CPA CORE 1 EXAM MATERIALS WITH COMPLETE SOLUTIONS
What is the condition that has to be satisfied for revenue recognition in accordance with
ASPE 3400? - ANSWER 1. The seller of the goods has transferred to the buyer the
significant risks and rewards of ownership, in that all significant acts have been
completed and the seller retains no continuing involvement in, or effective control of,
the goods transferred.
2. It is probable that the consideration to be derived from sale of goods will be measured
reliably.
3. It is probable that the ultimate collections will be realized
What are the three tests to determine if an entity shall report an operating segment per
IFRS 8.13? - ANSWER 1. Reported revenues are 10% or more of combined revenues.
2. The absolute value of its reported profit or loss is 10% or more of the greater of
combined reported profits and combined reported losses (absolute amount).
3. Assets are 10% or more of the combined assets.
Per IFRS 9.4.1.2A, Financial Instruments, the FVOCI classification is applied if which of
the following two criteria are satisfied? - ANSWER 1. The financial asset is held in a
business model whose objective is to hold assets to collect contractual cash flows and
to sell financial assets.
2. The contractual terms of the financial asset give rise on specified dates to cash flows
that are solely payments of principle and interest on the principle amount outstanding.
According to IFRS 9.4.1.2, Financial Instruments, which two criteria must an amortized
cost financial asset meet? - ANSWER 1. The financial asset is held in a business model
whose objective is to hold financial assets in order to collect contractual cash flows.
, 2. The contractual terms of the financial asset gave rise at specified dates to cash flows
that are solely payments of principal and interest on the outstanding principal amount.
Per ASPE 3064 Goodwill and intangible assets, what option does the entity have
regarding expenditures on internally generated intangible assets during the
development phase? - ANSWER They have an option to either expense those costs or
capitalize them as an intangible asset provided that the criteria in section 3064.41 are
satisfied.
What are the criteria to capitalize expenditures on internally generated intangible assets
per ASPE 3064.41? - ANSWER An intangible asset arising from development (or from the
development phase of an internal project) is recognized if, and only if, an entity can
demonstrate all of the following:
(a) the technical feasibility of completing the intangible asset so that it will be available
for use or sale;
(b) its ability to complete the intangible asset and either use or sell it;
(c) its ability to use or sell the intangible asset;
(d) the availability of adequate technical, financial and other resources to complete the
development and to use or sell the intangible asset;
(e) its ability to reliably measure the expenditure attributable to the intangible asset
during its development; and
(f) the manner in which the economic benefits are expected to be obtained from the
intangible asset. The entity may demonstrate the existence of one or more of the
following, depending on circumstances: a market for the output of the intangible asset
or for the intangible asset itself; if the intangible asset is to be used internally, the
usefulness of the intangible asset.
What is the condition that has to be satisfied for revenue recognition in accordance with
ASPE 3400? - ANSWER 1. The seller of the goods has transferred to the buyer the
significant risks and rewards of ownership, in that all significant acts have been
completed and the seller retains no continuing involvement in, or effective control of,
the goods transferred.
2. It is probable that the consideration to be derived from sale of goods will be measured
reliably.
3. It is probable that the ultimate collections will be realized
What are the three tests to determine if an entity shall report an operating segment per
IFRS 8.13? - ANSWER 1. Reported revenues are 10% or more of combined revenues.
2. The absolute value of its reported profit or loss is 10% or more of the greater of
combined reported profits and combined reported losses (absolute amount).
3. Assets are 10% or more of the combined assets.
Per IFRS 9.4.1.2A, Financial Instruments, the FVOCI classification is applied if which of
the following two criteria are satisfied? - ANSWER 1. The financial asset is held in a
business model whose objective is to hold assets to collect contractual cash flows and
to sell financial assets.
2. The contractual terms of the financial asset give rise on specified dates to cash flows
that are solely payments of principle and interest on the principle amount outstanding.
According to IFRS 9.4.1.2, Financial Instruments, which two criteria must an amortized
cost financial asset meet? - ANSWER 1. The financial asset is held in a business model
whose objective is to hold financial assets in order to collect contractual cash flows.
, 2. The contractual terms of the financial asset gave rise at specified dates to cash flows
that are solely payments of principal and interest on the outstanding principal amount.
Per ASPE 3064 Goodwill and intangible assets, what option does the entity have
regarding expenditures on internally generated intangible assets during the
development phase? - ANSWER They have an option to either expense those costs or
capitalize them as an intangible asset provided that the criteria in section 3064.41 are
satisfied.
What are the criteria to capitalize expenditures on internally generated intangible assets
per ASPE 3064.41? - ANSWER An intangible asset arising from development (or from the
development phase of an internal project) is recognized if, and only if, an entity can
demonstrate all of the following:
(a) the technical feasibility of completing the intangible asset so that it will be available
for use or sale;
(b) its ability to complete the intangible asset and either use or sell it;
(c) its ability to use or sell the intangible asset;
(d) the availability of adequate technical, financial and other resources to complete the
development and to use or sell the intangible asset;
(e) its ability to reliably measure the expenditure attributable to the intangible asset
during its development; and
(f) the manner in which the economic benefits are expected to be obtained from the
intangible asset. The entity may demonstrate the existence of one or more of the
following, depending on circumstances: a market for the output of the intangible asset
or for the intangible asset itself; if the intangible asset is to be used internally, the
usefulness of the intangible asset.
