Test Bank for Intermediate Accounting Volume 2 8th Edition Thomas H. Beechy, Joan E. Conrod, Elizabeth Farrell, Ingrid McLeod-Dick, Kayla Tomulka, Romi-Lee Sevel

Test Bank for Intermediate Accounting Volume 2
8th Edition Thomas H. Beechy, Joan E. Conrod,
Elizabeth Farrell, Ingrid McLeod-Dick, Kayla
Tomulka, Romi-Lee Sevel

,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 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) 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

, 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