Exam 5: International Financial Reporting Standards: Part II

Sigma Company issued $12 million in 10 percent bonds 6 years ago currently having a carrying amount of $10.7 million.The bond agreement allows for early extinguishment by Sigma Company beginning in the current year.Sigma's investment bank has arranged for the company to issue $10 million of new 8 percent bonds at face value to a group of investors.The proceeds will be used to extinguish the 10 percent bonds.The banking, legal, and accounting costs to execute the transaction total $200,000.The journal entry to record the debt extinguishment will include:

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

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

Under IAS 39, under what circumstances will derecognition of a financial liability occur?

What is true about both IFRS and U.S.GAAP with respect to service contracts?

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

What is a "contingent asset?"

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

Alpha Inc.has receivables from unrelated parties with a face value of $5,000.It transfers these receivables to bank for $4,500, without recourse.It will continue to collect the receivables, depositing them in a non-interest-bearing bank account with the cash flows remitted to the bank at the end of each month.It is not allowed to sell or pledge the receivables to anyone else and is under no obligation to repurchase the receivables from bank.Which of the following is the appropriate treatment for these Accounts receivables?

SilverStone Inc.supplies emission systems worth $100,000 to Horizon Enterprises.As per the terms of sale contract, SilverStone takes back all unused emission systems.Horizon estimates that 5% of the emission systems will be returned.Under IAS 18, only four out of the five conditions for recognizing revenue from the sale of goods are met as economic benefits of 95% of sale will flow to SilverStone.How much revenue should be recognized by SilverStone Inc.?

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

Under U.S.GAAP, if an entity issues 4% preferred stock that gives shareholders the right to redeem the shares if the prevailing interest rates on 5-year certificates of deposit exceed 4%, how should this stock be accounted for on the books of the entity?

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?

Under IAS 39, Financial Instruments: Recognition and Measurement, which of the following terms describes the removal of a financial asset or liability from the balance sheet when certain appropriate criteria have been met?