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