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1

The primary difference between IAS 37, and U.S. GAAP concerning the treatment of contingent liabilities pertains to:

A. definition of terms.

B. measurement.

C. classification on the balance sheet.

D. disclosure of relevant information.

A. definition of terms.

2

The term "provision" as it is used in IAS 37, is most closely related to what term in U.S. GAAP?

A. Contingent liability, where the outflow of resources is "remote."

B. Contingent liability, where the outflow of resources is "probable."

C. Current liability, where the outflow is difficult to measure.

D. Reserve for bad debt, where the amount recoverable is "uncertain."

B. Contingent liability, where the outflow of resources is "probable."

3

Under IAS 37, how are contingent liabilities treated in the financial statements?


A. IAS 37 does not address contingent liabilities.

B. They are recorded as current liabilities if the amount is reasonably measured.

C. They are disclosed in the notes to the financial statements when there is more than a remote possibility of an outflow of resources.

D. They are not disclosed.

C. They are disclosed in the notes to the financial statements when there is more than a remote possibility of an outflow of resources.

4

What is a "contingent asset?"

A. There is no such thing, in IASB standards, as a "contingent asset."

B. This is an asset that has been put up as collateral against a loan.

C. This is a possible inflow of resources arising from a future activity.

D. It is a probable asset, arising from past events, whose existence is yet to be confirmed definitively by a future event.

D. It is a probable asset, arising from past events, whose existence is yet to be confirmed definitively by a future event.

5

According to IAS 37, how should contingent assets be recognized?

A. They should be disclosed in the notes to the financial statements if the inflow of resources is probable.

B. They should be recognized like any other asset, with a debit to "contingent assets."

C. They should not be disclosed anywhere in the financial statements due to their uncertainty.

D. They should only be disclosed in the notes to the financial statements if the inflows of resources are virtually certain.

A. They should be disclosed in the notes to the financial statements if the inflow of resources is probable.

6

Under IAS 37, inflows of resources that are "virtually certain" to be received should be:

A. disclosed as contingent assets in the notes to the financial statements.

B. recognized as assets.

C. undisclosed until management is absolutely certain that resources will be received.

D. reported only in the cash flow statement.

B. recognized as assets.

7

Why is it difficult to compare IAS 18, Revenue, to U.S. GAAP?

A. The IASB definition of revenue is very complicated, whereas the definition of revenue under U.S. GAAP is straightforward.

B. Revenue is not defined under U.S. GAAP.

C. There is no single standard in U.S. GAAP that deals solely with revenue.

D. Under U.S. GAAP, revenue is defined in terms of cash, whereas IAS 18 defines revenue in terms of a variety of resources.

C. There is no single standard in U.S. GAAP that deals solely with revenue.

8

How does U.S. GAAP require the prior service cost related to retirees to be recognized?

A. Amortize over the average remaining working lives of active employees

B. Recognize immediately

C. Don't recognize at all

D. Amortize over remaining expected life of the retirees

D. Amortize over remaining expected life of the retirees

9

How should stock options be accounted for under IASB standard on stock options (IFRS 2)?

A. Since their value is not determinable until a future date, they are not recorded, but only disclosed in the notes to the financial statements.

B. A compensation expense is recorded based on the value of the options expected to vest as of the date the options are granted.

C. An expense is recorded only if a market value for the options exists on the date the options are granted.

D. The options are recorded as a liability for the value of the stock at the exercise date.

B. A compensation expense is recorded based on the value of the options expected to vest as of the date the options are granted.

10

Under IAS 1, Presentation of Financial Statements, which of the following is NOT a criterion in the definition of a current liability?

A. It is a liability that is expected to be settled in an entity's normal operating cycle.

B. It is a liability primarily held for the purpose of trading.

C. It is a liability that does not have the right to defer until 18 months after the balance sheet date.

D. It is a liability that is expected to be settled within 12 months of the balance sheet date.

C. It is a liability that does not have the right to defer until 18 months after the balance sheet date.

11

Which of the following represents a difference in the classification of current liabilities between IFRS and U.S. GAAP?

A. Refinanced short-term debt

B. Amounts payable on demand due to violation of debt covenants

C. Bank overdrafts

D. All of the above

D. All of the above

12

According to IAS 37, with respect to onerous contracts, a provision should be recognized for "unavoidable costs of the contract", which is:

A. the intrinsic value of the contract.

B. the lower of cost or market value of the contract.

C. the lower of cost of fulfillment or the penalty from non-fulfillment of the contract.

D. None of the above

C. the lower of cost of fulfillment or the penalty from non-fulfillment of the contract.

13

Under IAS 19, Employee Benefits, which of the following benefits are covered?

A. Compensated absences and bonuses

B. Post-employment benefits

C. Deferred compensation and disability benefits

D. All of the above

D. All of the above

14

Which of the following statements is true of IAS 19?

A. It establishes guidance for measuring onerous contract.

B. It requires all past service costs to be recognized in net income in a subsequent period in which the benefit plan is changed.

C. Its revised version became effective in the year 2013.

D. It covers all employee benefits including share-based compensation.

C. Its revised version became effective in the year 2013.

15

Zenith Company, a calendar-year entity, amends its defined benefit pension plan on January 1, 2013 and must recognize the increase in past service costs of its vested and non-vested employees as of that date in the calculation of its net 2013 pension expense (or revenue). The pertinent facts as of January 1, 2013 are:

(DON'T HAVE NUMBERS)

Calculate the past service costs included in 2013 net pension expense (or revenue) under IAS 19.


A. $5,100

B. $5,400

C. $600

D. $7,000

D. $7,000

16

Zenith Company, a calendar-year entity, amends its defined benefit pension plan on January 1, 2013 and must recognize the increase in past service costs of its vested and non-vested employees as of that date in the calculation of its net 2013 pension expense (or revenue). The pertinent facts as of January 1, 2013 are:

(DON'T HAVE NUMBERS)

Calculate the past service costs included in 2013 net pension expense (or revenue) under U.S GAAP.


A. $5,100

B. $5,400

C. $600

D. $7,000

C. $600

17

Which of the following is a difference between IAS 37 and U.S. GAAP with respect to restructuring provisions?

A. U.S. GAAP does not allow recognition of a restructuring provision until a liability has been incurred.

B. There is no difference between IAS 37 and U.S. GAAP with respect to restructuring provisions.

C. IAS 37 does not allow recognition of a restructuring provision until a liability has been incurred.

D. A restructuring provision and related loss is more likely to occur later under IAS 37 than under U.S. GAAP.

A. U.S. GAAP does not allow recognition of a restructuring provision until a liability has been incurred.

18

Which of the following statements is true of the treatment of actuarial gains and losses under IFRS and U.S. GAAP?

A. IFRS requires the disclosure of actuarial gains and losses in the notes to financial statements.

B. IFRS requires immediate recognition of actuarial gains and losses in net income.

C. U.S. GAAP allows a choice between immediate recognition in other comprehensive income or in net income.

D. U.S. GAAP requires the actuarial gains and losses to be recognized immediately through other comprehensive income.

C. U.S. GAAP allows a choice between immediate recognition in other comprehensive income or in net income.

19

With respect to post-employment medical benefits, U.S. GAAP:

A. does not recognize the concept of post-employment medical benefits.

B. has considerably less guidance than IAS 19.

C. follows the guidance of IAS 19.

D. has considerably more guidance than IAS 19.

D. has considerably more guidance than IAS 19.

20

Which of the following is NOT a share-based payment transaction under IFRS 2?

A. Equity-settled share-based payment

B. Cash-settled share-based payment

C. Choice-of-settlement share-based payment

D. All of the above are share-based payment transactions under IFRS 2.

D. All of the above are share-based payment transactions under IFRS 2.

21

Under IFRS 2, Share-based Payment, what approach is used to account for the transaction?

A. Comparable transaction approach

B. Fair value approach

C. Market approach

D. Notional value approach

B. Fair value approach

22

Under both IFRS and U.S. GAAP, in an equity-settled share-based payment transaction, how are such payments to non-employees measured?

A. At the cost of the goods or services received.

B. Both standards are silent as to the treatment of payments to non-employees.

C. Always the fair value of the equity instrument.

D. At the fair value of goods or services received, if a reliable determination is available—otherwise, the fair value of the equity instrument.

D. At the fair value of goods or services received, if a reliable determination is available—otherwise, the fair value of the equity instrument.

23

Under U.S. GAAP, with respect to equity-settled share-based payments, if the fair value of the equity instrument is used, the value is determined:

A. at the earlier of the date a commitment for performance is reached or the date the services are actually completed.

B. at the date the services are actually completed.

C. at the date a commitment for performance is reached.

D. None of the above

A. at the earlier of the date a commitment for performance is reached or the date the services are actually completed.

24

How does U.S. GAAP differ from IFRS with respect to cash-settled share-based payments?

A. U.S. GAAP always treats such payments as a liability.

B. U.S. GAAP offers the option to treat such payments as either a liability or equity.

C. IFRS and U.S. GAAP follow the same approach with respect to such payments.

D. U.S. GAAP, under certain circumstances, may treat such payments as equity.

D. U.S. GAAP, under certain circumstances, may treat such payments as equity.

25

Under IFRS 2, with respect to cash-settled share-based payments, when an employee has received stock appreciation rights, how is the fair value of those rights measured?

A. Using the consolidation method

B. Using an option pricing model

C. Using the dividend discount approach

D. All of the above

B. Using an option pricing model

26

Under IFRS 2, with respect to choice-of-settlement share-based payments, if it is the entity that has the right to choose between equity settlement and cash settlement, when must the entity choose the cash settlement?

A. If the supplier provides services

B. If the supplier provides goods

C. If the entity has a present obligation to settle in cash

D. The entity always has the option to choose either method.

C. If the entity has a present obligation to settle in cash

27

Under IFRS 2, with respect to choice-of-settlement share-based payments, if the supplier chooses the cash settlement, the entity is deemed to have issued a compound financial instrument consisting of debt and equity. When cash is received, how does the supplier applies it?

A. Only against the equity portion

B. Apportioned between debt and equity based on relative fair market value of each component

C. Only against current year liabilities

D. Only against the debt portion

D. Only against the debt portion

28

Under IAS 12, Income Taxes, which of the following issues are covered?

A. Temporary differences

B. Operating loss carry forwards

C. Tax credit carry forwards

D. All of the above

D. All of the above

29

Under IAS 12, current and deferred taxes are measured on the basis of:

A. rates that have been enacted or substantively enacted by the balance sheet date.

B. current rates and rates anticipated when temporary differences reverse.

C. rates anticipated when temporary differences reverse.

D. rates prevailing when the entity provided goods or services.

A. rates that have been enacted or substantively enacted by the balance sheet date.

30

Under the IASB's exposure draft, Income Tax, how would the term "substantively enacted", as it applies to tax laws, be determined?

A. When the affected jurisdiction has issued final regulations with respect to a tax law

B. When any future steps in the enactment process can't change the outcome

C. When one part of a bicameral legislature has passed a tax bill

D. All of the above

B. When any future steps in the enactment process can't change the outcome