Question 1

What is the basis for choosing depreciation methods for fixed assets under IAS 16 (Property,Plant,& Equipment)?

Accepted Answer

A) Tax minimization 
B) Profit maximization 
C) Useful life of the fixed asset 
D) Pattern of economic benefits to be derived from the asset 
A) Tax minimization 
B) Profit maximization 
C) Useful life of the fixed asset 
D) Pattern of economic benefits to be derived from the asset D

Question 2

When a patent or trademark is acquired in a business combination,what does IAS 38 say about recording these intangibles?

Accepted Answer

A) If they had not been previously recorded as separate assets by the acquired company,they should always be recorded as "Goodwill" on the balance sheet of the company acquiring them. 
B) The cost of the intangibles should be expensed by the acquiring company on the merger date. 
C) They should be recorded as separate intangible assets only if their useful life is indefinite. 
D) They should be recorded as separate intangible assets if their fair value can be reliably measured. 
A) If they had not been previously recorded as separate assets by the acquired company,they should always be recorded as "Goodwill" on the balance sheet of the company acquiring them. 
B) The cost of the intangibles should be expensed by the acquiring company on the merger date. 
C) They should be recorded as separate intangible assets only if their useful life is indefinite. 
D) They should be recorded as separate intangible assets if their fair value can be reliably measured. D

Question 3

What types of issues cause differences between International Financial Reporting Standards and U.S.GAAP?

Accepted Answer

A) measurement 
B) alternatives available 
C) disclosure 
D) All of the above may be different between IFRS and U.S.GAAP. 
A) measurement 
B) alternatives available 
C) disclosure 
D) All of the above may be different between IFRS and U.S.GAAP. D

Question 4

Under IAS 2,what adjustment needs to be made after an inventory write-down if the selling price subsequently increases?

Accepted Answer

A) No adjustment is necessary. Once inventory is written down,it cannot be increased under IASB standards. 
B) It should be sold at the replacement cost. 
C) The inventory write-down should be reversed to bring it in line with the new net realizable value. 
D) Recovery of inventory loss should be debited to reflect the increase in inventory value. 
A) No adjustment is necessary. Once inventory is written down,it cannot be increased under IASB standards. 
B) It should be sold at the replacement cost. 
C) The inventory write-down should be reversed to bring it in line with the new net realizable value. 
D) Recovery of inventory loss should be debited to reflect the increase in inventory value.

Question 5

How does IAS 38 (Intangible Assets)differ from U.S.GAAP with respect to development costs?

Accepted Answer

A) U)S.GAAP does not allow capitalization of development costs,whereas IAS 38 allows capitalization of these costs. 
B) U)S.GAAP requires capitalization of development costs,whereas IAS 38 makes capitalization of these costs optional. 
C) U)S.GAAP treats development costs as part of "Goodwill" whereas IAS 38 treats these costs as an intangible asset. 
D) U)S.GAAP requires expensing of all development costs and IAS 38 requires capitalizing all development costs. 
A) U)S.GAAP does not allow capitalization of development costs,whereas IAS 38 allows capitalization of these costs. 
B) U)S.GAAP requires capitalization of development costs,whereas IAS 38 makes capitalization of these costs optional. 
C) U)S.GAAP treats development costs as part of "Goodwill" whereas IAS 38 treats these costs as an intangible asset. 
D) U)S.GAAP requires expensing of all development costs and IAS 38 requires capitalizing all development costs.

Question 6

Use the following to answer questions :
The following information was taken from the fixed asset records of Bosco Ltd as of December 31,2010:  
-What is the amount of Impairment Loss under U.S.GAAP?

Accepted Answer

A) €37,000 
B) €18,000 
C) €15,000 
D) €25,000 
A) €37,000 
B) €18,000 
C) €15,000 
D) €25,000

Question 7

Which of the following is generally true about the differences between U.S.GAAP and IASB standards?

Accepted Answer

A) U)S.GAAP is generally more flexible than IASB standards. 
B) U)S.GAAP tends to be more rule-based and the IASB standards tend to be principles-based. 
C) More professional judgment is required to apply U.S.GAAP than is required for implementing IASB standards. 
D) In all cases,U.S.GAAP is more detailed than the IASB standards. 
A) U)S.GAAP is generally more flexible than IASB standards. 
B) U)S.GAAP tends to be more rule-based and the IASB standards tend to be principles-based. 
C) More professional judgment is required to apply U.S.GAAP than is required for implementing IASB standards. 
D) In all cases,U.S.GAAP is more detailed than the IASB standards.

Question 8

In an Ernst and Young 2005 survey of 130 companies' Forms 20-F filed with the SEC,what issue required the greatest adjustment?

Accepted Answer

A) goodwill 
B) leases 
C) pensions 
D) business combinations 
A) goodwill 
B) leases 
C) pensions 
D) business combinations

Question 9

Use the following to answer questions :
The following inventory information was taken from the records of Kleinfeld Inc.:  
-Under U.S.GAAP,what should the Balance Sheet report for Inventory?

Accepted Answer

A) $9,000 
B) $8,500 
C) $7,600 
D) $10,000 
A) $9,000 
B) $8,500 
C) $7,600 
D) $10,000

Question 10

Which of the following is true about the IASB standards on Cash Flow Statements?

Accepted Answer

A) Cash flow statements are not required under the IASB standards. 
B) Operating cash flows must be determined using the "direct method." 
C) Operating cash flows may be combined with financing cash flows. 
D) IAS 7 requires essentially the same information in the cash flow statement as U.S.GAAP. 
A) Cash flow statements are not required under the IASB standards. 
B) Operating cash flows must be determined using the "direct method." 
C) Operating cash flows may be combined with financing cash flows. 
D) IAS 7 requires essentially the same information in the cash flow statement as U.S.GAAP.

Question 11

Under IAS 16 (Property,Plant,and Equipment),subsequent revaluation decreases are:

Accepted Answer

A) never recognized. 
B) credited to a revaluation surplus account. 
C) recognized as an expense on the Income Statement. 
D) first recognized as a reduction in any related revaluation surplus. 
A) never recognized. 
B) credited to a revaluation surplus account. 
C) recognized as an expense on the Income Statement. 
D) first recognized as a reduction in any related revaluation surplus.

Question 12

As defined by IAS 38,how are intangible assets unlike other assets?

Accepted Answer

A) They must have arisen from past events. 
B) Their value cannot be reasonably measured. 
C) They must be controlled by the enterprise. 
D) They are non-monetary and lack physical substance. 
A) They must have arisen from past events. 
B) Their value cannot be reasonably measured. 
C) They must be controlled by the enterprise. 
D) They are non-monetary and lack physical substance.

Question 13

Blanco Chemical Company spent €15,000,000 in development efforts to create a fertilizer for which it was able to obtain a patent;however,the expected distribution costs make it infeasible to market the chemical in the foreseeable future. According to IAS 38 (Intangible Assets),how should Blanco Chemical Company record the €15,000,000?

Accepted Answer

A) as a "Deferred Development Cost" on the Balance Sheet 
B) as "Fertilizer Revenue" on the Income Statement 
C) as "Development Expense" on the Income Statement 
D) It should only be reported in the notes to the financial statements. 
A) as a "Deferred Development Cost" on the Balance Sheet 
B) as "Fertilizer Revenue" on the Income Statement 
C) as "Development Expense" on the Income Statement 
D) It should only be reported in the notes to the financial statements.

Question 14

Camerata Construction borrowed €19,000,000 for 10 years at 6% specifically to modernize its operations with new equipment. The average rate of interest on Camerata's debt after considering the most recent loan was 5.5%. What rate of interest should be used for capitalizing the borrowing costs on the new equipment under IAS 23?

Accepted Answer

A) 5)5% 
B) 6% 
C) 5)75% 
D) some other amount 
A) 5)5% 
B) 6% 
C) 5)75% 
D) some other amount

Question 15

According to IAS 16 (Property,Plant & Equipment),what is the term used to indicate the amount for which an asset could be exchanged between knowledgeable,willing parties in an arm's length transaction?

Accepted Answer

A) replacement cost 
B) net realizable value 
C) fair market value 
D) historical cost 
A) replacement cost 
B) net realizable value 
C) fair market value 
D) historical cost

Question 16

How does IAS 34 (Interim Financial Reporting)differ from U.S.GAAP?

Accepted Answer

A) U)S.GAAP has no guidance for interim financial reporting. 
B) U)S.GAAP takes the position that interim periods are an integral part of the full year. 
C) U)S.GAAP is the same as IAS 34. 
D) U)S.GAAP requires that an interim period be projected pro rata for the entire year. 
A) U)S.GAAP has no guidance for interim financial reporting. 
B) U)S.GAAP takes the position that interim periods are an integral part of the full year. 
C) U)S.GAAP is the same as IAS 34. 
D) U)S.GAAP requires that an interim period be projected pro rata for the entire year.

Question 17

How does the definition of asset impairment differ between IAS 36 and U.S.GAAP?

Accepted Answer

A) U)S.GAAP does not consider selling price in determining impairment,but IAS 36 does. 
B) U)S.GAAP considers cash flows in assessing value of continued use,but does not discount them,whereas IAS 36 requires discounting in assessing asset impairment. 
C) Asset impairment is more likely to occur under IAS 36 than under U.S.GAAP. 
D) All of the above are differences between IAS 36 and U.S.GAAP. 
A) U)S.GAAP does not consider selling price in determining impairment,but IAS 36 does. 
B) U)S.GAAP considers cash flows in assessing value of continued use,but does not discount them,whereas IAS 36 requires discounting in assessing asset impairment. 
C) Asset impairment is more likely to occur under IAS 36 than under U.S.GAAP. 
D) All of the above are differences between IAS 36 and U.S.GAAP.

Question 18

Under IAS 38,which of the following items is specifically EXCLUDED from being recognized as an internally generated intangible asset?

Accepted Answer

A) computer software costs 
B) copyrights 
C) customer lists 
D) motion pictures 
A) computer software costs 
B) copyrights 
C) customer lists 
D) motion pictures

Question 19

According to IAS 16,a decrease in the carrying amount of a fixed asset that is identified on an asset's first revaluation should be recorded as:

Accepted Answer

A) an expense on the Income Statement. 
B) a prior period adjustment to Retained Earnings. 
C) a credit to Revaluation Surplus. 
D) a debit to Revaluation Surplus. 
A) an expense on the Income Statement. 
B) a prior period adjustment to Retained Earnings. 
C) a credit to Revaluation Surplus. 
D) a debit to Revaluation Surplus.

Question 20

Which of the following inventory valuation methods commonly used in the U.S.is NOT allowed under IAS 2 (Inventories)?

Accepted Answer

A) LIFO 
B) FIFO 
C) weighted average 
D) retail inventory method 
A) LIFO 
B) FIFO 
C) weighted average 
D) retail inventory method

What is the basis for choosing depreciation methods for fixed assets under IAS 16 (Property,Plant,& Equipment)?

When a patent or trademark is acquired in a business combination,what does IAS 38 say about recording these intangibles?

What types of issues cause differences between International Financial Reporting Standards and U.S.GAAP?

Under IAS 2,what adjustment needs to be made after an inventory write-down if the selling price subsequently increases?

How does IAS 38 (Intangible Assets)differ from U.S.GAAP with respect to development costs?

Use the following to answer questions : The following information was taken from the fixed asset records of Bosco Ltd as of December 31,2010: -What is the amount of Impairment Loss under U.S.GAAP?

Which of the following is generally true about the differences between U.S.GAAP and IASB standards?

In an Ernst and Young 2005 survey of 130 companies' Forms 20-F filed with the SEC,what issue required the greatest adjustment?

Use the following to answer questions : The following inventory information was taken from the records of Kleinfeld Inc.: -Under U.S.GAAP,what should the Balance Sheet report for Inventory?

Which of the following is true about the IASB standards on Cash Flow Statements?

Under IAS 16 (Property,Plant,and Equipment),subsequent revaluation decreases are:

As defined by IAS 38,how are intangible assets unlike other assets?

According to IAS 16 (Property,Plant & Equipment),what is the term used to indicate the amount for which an asset could be exchanged between knowledgeable,willing parties in an arm's length transaction?

How does IAS 34 (Interim Financial Reporting)differ from U.S.GAAP?

How does the definition of asset impairment differ between IAS 36 and U.S.GAAP?

Under IAS 38,which of the following items is specifically EXCLUDED from being recognized as an internally generated intangible asset?

According to IAS 16,a decrease in the carrying amount of a fixed asset that is identified on an asset's first revaluation should be recorded as:

Which of the following inventory valuation methods commonly used in the U.S.is NOT allowed under IAS 2 (Inventories)?

Introduction to International Accounting

Worldwide Accounting Diversity

International Convergence of Financial Reporting

International Financial Reporting Standards: Part II

Comparative Accounting

Foreign Currency Transactions and Hedging Foreign Exchange Risk

Translation of Foreign Currency Financial Statements

Additional Financial Reporting Issues

Analysis of Foreign Financial Statements

International Taxation

International Transfer Pricing

Strategic Accounting Issues in Multinational Corporations

Comparative International Auditing and Corporate Governance

International Corporate Social Reporting

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Exam 4: International Financial Reporting Standards: Part I

What is the basis for choosing depreciation methods for fixed assets under IAS 16 (Property,Plant,& Equipment)?

When a patent or trademark is acquired in a business combination,what does IAS 38 say about recording these intangibles?

What types of issues cause differences between International Financial Reporting Standards and U.S.GAAP?

Under IAS 2,what adjustment needs to be made after an inventory write-down if the selling price subsequently increases?

How does IAS 38 (Intangible Assets)differ from U.S.GAAP with respect to development costs?

Use the following to answer questions : The following information was taken from the fixed asset records of Bosco Ltd as of December 31,2010: -What is the amount of Impairment Loss under U.S.GAAP?

Which of the following is generally true about the differences between U.S.GAAP and IASB standards?

In an Ernst and Young 2005 survey of 130 companies' Forms 20-F filed with the SEC,what issue required the greatest adjustment?

Use the following to answer questions : The following inventory information was taken from the records of Kleinfeld Inc.: -Under U.S.GAAP,what should the Balance Sheet report for Inventory?

Which of the following is true about the IASB standards on Cash Flow Statements?

Under IAS 16 (Property,Plant,and Equipment),subsequent revaluation decreases are:

As defined by IAS 38,how are intangible assets unlike other assets?

According to IAS 16 (Property,Plant & Equipment),what is the term used to indicate the amount for which an asset could be exchanged between knowledgeable,willing parties in an arm's length transaction?

How does IAS 34 (Interim Financial Reporting)differ from U.S.GAAP?

How does the definition of asset impairment differ between IAS 36 and U.S.GAAP?

Under IAS 38,which of the following items is specifically EXCLUDED from being recognized as an internally generated intangible asset?

According to IAS 16,a decrease in the carrying amount of a fixed asset that is identified on an asset's first revaluation should be recorded as:

Which of the following inventory valuation methods commonly used in the U.S.is NOT allowed under IAS 2 (Inventories)?

Introduction to International Accounting

Worldwide Accounting Diversity

International Convergence of Financial Reporting

International Financial Reporting Standards: Part II

Comparative Accounting

Foreign Currency Transactions and Hedging Foreign Exchange Risk

Translation of Foreign Currency Financial Statements

Additional Financial Reporting Issues

Analysis of Foreign Financial Statements

International Taxation

International Transfer Pricing

Strategic Accounting Issues in Multinational Corporations

Comparative International Auditing and Corporate Governance

International Corporate Social Reporting

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