Question 1

Where there is a difference between fair value at initial recognition and cost,assuming no other standard prohibits it,the entity should?

Accepted Answer

A) Immediately adjust the value and recognise profit or loss. 
B) Ignore the difference as there should be no day one gain or loss. 
C) Amortise the difference over the useful life of the item. 
D) Pay more or less for the item to make the figures equal. 
A) Immediately adjust the value and recognise profit or loss. 
B) Ignore the difference as there should be no day one gain or loss. 
C) Amortise the difference over the useful life of the item. 
D) Pay more or less for the item to make the figures equal. A

Question 2

Which of the following has NOT been identified as a problem with the old definition of fair value?

Accepted Answer

A) The word willing is not always ideal. 
B) The word exchange is unclear. 
C) The word settle is potentially misleading. 
D) None of the above,i.e.they are all criticisms. 
A) The word willing is not always ideal. 
B) The word exchange is unclear. 
C) The word settle is potentially misleading. 
D) None of the above,i.e.they are all criticisms. D

Question 3

Which of the following is not part of the definition of fair value under AAASB 13?

Accepted Answer

A) Knowledgeable and willing parties. 
B) Price received to sell an asset. 
C) Price paid to sell a liability. 
D) At measurement date. 
A) Knowledgeable and willing parties. 
B) Price received to sell an asset. 
C) Price paid to sell a liability. 
D) At measurement date. A

Question 4

Fair value accounting:

Accepted Answer

A) Appears in many accounting standards. 
B) Is a new concept. 
C) Is currently rare in accounting standards. 
D) Is simply a refinement to the definition of historic cost. 
A) Appears in many accounting standards. 
B) Is a new concept. 
C) Is currently rare in accounting standards. 
D) Is simply a refinement to the definition of historic cost.

Question 5

Why does the new definition focus on an exit price when valuing and asset or liability?

Accepted Answer

A) It introduces the concept of an external party into the transaction. 
B) It focuses on the current value. 
C) It is specific to the item being considered. 
D) All of the above. 
A) It introduces the concept of an external party into the transaction. 
B) It focuses on the current value. 
C) It is specific to the item being considered. 
D) All of the above.

Question 6

Traditionally what measurement technique has been most commonly used:

Accepted Answer

A) Replacement cost. 
B) Modified historical cost. 
C) Fair value. 
D) Sales value. 
A) Replacement cost. 
B) Modified historical cost. 
C) Fair value. 
D) Sales value.

Question 7

Which of the following is not an acceptable valuation technique?

Accepted Answer

A) The expert evaluation approach. 
B) The income approach. 
C) The cost approach. 
D) None of the above,i.e.they are all acceptable valuation techniques. 
A) The expert evaluation approach. 
B) The income approach. 
C) The cost approach. 
D) None of the above,i.e.they are all acceptable valuation techniques.

Question 8

Which of the following is NOT a transaction cost that should be considered in the calculation of fair value?

Accepted Answer

A) Costs associated with marketing the item. 
B) Transport costs. 
C) Agent's selling fees. 
D) None of the above,i.e.they are all transaction costs. 
A) Costs associated with marketing the item. 
B) Transport costs. 
C) Agent's selling fees. 
D) None of the above,i.e.they are all transaction costs.

Question 9

Which of the following is NOT one of the reasons given for issuing IFRS 13?

Accepted Answer

A) To clarify the definition of fair value. 
B) To replace the use of historical cost. 
C) To enhance disclosure. 
D) To provide a single source of guidance on the use of fair value. 
A) To clarify the definition of fair value. 
B) To replace the use of historical cost. 
C) To enhance disclosure. 
D) To provide a single source of guidance on the use of fair value.

Question 10

Which part of the asset definition supports the use of fair value accounting?

Accepted Answer

A) Future economic benefit. 
B) Control. 
C) Relevance and reliability. 
D) Past transaction. 
A) Future economic benefit. 
B) Control. 
C) Relevance and reliability. 
D) Past transaction.

Question 11

Which of the following information must be provided in the financial report about level 3 fair valuations?

Accepted Answer

A) Quantitative information on the inputs used in the model. 
B) A description of the valuation technique used. 
C) If the asset is not being used for its highest and best use why this is the case. 
D) All of the above. 
A) Quantitative information on the inputs used in the model. 
B) A description of the valuation technique used. 
C) If the asset is not being used for its highest and best use why this is the case. 
D) All of the above.

Question 12

AASB 13 Fair Value Accounting has an effective date of:

Accepted Answer

A) January 2013. 
B) July 2005. 
C) July 2011. 
D) January 2015. 
A) January 2013. 
B) July 2005. 
C) July 2011. 
D) January 2015.

Question 13

Which two economic concepts are fundamental to the relevance of fair values to accounting?
 i)The Efficient Markets Hypothesis
Ii)Supply and Demand
Iii)Economic Rationalism
Iv)Marginal Utility

Accepted Answer

A) i.& iii. 
B) i.& ii. 
C) ii.& iv. 
D) iii.& iv. 
A) i.& iii. 
B) i.& ii. 
C) ii.& iv. 
D) iii.& iv.

Question 14

When fair valuing a liability which factor should NOT be considered?

Accepted Answer

A) Expectations of the market about fulfilling the obligation. 
B) Non-performance risk. 
C) The fair value of the corresponding asset. 
D) None of the above,i.e.they are all factors to consider. 
A) Expectations of the market about fulfilling the obligation. 
B) Non-performance risk. 
C) The fair value of the corresponding asset. 
D) None of the above,i.e.they are all factors to consider.

Question 15

IFRS 13 is considered:

Accepted Answer

A) To be an evolutionary standard. 
B) To clarify our current use of fair value. 
C) To be a revolutionary standard. 
D) To be a regression from previous practice. 
A) To be an evolutionary standard. 
B) To clarify our current use of fair value. 
C) To be a revolutionary standard. 
D) To be a regression from previous practice.

Question 16

Which of the following would NOT indicate that market is inactive?

Accepted Answer

A) The bid-ask spread is narrow. 
B) Little information is publicly available. 
C) Price quotations don't reflect current information. 
D) Indices are demonstrably uncorrelated with recent indications of fair valuation. 
A) The bid-ask spread is narrow. 
B) Little information is publicly available. 
C) Price quotations don't reflect current information. 
D) Indices are demonstrably uncorrelated with recent indications of fair valuation.

Question 17

When fair valuing a motor vehicle which of the following is least likely to be important?

Accepted Answer

A) Colour. 
B) Age. 
C) Make and model. 
D) Kilometres travelled. 
A) Colour. 
B) Age. 
C) Make and model. 
D) Kilometres travelled.

Question 18

When valuing non-financial assets which use for the asset should be considered?

Accepted Answer

A) The asset's expected use. 
B) The asset's highest and best use. 
C) The asset's current use. 
D) None of the above. 
A) The asset's expected use. 
B) The asset's highest and best use. 
C) The asset's current use. 
D) None of the above.

Question 19

Which of the following would most likely be valued using a level 2 valuation?

Accepted Answer

A) Shares. 
B) Gold. 
C) A building. 
D) A business unit. 
A) Shares. 
B) Gold. 
C) A building. 
D) A business unit.

Question 20

Which of the following is NOT part of the old definition of fair value?

Accepted Answer

A) An arms-length transaction. 
B) The amount an asset could be exchanged for. 
C) The amount a liability could be settled for. 
D) At measurement date. 
A) An arms-length transaction. 
B) The amount an asset could be exchanged for. 
C) The amount a liability could be settled for. 
D) At measurement date.

Where there is a difference between fair value at initial recognition and cost,assuming no other standard prohibits it,the entity should?

Which of the following has NOT been identified as a problem with the old definition of fair value?

Which of the following is not part of the definition of fair value under AAASB 13?

Fair value accounting:

Why does the new definition focus on an exit price when valuing and asset or liability?

Traditionally what measurement technique has been most commonly used:

Which of the following is not an acceptable valuation technique?

Which of the following is NOT a transaction cost that should be considered in the calculation of fair value?

Which of the following is NOT one of the reasons given for issuing IFRS 13?

Which part of the asset definition supports the use of fair value accounting?

Which of the following information must be provided in the financial report about level 3 fair valuations?

AASB 13 Fair Value Accounting has an effective date of:

Which two economic concepts are fundamental to the relevance of fair values to accounting? i)The Efficient Markets Hypothesis Ii)Supply and Demand Iii)Economic Rationalism Iv)Marginal Utility

When fair valuing a liability which factor should NOT be considered?

IFRS 13 is considered:

Which of the following would NOT indicate that market is inactive?

When fair valuing a motor vehicle which of the following is least likely to be important?

When valuing non-financial assets which use for the asset should be considered?

Which of the following would most likely be valued using a level 2 valuation?

Which of the following is NOT part of the old definition of fair value?

Contemporary Issues in Accounting

The Conceptual Framework for Financial Reporting

Standard Setting

Measurement

Theories in Accounting

Products of the Financial Reporting Process

Corporate Governance

Capital Markets Research and Accounting

Earnings Management

Sustainability and Environmental Accounting

International Accounting

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Exam 10: Fair Value Accounting

Where there is a difference between fair value at initial recognition and cost,assuming no other standard prohibits it,the entity should?

Which of the following has NOT been identified as a problem with the old definition of fair value?

Which of the following is not part of the definition of fair value under AAASB 13?

Fair value accounting:

Why does the new definition focus on an exit price when valuing and asset or liability?

Traditionally what measurement technique has been most commonly used:

Which of the following is not an acceptable valuation technique?

Which of the following is NOT a transaction cost that should be considered in the calculation of fair value?

Which of the following is NOT one of the reasons given for issuing IFRS 13?

Which part of the asset definition supports the use of fair value accounting?

Which of the following information must be provided in the financial report about level 3 fair valuations?

AASB 13 Fair Value Accounting has an effective date of:

Which two economic concepts are fundamental to the relevance of fair values to accounting? i)The Efficient Markets Hypothesis Ii)Supply and Demand Iii)Economic Rationalism Iv)Marginal Utility

When fair valuing a liability which factor should NOT be considered?

IFRS 13 is considered:

Which of the following would NOT indicate that market is inactive?

When fair valuing a motor vehicle which of the following is least likely to be important?

When valuing non-financial assets which use for the asset should be considered?

Which of the following would most likely be valued using a level 2 valuation?

Which of the following is NOT part of the old definition of fair value?

Contemporary Issues in Accounting

The Conceptual Framework for Financial Reporting

Standard Setting

Measurement

Theories in Accounting

Products of the Financial Reporting Process

Corporate Governance

Capital Markets Research and Accounting

Earnings Management

Sustainability and Environmental Accounting

International Accounting

Filters