Intermediate Accounting, Volume 2, 8th Edition by Thomas H. Beechy – Complete Test Bank Covering Chapters 12–22

INTERMEDIATE ACCOUNTING VOLUME 2\8TH EDITION




TEST BANK FOR INTERMEDIATE ACCOUNTING
VOLUME 2 -8TH EDITION BY THOMAS H BEECHY –
ALL 12\22 CHAPTERS COVERED




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,INTERMEDIATE ACCOUNTING VOLUME 2\8TH EDITION




Chapter - 12

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




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,INTERMEDIATE ACCOUNTING VOLUME 2\8TH EDITION



6) An improvement to a company's credit rating under IFRS will 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 always 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 with respect to the expected value and
cumulative probabilities.
⊚ true


⊚ false

12) Under ASPE, contingent liabilities which are more likely than not, are accrued at the
lowest end of the range.
⊚ true


⊚ false



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, INTERMEDIATE ACCOUNTING VOLUME 2\8TH EDITION


13) Contingent assets may be recorded under ASPE but not under IFRS.
⊚ true


⊚ false
14) Executory contracts seldom require a journal entry, while onerous contracts do.
⊚ true


⊚ false

15) 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

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 with ongoing operations. The expenses incurred in doing so would qualify as a
restructuring charge.
⊚ true


⊚ false

18) 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




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