Chapter 8, Problem 4QE

Choose the correct. 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.

Reporting an investment at its fair value means adjusting its carrying amount for changes in fair value afterits acquisition (or since the last reporting date if it was held at that time). Such changes are called unrealizedholding gains and losses because they haven’t yet been realized through the sale of the security. If the security isclassified as available-for-sale, how are unrealized holding gains and losses typically reported?

Assets and liabilities, and income and expenses, when material, shall not be offset against each other. Which among the following is not an allowed offsetting? * a. foreign exchange gains and losses b. gain from the proceeds of selling equipment and the related selling expenditures c. share premium and organizational costs d. "gain" from donated land and the related cost of transferring the title

(Based on Appendix 12B) Reporting an investment at its fair value requires adjusting its carrying amount forchanges in fair value after its acquisition (or since the last reporting date if it was held at that time). Such changesare called unrealized holding gains and losses because they haven’t yet been realized through the sale of thesecurity. If a security is classified as available-for-sale, and an unrealized holding loss is viewed as giving rise toan other-than-temporary (OTT) impairment, how is it reported in the financial statements?

Which of the following costs may not be eligible for capitalization as borrowing costs under PAS 23? *       Interest on bonds issued to finance the construction of a qualifying asset.       Exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to interest costs pertaining to a qualifying asset.       Amortization of discounts or premiums relating to borrowings that qualify for capitalization.       Imputed cost of equity.

• Match the following phrase to the term -Costs that are expensed rather than capitalized -A series of equal payment made at equal intervals -The translation of new knowledge into new products -Attempt to find new knowledge -Price paid for a subsidiary in excess of the fair value of its net assets Options: -Research -Annuity -Development -Goodwill -Research and Development • Match the following phrase to the term -Gives rise to deferred taxes -EBIT minus interest -Lease agreement where the risks and benefits are not conveyed to the lessee -Account holding both interest expense and amortization expense on an operating lease -Lease agreement where the risks and benefits are conveyed to the lessee Options: Operating lease -Lease expense -Finance lease -Temporary difference -Times -Interest -earned

From the U.S. standpoint, a capital outflow will occur when a Japanese investor buys a portion of the U.S. government debt. True False

Examples of when an entity has retained substantially all the risks and rewards of ownership of transferred financial asset include A. All of these. B.A sale and repurchase transaction where the repurchase price is a fixed price or the sale price plus a lender's return. C.A sale of a financial asset together with a total return swap that transfers the market risk exposure back to the entity. D.A sale of short-term receivables in which the entity guarantees to compensate the transferee for credit losses that are likely to occur.

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.