Make your own quiz Manage my Quizzes Plans / Features Guides and Help Contact Privacy & Security

INTERMEDIATE ACCOUNTING 2: THEORETICAL

Surname:

Borrowing costs that are directly attributable acquisition, construction or production of a qualifying asset are

Capitalized; other borrowing costs are expensed.

Expensed; other borrowing costs are capitalized.

Capitalized; other borrowing costs are also capitalized.

Expensed; other borrowing costs are also expensed

Which of the following statements is true?

Borrowing costs are generally expensed except when they are avoidable and relate to the acquisition or construction of a qualifying asset.

Borrowing costs are generally capitalized except when they do not relate to the acquisition or construction of a qualifying asset.

Borrowing costs may or may not be capitalized depending on the accounting policy chosen by an entity.

Exchange differences are ignored when determining borrowing costs.

What is a qualifying asset?

A qualifying asset is an asset that is financed by borrowings.

A qualifying asset is a long-term asset that is specialized in nature that only the entity can use without any substantial modification.

A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use or sale.

All of these

Which of the following is a qualifying asset?

A large vessel that can be purchased from a manufacturer.

Inventories that are mass produced on a routine basis.

A building classified as investment property that takes three years to complete and is measured under the fair value model.

A self-generated intangible asset that takes 2 years to complete.

Borrowing costs on borrowings obtained for the purpose of acquiring or constructing a qualifying asset are capitalized if the borrowing costs

Are incurred regardless of whether the expenditure on the acquisition or construction of the qualifying asset had been made.

Are avoidable.

. Are not eligible for recognition as expense.

A or b

The capitalization of borrowing costs starts when the entity

Incurs expenditures for the asset

Incurs borrowing costs.

Necessary activities are being undertaken.

On the date when all of the items listed above exist.

In which of the following instances is the capitalization of borrowing costs suspended?

During periods of suspension where substantial technical and administrative work is being performed.

During extended periods of suspension of active development of a qualifying asset.

During periods of temporary delay which is a necessary part of the process of getting an asset ready for its intended use or sale.

Any of these

The capitalizable borrowing cost on specific borrowing is computed as

Interest expense less investment income.

Investment income less interest expense.

Average expenditure multiplied by capitalization rate.

A plus c, after deducting specific borrowing from average expenditure.

The capitalizable borrowing cost on general borrowings is computed as

Interest expense less investment income.

Investment income less interest expense.

Average expenditure multiplied by capitalization rate.

A plus c, after deducting specific borrowing from average expenditure.

The capitalization rate is computed as

Total interest expense on general borrowings divided by Total general borrowings.

Average expenditure divided by 2.

A or b

Total general borrowings divided by Total interest expense on general borrowings.

Which of the following assets may be classified as investment property?

Land

Equipment

Intangible asset

Building

A or d only

Which of the following properties falls under the definition investment property and therefore within the scope of PAS 40 Investment property?

Land held for long-term capital appreciation
Property occupied by an employee paying rent
Property being constructed on behalf of third parties
A building owned by an entity and leased out under an operating lease

I, II

II, IV

I, IV

II, III, IV

Which of the following is a characteristic that distinguishes an investment property from the other assets of an entity?

Changes in the fair value of an investment property are charged to profit or loss.

An investment property does not derive cash flows separately from the other assets of the entity.

An investment property generates separately identifiable cash flows from the other assets of the entity.

An investment property earns rentals as part of the ordinary operations of the entity.

If ancillary services provided to occupants of a property held are , the property is classified as

Significant - investment property

Insignificant - property, plant and equipment (PPE)

Significant - allocated to investment property and PPE

Insignificant - investment property

Investment property is measured as follows:

Cost - fair value

Cost or fair value - cost or fair value

Fair value - fair value

Cost - cost or fair value

When an entity uses the fair value model, changes in the fair value of an investment property are

Recognized in profit or loss.

Recognized in other comprehensive income.

Recognized directly in equity.

Not recognized.

The best evidence of fair value for an investment property is

Price in a binding sale agreement.

Fair value determined on the basis of observable data.

Current price in an active market.

Management's estimate of future cash flows multiplied by a discount rate.

Counting Crow's investment property has a carrying amount of P3,600,000 under the fair value model, before adjustment. If the fair value at year-end is P3,000,000, how much should be the gain or loss on transfer if Dolphin would shift to cost model?

Gain of P600,000 reported as other comprehensive income

Loss of P600,000 reported as other loss in the income statement

Loss of P600,000 reported in equity as decrease revaluation surplus

Zero

Which of the following would not indicate a change in use of a property and therefore will not trigger transfers to or from investment property classification?

Start of owner occupation

End of owner occupation

Start of development with a view to sale

A decision to sell an investment property without development

Which of the following is incorrect when an entity uses the fair value model for its investment property?

The entity shall apply the fair value model selectively to one or more of its investment properties.

The entity stops depreciating a depreciable asset that is classified as investment property.

The entity recognizes in profit or loss the changes in the fair value of its investment property.

If the fair value of an item of investment property cannot be determined reliably on initial recognition, such item is subsequently measured under the cost model.

Which of the following may be classified as a biological asset?

Breast milk

Cheese curls

Mama monkey

Dead mama monkey

Which of the following may be classified as an agricultural produce?

Duck

Table egg

Egg powder

Cake

Which of the following is not one of the common features of agricultural activities

Accounting change

Capability to change

Management of change

Measurement of change

A biological asset is initially and subsequently measured at

Fair value

Fair value less costs to sell

cost

Fair value less costs to complete

Which of the following is not a biological asset that is accounted for under PAS 41 Agriculture?

Animals that are being grown to be butchered for their meat

Animals held to produce milk

Plants grown to produce fruit over a long period of time

Plants grown to be harvested and sold

The common features of agricultural activities include all of the following except

Capability to change

Management of change

Measurement of change

Wind of change

Biological assets and agricultural produce are recognized when all of the following are present except:

Control

Probable future economic benefits

Probable future event

Fair value or cost can be measured reliably

Biological assets are initially and subsequently measured at

Cost.

Fair value less costs to sell

Lower of a and b

Any of these

Which of the following is not included in costs to sell according to PAS 41?

Commissions to brokers

Levies by regulatory agencies and commodity exchanges

Transfer taxes and duties.

Transport costs

According to PAS 41, an unconditional government grant related to a biological asset measured at FVLCS is recognized in

Profit or loss when the government grant is received.

Profit or loss when the government grant becomes receivable.

Other comprehensive income when the grant is received.

In profit or loss over the period the grant is expected to reimburse any related expenses.

PAS 38 Intangible Assets applies to

All intangible assets, including goodwill.

All identifiable intangible assets, including goodwill.

All identifiable intangible assets only

All identifiable intangible assets only, including the disclosure requirements for goodwill, but not the accounting for goodwill

When intangible assets are self-generated, costs incurred in the research phase are

Capitalized.

Capitalized only to extent of the limits provided under the standards.

Expensed immediately.

Expensed or capitalized, as a matter of accounting policy choice and professional judgment.

Identify the type of the following costs:

These include costs of searching new knowledge and identifying and selecting possible alternatives.
These include costs of designing from selected alternative and using knowledge gained from research.

Research costs, Development costs

Development costs, Research costs

R&D, Intangible asset costs

R&D, Regular expense

According to PAS 38 Intangible Assets, if an entity cannot identify in which phase a cost is incurred, the cost

Is allocated to research and development phases.

Is expensed as a regular expense.

Is capitalized and amortized over the shorter of the intangible asset's useful life and legal life.

Is regarded as incurred in research phase.

When intangible assets are self-generated, costs incurred in the development phase are

Capitalized.

Capitalized only to extent of the limits provided under the standards.

Expensed or capitalized, as as a matter of accounting policy choice and professional judgment.

Expensed immediately, unless they meet all of the conditions for capitalization under PAS 38 Intangible assets.

Which of the following costs is a research and development (R&D) cost?

Costs incurred during commercial production

Costs of advertising a product undergoing its final stage of development

Costs of training employees who will be using a newly developed computer system

Costs of producing a prototype model for a new invention

Which of the following costs may be capitalized?

Cost of internally generated goodwill

Cost of internally generated mastheads

Cost of improving an externally purchased goodwill

Cost of customer list acquired externally

Subsequent expenditures on intangible assets are

Expensed immediately.

Capitalized only to extent that the litigation is successful

Expensed unless they meet the recognition criteria for intangible assets.

A or b as a matter of accounting policy choice.

Under PAS 38 Intangible Assets, intangible assets are amortized

Using straight-line method applied to the shorter of an intangible asset's useful life and legal life

Using an amortization method that best reflects the pattern in which the asset's future economic benefits are expected to be consumed by the entity.

Using a residual value of zero, except in cases where the revaluation model if applied.

All of these

Changes in amortization method, useful life, and residual value are changes in accounting estimates and are accounted for

Prospectively

Retrospectively

A or b

Not accounted

When the carrying amount of an asset exceeds its recoverable amount,

The asset is impaired

The excess represents impairment loss.

There is a need to write-down the asset's carrying amount to its recoverable amount.

All of these

According to PAS 36 Impairment of Assets, the recoverable amount of an asset is

Fair value less costs of disposal

Value in use

Lower of a and b

Higher of a and b

According to PAS 36 Impairment of Assets, the recoverable amount of an asset

Is determined only if there are indications that the asset is impaired.

Is determined at least annually

Need not be determined if there are no indications for impairment, except for intangible assets with indefinite useful life, intangible assets not yet available for use, and goodwill acquired in a business combination which are required to be tested for impairment at least annually.

A and c

It is the present value of estimated future cash flows expected to arise from the continuing use of an asset (or CGU) and from its disposal at the end of its useful life.

Use in value

Fair value less costs of disposal

Recoverable amount

Value in use

ABC Co. incurred P2,800,000 in constructing an office building. Immediately after Construction but before occupancy, the office building's recoverable amount was determined to be only Pl,800,000. Which of the following is true under PAS 36 Impairment of Assets?

The building is impaired. ABC Co. Shall recognize impairment loss.

The building is impaired. However, since the building is not yet put to use, ABC Co. May defer the recognition of the impairment loss.

The building is not impaired because it is newly constructed.

The building is not impaired because it is not yet put to use. ABC Co. Shall reassess the building for impairment once ABC Co. Starts using the building.

Which of the following is an indication of impairment that is considered from external source?

Significant change with adverse effect to the entity has taken place or will take place, which will affect expected use of asset, e.g., discontinuance, disposal, restructuring plans.

Significant changes in technological, market, economic or legal environment in which the entity operates or in the market to which an asset is dedicated.

Evidence of obsolescence or physical damage

Evidence is available from internal reporting that indicates that the economic performance of an asset is, or will be, worse than expected.

The gain on impairment loss reversal of an asset which is recognized in profit or loss is computed as:

The difference between the recoverable amount on date of reversal and the carrying amount on date of reversal

The difference between the recoverable amount on date of reversal and carrying amount of the asset had no impairment loss been recognized previously

The difference between the carrying amount of the asset had no impairment loss been recognized previously and the carrying amount of the asset on the date of reversal

The difference between the carrying amount of the asset had no impairment loss been recognized previously and the recoverable amount on the date of the previous impairment testing.

According to PAS 36 Impairment of Assets, when determining value in use, the maximum period over which the future cash flows from an asset is projected is

5 years.

3 years

12 months.

There is no maximum period

Given the following, how is impairment loss computed:

X= carrying amount

Y= fair value less costs of disposal

Z= value in use

Impairment loss = X- Y

Impairment loss = higher of Y and Z minus X

Impairment loss = lower of Y and Z minus X

Impairment loss = Z-Y

Which of the following impairments should never be reversed?

Impairment loss on goodwill

Impairment loss on a machinery measured under the revaluation model

Impairment loss on an investment property measured under the fair value model

Impairment loss on an investment property measured under the cost model

{"name":"INTERMEDIATE ACCOUNTING 2: THEORETICAL", "url":"https://www.quiz-maker.com/QPREVIEW","txt":"Surname:, Borrowing costs that are directly attributable acquisition, construction or production of a qualifying asset are, Which of the following statements is true?","img":"https://www.quiz-maker.com/3012/images/ogquiz.png"}