CHAPTER 1
SOLUTIONS TO B EXERCISES
E 1.1B (15–20 minutes)
(a) True.
(b) False – General-purpose financial reporting helps external users who lack
the ability to demand all the financial information they need from an entity
and therefore must rely, at least partly, on the information in financial
reports.
(c) False – Standard-setting that is based on individual conceptual
frameworks will lead to different conclusions about identical or similar
issues. As a result, standards will not be consistent with one another,
and past decisions may not be indicative of future ones.
(d) False – Information that is decision-useful to capital providers may also
be useful to other users of financial reporting, who are not capital
providers such as government agencies.
(e) False – An implicit assumption is that users need reasonable knowledge
of business and financial accounting matters to understand the
information contained in the financial statements.
(f) True.
LO: 1, 2 Bloom: C, Difficulty: Easy, Time: 15-20, AACSB: Communication, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None
Copyright © 2022 John Wiley & Sons, Inc. Kieso, Intermediate Accounting, 18/e, Exercise B Solutions (For Instructor Use Only) 1-1
,E 1.2B (15–20 minutes)
(a) False – The fundamental qualitative characteristics that make accounting
information useful are relevance and faithful representation.
(b) True.
(c) False – prudence or conservatism generally is in conflict with the quality
of neutrality and may lead to bias in financial reporting.
(d) False – Information that is relevant is characterized as having predictive
or confirmatory value.
(e) False – Comparability also refers to comparisons of a firm over time
(consistency).
(f) False – Enhancing characteristics relate to both relevance and faithful
representation.
(g) True.
LO: 1, 2, Bloom: C, Difficulty: Easy, Time: 15-20, AACSB: Communication, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None
E 1.3B (20–30 minutes)
(a) Relevance. (f) Cost constraint.
(b) Comparability, Consistency. (g) Neutrality.
(c) Confirmatory value. (h) Timeliness.
(d) Relevance and faithful (i) Verifiability.
representation.
(e) Neutrality. (j) Comparability.
LO: 2 Bloom: C, Moderate, Time: 20-30, AACSB: Communication, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None
1-2Copyright © 2022 John Wiley & Sons, Inc. Kieso, Intermediate Accounting, 18/e, Exercise B Solutions (For Instructor Use Only)
,E 1.4B (15–20 minutes)
(a) Faithful representation. (f) Confirmatory value.
(b) Neutrality. (g) Verifiability.
(c) Comparability. (h) Comparability, verifiability,
timeliness, and
understandability.
(d) Relevance. (i) Timeliness.
(e) Comparability. (j) Relevance and faithful
representation.
LO: 2, Bloom: C, Difficulty: Easy, Time: 15-20, AACSB: Communication, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None
E 1.5B (15–20 minutes)
(a) Revenues, expenses.
(b) Distribution to owners
(Note: Net effect is to reduce equity and assets).
(c) Gains, losses.
(d) Assets.
(e) Investment by owners, comprehensive income
(also possible to be revenues and gains).
(f) Liabilities.
Copyright © 2022 John Wiley & Sons, Inc. Kieso, Intermediate Accounting, 18/e, Exercise B Solutions (For Instructor Use Only) 1-3
, E 1.5B (continued)
(g) Comprehensive income
(also possible to be revenues and gains).
(h) Comprehensive income.
(i) Revenues.
(j) Equity.
(k) Comprehensive income.
(l) Distributions to owners.
LO: 2, Bloom: C, Difficulty: Easy, Time: 15-20, AACSB: Communication, AICPA BC: None, AICPA AC: Measurement Analysis and Interpretation, Reporting,
AICPA PC: None
E 1.6B (15–20 minutes)
(a) 6. Measurement principle (fair value).
(b) 2. Going concern assumption.
(c) 7. Expense recognition principle.
(d) 1. Economic entity assumption.
(e) 8. Full disclosure principle.
(f) 5. Measurement principle (historical cost).
(g) 4. Periodicity assumption.
(h) 3. Monetary unit assumption.
LO: 3 Bloom: C, Difficulty: Easy, Time: 15-20, AACSB: Communication, AICPA BC: None, AICPA AC: Measurement Analysis and Interpretation, Reporting,
AICPA PC: None
1-4Copyright © 2022 John Wiley & Sons, Inc. Kieso, Intermediate Accounting, 18/e, Exercise B Solutions (For Instructor Use Only)
SOLUTIONS TO B EXERCISES
E 1.1B (15–20 minutes)
(a) True.
(b) False – General-purpose financial reporting helps external users who lack
the ability to demand all the financial information they need from an entity
and therefore must rely, at least partly, on the information in financial
reports.
(c) False – Standard-setting that is based on individual conceptual
frameworks will lead to different conclusions about identical or similar
issues. As a result, standards will not be consistent with one another,
and past decisions may not be indicative of future ones.
(d) False – Information that is decision-useful to capital providers may also
be useful to other users of financial reporting, who are not capital
providers such as government agencies.
(e) False – An implicit assumption is that users need reasonable knowledge
of business and financial accounting matters to understand the
information contained in the financial statements.
(f) True.
LO: 1, 2 Bloom: C, Difficulty: Easy, Time: 15-20, AACSB: Communication, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None
Copyright © 2022 John Wiley & Sons, Inc. Kieso, Intermediate Accounting, 18/e, Exercise B Solutions (For Instructor Use Only) 1-1
,E 1.2B (15–20 minutes)
(a) False – The fundamental qualitative characteristics that make accounting
information useful are relevance and faithful representation.
(b) True.
(c) False – prudence or conservatism generally is in conflict with the quality
of neutrality and may lead to bias in financial reporting.
(d) False – Information that is relevant is characterized as having predictive
or confirmatory value.
(e) False – Comparability also refers to comparisons of a firm over time
(consistency).
(f) False – Enhancing characteristics relate to both relevance and faithful
representation.
(g) True.
LO: 1, 2, Bloom: C, Difficulty: Easy, Time: 15-20, AACSB: Communication, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None
E 1.3B (20–30 minutes)
(a) Relevance. (f) Cost constraint.
(b) Comparability, Consistency. (g) Neutrality.
(c) Confirmatory value. (h) Timeliness.
(d) Relevance and faithful (i) Verifiability.
representation.
(e) Neutrality. (j) Comparability.
LO: 2 Bloom: C, Moderate, Time: 20-30, AACSB: Communication, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None
1-2Copyright © 2022 John Wiley & Sons, Inc. Kieso, Intermediate Accounting, 18/e, Exercise B Solutions (For Instructor Use Only)
,E 1.4B (15–20 minutes)
(a) Faithful representation. (f) Confirmatory value.
(b) Neutrality. (g) Verifiability.
(c) Comparability. (h) Comparability, verifiability,
timeliness, and
understandability.
(d) Relevance. (i) Timeliness.
(e) Comparability. (j) Relevance and faithful
representation.
LO: 2, Bloom: C, Difficulty: Easy, Time: 15-20, AACSB: Communication, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None
E 1.5B (15–20 minutes)
(a) Revenues, expenses.
(b) Distribution to owners
(Note: Net effect is to reduce equity and assets).
(c) Gains, losses.
(d) Assets.
(e) Investment by owners, comprehensive income
(also possible to be revenues and gains).
(f) Liabilities.
Copyright © 2022 John Wiley & Sons, Inc. Kieso, Intermediate Accounting, 18/e, Exercise B Solutions (For Instructor Use Only) 1-3
, E 1.5B (continued)
(g) Comprehensive income
(also possible to be revenues and gains).
(h) Comprehensive income.
(i) Revenues.
(j) Equity.
(k) Comprehensive income.
(l) Distributions to owners.
LO: 2, Bloom: C, Difficulty: Easy, Time: 15-20, AACSB: Communication, AICPA BC: None, AICPA AC: Measurement Analysis and Interpretation, Reporting,
AICPA PC: None
E 1.6B (15–20 minutes)
(a) 6. Measurement principle (fair value).
(b) 2. Going concern assumption.
(c) 7. Expense recognition principle.
(d) 1. Economic entity assumption.
(e) 8. Full disclosure principle.
(f) 5. Measurement principle (historical cost).
(g) 4. Periodicity assumption.
(h) 3. Monetary unit assumption.
LO: 3 Bloom: C, Difficulty: Easy, Time: 15-20, AACSB: Communication, AICPA BC: None, AICPA AC: Measurement Analysis and Interpretation, Reporting,
AICPA PC: None
1-4Copyright © 2022 John Wiley & Sons, Inc. Kieso, Intermediate Accounting, 18/e, Exercise B Solutions (For Instructor Use Only)
