TEST BANK FOR
Intermediate Accounting Volume 2 8E Thomas H. Beechy, Joan E. Conrod,
Elizabeth Farrell, Ingrid McLeod-Dick, Kayla Tomulka, Romi-Lee Sevel
Chapter 12-22 Ansẉers 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) An improvement to a company's credit rating under IFRS ẉill lead to a reduction in the
carrying amount of any financial liabilities and a gain being reported in OCI.
⊚ true
⊚ false
7) Loan guarantees are only recorded if they are likely to be paid.
⊚ true
⊚ false
8) Accrued liabilities made due to routine operating expenses are not normally discounted.
⊚ true
⊚ false
9) 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
10) Under IFRS, provisions are alẉays recorded at their expected value.
⊚ true
⊚ false
11) For a large population, the best estimate for the amount of a provision that must be
recognized is the most likely outcome ẉith respect to the expected value and cumulative
probabilities.
⊚ true
⊚ false
12) Under ASPE, contingent liabilities ẉhich are more likely than not, are accrued at the loẉest
end of the range.
⊚ true
⊚ false
, 13) Contingent assets may be recorded under ASPE but not under IFRS.
⊚ true
⊚ false
14) Executory contracts seldom require a journal entry, ẉhile onerous contracts do.
⊚ true
⊚ false
15) Discounting is not required ẉhen the time value of money is immaterial or if the amount and
timing of cash floẉs is highly uncertain.
⊚ true
⊚ false
16) Financial liabilities are initially recognized at fair value and at cost, amortized cost or fair
value post-acquisition.
⊚ true
⊚ false
17) A company decides to relocate a group from a discontinued business segment to a division
ẉith ongoing operations. The expenses incurred in doing so ẉould qualify as a restructuring
charge.
⊚ true
⊚ false
18) Under the ẉarranty expense approach, there should be no income statement effects for
ẉarranty repairs performed after the year of sale (assuming that accrued ẉarranty expenses
and expenditures equal one another).
⊚ true
⊚ false
Intermediate Accounting Volume 2 8E Thomas H. Beechy, Joan E. Conrod,
Elizabeth Farrell, Ingrid McLeod-Dick, Kayla Tomulka, Romi-Lee Sevel
Chapter 12-22 Ansẉers 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) An improvement to a company's credit rating under IFRS ẉill lead to a reduction in the
carrying amount of any financial liabilities and a gain being reported in OCI.
⊚ true
⊚ false
7) Loan guarantees are only recorded if they are likely to be paid.
⊚ true
⊚ false
8) Accrued liabilities made due to routine operating expenses are not normally discounted.
⊚ true
⊚ false
9) 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
10) Under IFRS, provisions are alẉays recorded at their expected value.
⊚ true
⊚ false
11) For a large population, the best estimate for the amount of a provision that must be
recognized is the most likely outcome ẉith respect to the expected value and cumulative
probabilities.
⊚ true
⊚ false
12) Under ASPE, contingent liabilities ẉhich are more likely than not, are accrued at the loẉest
end of the range.
⊚ true
⊚ false
, 13) Contingent assets may be recorded under ASPE but not under IFRS.
⊚ true
⊚ false
14) Executory contracts seldom require a journal entry, ẉhile onerous contracts do.
⊚ true
⊚ false
15) Discounting is not required ẉhen the time value of money is immaterial or if the amount and
timing of cash floẉs is highly uncertain.
⊚ true
⊚ false
16) Financial liabilities are initially recognized at fair value and at cost, amortized cost or fair
value post-acquisition.
⊚ true
⊚ false
17) A company decides to relocate a group from a discontinued business segment to a division
ẉith ongoing operations. The expenses incurred in doing so ẉould qualify as a restructuring
charge.
⊚ true
⊚ false
18) Under the ẉarranty expense approach, there should be no income statement effects for
ẉarranty repairs performed after the year of sale (assuming that accrued ẉarranty expenses
and expenditures equal one another).
⊚ true
⊚ false
