TEST BANK FOR Intermediate Accounting Volume 2 8E Thomas H. Beechy, Joan E. Conrod, Elizabeth Farrell, Ingrid McLeod-Dick, Kayla Tomulka, Romi-Lee Sevel

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IntermediateAccountingVolume28E Thomas H.Beechy,Joan E.Conrod,
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Elizabeth Farrell, Ingrid McLeod-Dick, Kayla Tomulka, Romi-Lee Sevel
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Chapter 12-22 Answers are at the End of Each Chapter
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1) Conceptually, liabilities constitute apresent obligation as a result of a past event and entail an
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v expected future sacrifice of assets or services.
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2) Under ASPE, only legal obligations are recognized.
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3) A reasonable expectation on the part of a company's stakeholders arising from a company's past
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v practices or behaviour may constitute a constructive obligation in certain instances.
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4) A contingency may become a provision if the likelihood of the contingent event greatly
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v increases.
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5) Under IFRS, most financial liabilities are valued at fair value.
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,6) An improvement to a company's credit rating under IFRS will lead to a reduction in the
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v carrying amount of any financial liabilities and a gain being reported in OCI.
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7) Loan guarantees are only recorded if they are likely to be paid.
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8) Accrued liabilities made due to routine operating expenses are not normally discounted.
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9) For a small population, the best estimate for the amount of a provision that must be
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v recognized is the expected value of the possible outcomes.
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10) Under IFRS, provisions are always recorded at their expected value.
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11) For a large population, the best estimate for the amount of a provision that must be
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v recognized is the most likely outcome with respect to the expected value and cumulative
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v probabilities.
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12) Under ASPE, contingent liabilities which are more likely than not, are accrued at the lowest end
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v of the range.
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, 13) Contingent assets may be recorded under ASPE but not under IFRS.
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14) Executory contracts seldom require a journal entry, while onerous contracts do.
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15) Discounting is not required when the time value of money is immaterial or if the amount and
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v timing of cash flows is highly uncertain.
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16) Financial liabilities are initially recognized at fair value and at cost, amortized cost or fair value
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v post-acquisition.
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17) A company decides to relocate a group from a discontinued business segment to a division with
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ongoing operations. The expenses incurred in doing so would qualify as a restructuring charge.
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18) Under the warranty expense approach, there should be no income statement effects for
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v warranty repairs performed after the year of sale (assuming that accrued warranty expenses and
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v expenditures equal one another). v v v




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⊚ false
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