Chapter 6, Problem 9Q

True or false, the financing activities section of the statement of cash flows reflects the cash flows that affect current assets and liabilities? True or false, buying property, plant and equipment would be considered a cash outflow from financing? True or false, the financing section of the statement of cash flows reflects transactions in the equity accounts and the long-term liability accounts?

3.9 Treatment of Noncash Exchanges. The acquisition of equipment by assum- ing a mortgage is a transaction that firms cannot report in their statement of cash flows but must report in a supplemental schedule or note. Of what value is information about this type of transaction? What is the reason for its exclusion from the statement of cash flows?

Which of the following statements regarding selling fixed assets for cash is NOT true? a.The journal entry is similar to discarding fixed assets. b.The cash payment to the buyer is recorded. c.The cash receipt is recorded. d.If the selling price is more than the book value, a gain is recorded.

Which of the following returns is consistent with contractual cash flows that are solely payments of principal and interest or SPPI? I. Return of passage of time II. Return for the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation III. Return for the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset IV. Return for amounts to cover expenses and a profit margin   a. I, II, III, and IV b. I, II, and III c. I and IV only d. II and III only

Which statement is incorrect regarding contractual cash flows that are solely payments of principal and interest (SPPI)? a.Contractual cash flows that are SPPI on the principal amount outstanding are consistent with a basic lending arrangement. b.Principal is the fair value of the financial asset at initial recognition. c.An entity shall assesswhether contractual cash flows are SPPI on the principal amount outstanding for the currency in which the financial asset is denominated. d.An originated or a purchased financial asset can be a basic lending arrangement only if it is a loan in its legal form.

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…

Which statement is incorrect? A. An entity shall report cash flows from operating activities either using direct or indirect method. B. Interest payments to lenders should be classified as cash outflows for financing activities. C. Cash receipts from commissions and other revenues are cash flows from operating activities. D. The aggregate cash flows arising from acquisition of subsidiary should be classified as investing activities.

Which of the following returns is consistent with contractual cash flows that are SPPI? Return for passage of time. Return for the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. Return for the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. Return for amounts to cover expenses and a profit margin. Group of answer choices I, II and III only I and IV only I, II, III and IV II and III only

D. True or false, the financing activities section of the statement of cash flows reflects the cash flows that affect current assets and liabilities? E. True or false, buying property, plant and equipment would be considered a cash outflow from financing? F. True or false, the financing section of the statement of cash flows reflects transactions in the equity accounts and the long-term liability accounts?