-term tangible assets may be reported at fair value rather than historical cost. Both IFRS and U.S. GAAP require that specific items be reported on the balance sheet. Both IFRS and U.S. GAAP require current assets to be listed first on the balance sheet. IFRS does not intend to issue detailed guidance on the selection of a discount rate when the time value of money is required to determine cash flows. Under IAS 37 and the establishment of estimate provisions, discounting is…arrow_forwardWhich of the following statements about IFRS and GAAP accounting and reporting requirements for the balance sheet is not correct? a. Both IFRS and GAAP distinguish between current and non-current assets and liabilities. b. The presentation formats required by IFRS and GAAP for the balance sheet are similar. c. Both IFRS and GAAP require that comparative information be reported. d. One difference between the reporting requirements under IFRS and those of the GAAP balance sheet is that an IFRS balance sheet may list long-term assets first.arrow_forwardFair value is used to value which of the following balance sheet accounts? a. Prepaid expenses; patents; property, plant, and equipment b. Capital lease obligations, bonds payable c. Receivables net of allowance for doubtful accounts d. Debtsecurities available for sale, trading securitiesarrow_forward
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