Chapter 12-22 Fully
Covered| Verified Questions
and Answers.
Answers are at the End of
Each Chapter
Chapter 12
Student name:
1) Conceptually, liabilities constitute a present obligation as a result of a past event and entail an
expected future sacrifice of assets or services.
⊚ true
⊚ false
,2) Under ASPE, only legal obligations are recognized.
⊚ true
⊚ false
3) A reasonable expectation on the part of a company's stakeholders arising from a company's
past practices or behaviour may constitute a constructive obligation in certain instances.
⊚ true
⊚ false
4) A contingency may become a provision if the likelihood of the contingent event greatly
increases.
⊚ true
⊚ false
5) Under IFRS, most financial liabilities are valued at fair value.
⊚ true
⊚ false
,6) For a small population, the best estimate for the amount of a provision that must be
recognized is the expected value of the possible outcomes.
⊚ true
⊚ false
7) Under IFRS, provisions are always recorded at their expected value.
⊚ true
⊚ false
8) For a large population, the best estimate for the amount of a provision that must be
recognized is the most likely outcome with respect to the expected value and cumulative
probabilities.
⊚ true
⊚ false
9) Under ASPE, contingent liabilities which are more likely than not, are accrued at the lowest
end of the range.
⊚ true
⊚ false
, 10) Contingent assets may be recorded under ASPE but not under IFRS.
⊚ true
⊚ false
11) Executory contracts seldom require a journal entry, while onerous contracts do.
⊚ true
⊚ false
12) Discounting is not required when the time value of money is immaterial or if the amount and
timing of cash flows is highly uncertain.
⊚ true
⊚ false
13) Financial liabilities are initially recognized at fair value and at cost, amortized cost or fair
value post-acquisition.
⊚ true
⊚ false
14) A company decides to relocate a group from a discontinued business segment to a division
with ongoing operations. The expenses incurred in doing so would qualify as a restructuring
charge.
⊚ true
⊚ false
15) Under the warranty expense approach, there should be no income statement effects for
warranty repairs performed after the year of sale (assuming that accrued warranty expenses
and expenditures equal one another).
⊚ true
⊚ false
Covered| Verified Questions
and Answers.
Answers are at the End of
Each Chapter
Chapter 12
Student name:
1) Conceptually, liabilities constitute a present obligation as a result of a past event and entail an
expected future sacrifice of assets or services.
⊚ true
⊚ false
,2) Under ASPE, only legal obligations are recognized.
⊚ true
⊚ false
3) A reasonable expectation on the part of a company's stakeholders arising from a company's
past practices or behaviour may constitute a constructive obligation in certain instances.
⊚ true
⊚ false
4) A contingency may become a provision if the likelihood of the contingent event greatly
increases.
⊚ true
⊚ false
5) Under IFRS, most financial liabilities are valued at fair value.
⊚ true
⊚ false
,6) For a small population, the best estimate for the amount of a provision that must be
recognized is the expected value of the possible outcomes.
⊚ true
⊚ false
7) Under IFRS, provisions are always recorded at their expected value.
⊚ true
⊚ false
8) For a large population, the best estimate for the amount of a provision that must be
recognized is the most likely outcome with respect to the expected value and cumulative
probabilities.
⊚ true
⊚ false
9) Under ASPE, contingent liabilities which are more likely than not, are accrued at the lowest
end of the range.
⊚ true
⊚ false
, 10) Contingent assets may be recorded under ASPE but not under IFRS.
⊚ true
⊚ false
11) Executory contracts seldom require a journal entry, while onerous contracts do.
⊚ true
⊚ false
12) Discounting is not required when the time value of money is immaterial or if the amount and
timing of cash flows is highly uncertain.
⊚ true
⊚ false
13) Financial liabilities are initially recognized at fair value and at cost, amortized cost or fair
value post-acquisition.
⊚ true
⊚ false
14) A company decides to relocate a group from a discontinued business segment to a division
with ongoing operations. The expenses incurred in doing so would qualify as a restructuring
charge.
⊚ true
⊚ false
15) Under the warranty expense approach, there should be no income statement effects for
warranty repairs performed after the year of sale (assuming that accrued warranty expenses
and expenditures equal one another).
⊚ true
⊚ false
