CPA CFE Financial Reporting 3

Question 1

Under IAS 16 Property, Plant and Equipment, which subsequent measurement model allows for upward revaluation of assets?

Accepted Answer

Revaluation model

Answer

Cost model

Answer

Fair value through profit or loss model

Answer

Amortized cost model

Question 2

A Canadian public company prepares consolidated financial statements. Under which circumstances can a subsidiary be excluded from consolidation under IFRS 10?

Accepted Answer

Subsidiaries cannot be excluded; all controlled entities must be consolidated

Answer

When the subsidiary operates in a different industry

Answer

When the subsidiary is immaterial to the group

Answer

When the subsidiary has a different fiscal year-end

Question 3

Under IAS 38 Intangible Assets, which of the following internally generated items can be recognized as an intangible asset?

Accepted Answer

Development costs that meet specific recognition criteria

Answer

Internally generated goodwill

Answer

Research costs

Answer

Internally generated brands

Question 4

What is the primary difference between a joint venture and a joint operation under IFRS 11?

Accepted Answer

In a joint venture, parties have rights to net assets; in a joint operation, parties have rights to assets and obligations for liabilities

Answer

Joint ventures are always larger than joint operations

Answer

Joint operations must be incorporated entities

Answer

There is no difference; the terms are interchangeable

Question 5

Under IAS 10, which of the following is an adjusting event after the reporting period?

Accepted Answer

Settlement of a court case that confirms a year-end obligation

Answer

A major business combination completed after year-end

Answer

A decline in market value of investments after year-end

Answer

Announcement of a major restructuring plan after year-end

Question 6

Under IAS 21 The Effects of Changes in Foreign Exchange Rates, how are foreign currency monetary items translated at the reporting date?

Accepted Answer

At the closing (spot) rate at the reporting date

Answer

At the historical exchange rate

Answer

At the average rate for the period

Answer

At the forward rate for the next period