Corporate Reporting
Final Exam
Course Introduction
Corporate Reporting focuses on the preparation, analysis, and interpretation of financial statements in accordance with international accounting standards and regulatory requirements. The course covers key areas such as financial reporting frameworks, consolidation of group accounts, revenue recognition, and accounting for assets, liabilities, and equity. Students learn to evaluate the transparency, accuracy, and ethical considerations of corporate financial disclosures and gain insights into the role of reporting in informing stakeholders and supporting decision-making processes. Emphasis is placed on both theoretical concepts and practical applications, equipping students to handle complex reporting scenarios in a corporate environment.
Recommended Textbook
Understanding Australian Accounting Standards 1st Edition by Janice Loftus
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Page 2
Chapter 1: Accounting Regulation and the Conceptual Framework
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Q1) The definition of equity as given in the Conceptual Framework shows that:
A) Equity = Assets - Expenses
B) Equity = Assets - Liabilities
C) Equity = Income - Expenses
D) Equity = Assets - Liabilities - Expenses
Answer: B
Q2) An independent body established in 2006 to resolve disputes between ASIC and companies is:
A) APRA
B) FRP
C) FRC
D) ASX
Answer: B
Q3) Members of the IASB are appointed by:
A) the Monitoring Board.
B) the IFRS Advisory Council.
C) the IFRS Foundation Trustees.
D) the IFRS Interpretations Committee.
Answer: C
Page 3
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Chapter 2: Application of Accounting Theory
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Sample Questions
Q1) Normative theories:
A) prescribe what should be the case based on a specific objective.
B) are based on what is happening in the world.
C) explain why people behave in certain ways.
D) predicts unobserved phenomena.
Answer: A
Q2) An example of political costs is:
A) higher tax imposed on mining companies.
B) cost of implementing sound corporate governance arrangements.
C) having a debt covenant.
D) excessive consumption of perquisites.
Answer: A
Q3) Which of the following statements is correct?
A) Accounting is only concerned with recording transactions and does not involve human behaviours.
B) Positive theories provide recommendations about what should happen.
C) Inductive reasoning starts with objective setting.
D) The Conceptual Framework is developed through a deductive approach.
Answer: D
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Page 4
Chapter 3: Shareholders Equity: Share Capital and Reserves
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Sample Questions
Q1) AASB 101 requires that information in relation to dividends paid or declared during the year be disclosed in:
A) the Statement of Changes in Equity only;
B) the notes only;
C) either the Statement of Changes in Equity or the notes;
D) the Statement of Comprehensive Income.
Answer: C
Q2) In relation to share capital, AASB 101 does not require disclosure in the financial report of:
A) the number of shares on issue at the end of the year
B) the amount of any over or under subscription of new share issues during the year
C) restrictions on dividends payable to certain classes of shareholders
D) the total dollar value of share capital at the end of the year
Answer: B
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5
Chapter 4: Fair Value Measurement
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Sample Questions
Q1) Which of the following is an example of a liability where there is no corresponding asset?
A) a provision for decommissioning
B) a debenture issued by a listed company
C) a loan owing to a financial institution
D) a provision for warranties.
Q2) In measuring an equity instrument at fair value the objective is to estimate an exit price at measurement date from the perspective of:
A) the issuer of the equity instrument
B) the party to whom the instrument will be transferred
C) the party who intends to repurchase the instrument.
D) a market participant who holds the instrument as an asset.
Q3) At which date is fair value determined?
A) the measurement date
B) the settlement date
C) the transaction date
D) the exchange date
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Chapter 5: Revenue
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Q1) Which of the following events took place in December 2008?
A) The IASB issued an Exposure Draft proposing amendments to AASB 118.
B) The FASB formally adopted AASB 118.
C) The IASB and FASB jointly issued a Discussion Paper on revenue recognition.
D) The IASB issued an amended AASB 118.
Q2) Which of the following is NOT excluded from the scope of AASB 118 Revenue?
A) Accounting for share of joint venture revenue.
B) Subscriptions
C) Revenue arising from primary production activities
D) Revenue arising from oil and gas exploration
Q3) Which of the following items are defined in AASB 118?
A) Income
B) Revenue
C) Gains
D) All of the above
Q4) The two elements of performance referred to in the Conceptual Framework are:
A) assets and liabilities
B) revenue and expenses
C) liabilities and equity
D) expenses and income
Page 7
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Chapter 6: Provisions, Contingent Liabilities and Contingent Assets
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Q1) The following is statement made in AASB 137 Provisions, Contingent Liabilities and Contingent Assets:
'a contract in which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it'.
This statement provides a definition of:
A) an onerous contract;
B) a deferred liability;
C) a future operating loss;
D) a present obligation.
Q2) Entities are not required to disclose which of the following in relation to provisions?
A) carrying amounts of provisions at the beginning of the period
B) amounts used during the period
C) the effect of any change in the discount rate used
D) comparatives
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8
Chapter 7: Income Taxes
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Sample Questions
Q1) Malarky Limited accrued $30 000 for employees' long service leave in the year ended 30 June 2013. This item will not be tax deductible until it is paid in approximately 10 years' time. If the company tax rate is 30% Malarky Limited must record the following tax effect as a balance date adjustment:
A) debit Deferred tax asset $9000
B) debit Deferred tax liability $9000
C) credit Deferred tax asset $9000
D) credit Deferred tax liability $9000.
Q2) Under AASB 112 Incomes Taxes, deferred tax assets and liabilities are measured at the tax rates that:
A) applied at the beginning of the reporting period
B) at the end of the reporting period
C) at the rates that prevail at the reporting date
D) are expected to apply when the asset is realised or the liability is settled.
Q3) Deferred tax accounting adjustments are recorded at what point in time?
A) As each transaction arises or is incurred
B) As the cash flows from each transaction occur
C) At the end of each month
D) At balance date.
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Page 9
Chapter 8: Financial Instruments
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Q1) Which of the following categories of financial instruments is NOT subsequently measured at amortised cost?
A) Held-to-maturity investments
B) Loans and receivables
C) Other financial liabilities
D) Available-for-sale financial assets
Q2) The appropriate accounting treatment for incremental costs directly attributable to an equity transaction that would otherwise have been avoided is to:
A) deduct from equity, net of tax;
B) add to equity, net of tax;
C) expense in the period incurred;
D) defer as a contingent asset.
Q3) When first issued, AASB 139 was:
A) More rule-based than other AASB standards
B) Less rule-based than other AASB standards
C) Wider in scope that other AASB standards
D) Narrower in scope that other AASB standards
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10
Chapter 9: Share-Based Payments
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Sample Questions
Q1) What is the fair value of the cash alternative?
A) $240 000
B) $250 000
C) $288 000
D) $300 000
Q2) Which of the following is within the scope of AASB 2 Share-based Payment.
A) Transactions in which the entity receives or acquires goods or services as part of the net assets acquired in a business combination to which IFRS 3 Business Combinations applies.
B) Transaction in which the entity receives or acquired goods or services under a contract which is within the scope of AASB 139 Financial Instruments: Recognition & Measurement.
C) Transactions with employees in the employee's capacity as a holder of equity instruments of the entity.
D) Cancellation, replacement or modification of share-based payments arising because of a business combination or restructuring.
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11
Chapter 10: Translation of the Financial Statements of Foreign Entities
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Q1) Aussie Ltd has an investment in Yankee Inc. The shares in Yankee were acquired on 15 August 20X4. Yankee uses the revaluation model to account for land & buildings. A building which was acquired by Yankee on 1 April 20X2 was revalued on 15 March 20X9. The exchange rate used to translate the building into the presentation currency at 30 June 20X9 is the rate that applied on:
A) 1 April 20X2
B) 15 August 20X4
C) 15 March 20X9
D) 30 June 20X9
Q2) Monetary items are best described as:
A) plant and equipment;
B) units of currency held and assets and liabilities to be received or paid in fixed numbers of currency units;
C) all intangible items including goodwill;
D) all items that are contingent in nature.
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Chapter 11: Employee Benefits
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Sample Questions
Q1) The closing balance in the provision for annual leave account at 30 June 2014 is:
A) $18 712
B) $19 647
C) $23 086
D) $27 221
Q2) Which of the following do NOT fall within the definition of a termination benefit?
A) employee resignation
B) voluntary redundancy accepted by an employee
C) termination of employment before the normal retirement date due to company insolvency
D) termination of employment before the normal retirement date due to poor performance
Q3) Employee benefits can be allocated to assets:
A) only if it relates to the cost of an internally generated intangible
B) where the entity is certain the future economic benefits will flow to it
C) in accordance with the requirements of other accounting standards
D) where they meet the definition of an asset under the Conceptual Framework
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Chapter 12: Inventories
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Sample Questions
Q1) Where the net realisable value of inventory falls below cost, AASB 102 Inventories, requires that:
A) the inventory continue to be carried in the Statement of Financial Position at cost;
B) the inventory be written down to net realisable value;
C) no adjustment be made, but the difference between net realisable value and cost be disclosed in the notes to the financial statements;
D) the difference be added to the carrying amount of the inventory.
Q2) Under the periodic inventory approach the cost of goods sold during a period is determined as follows:
A) beginning inventory + net purchases - ending inventory;
B) beginning inventory - net purchases - ending inventory;
C) opening inventory + net purchases + closing inventory;
D) opening inventory - net purchases + closing inventory.
Q3) AASB 102 Inventories applies to the accounting for:
A) work in progress under construction contracts;
B) financial instruments;
C) biological assets;
D) materials consumed in the manufacture of knitting machines for sale.
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Chapter 13: Property, Plant and Equipment
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Sample Questions
Q1) For the purposes of recognising a non-current property, plant and equipment asset the acquisition date is determined as the date:
A) the contract to exchange assets is signed;
B) on which the offer to acquire the asset becomes unconditional
C) the consideration is paid;
D) on which the acquirer obtains control of the asset.
Q2) Subsequent to the initial recognition of an asset an entity has a choice on the measurement basis to be adopted. The choice is between:
A) cash and accrual;
B) cost and revaluation;
C) tax and accounting;
D) current and non-current.
Q3) Under AASB 116, the depreciation charge for a period reflects:
A) the fall in the fair value of the asset across the period;
B) a change in the re-sale value of the asset that has occurred over the period;
C) the consumption of economic benefits over the period;
D) a reduction in the estimated market value of the asset across the period.
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Chapter 14: Leases
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Sample Questions
Q1) Which of the following is NOT an example of a risk of ownership of an asset?
A) idle capacity
B) gains on the eventual sale of the asset
C) uninsured damage
D) technical obsolescence
Q2) In relation to finance leases, the following information must be disclosed separately in the financial statements of lessors:
I Unearned finance income.
II Contingent rents recognised as income in the period.
III The unguaranteed residual values accruing to the benefit of the lessee.
IV The accumulated allowance for uncollectible minimum lease payments receivable.
A) I, II and IV only
B) I, III and IV only
C) II, III and IV only
D) II and IV only.
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Chapter 15: Understanding Australian Accounting Standards
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Q1) Which of the following assets is regarded as meeting the identifiability criteria for recognition as an identifiable intangible asset that may be acquired in a business combination?
A) customer service capability
B) newspaper mastheads
C) favourable government relations
D) presence in geographic locations.
Q2) Items such as market knowledge, effective advertising programs, fundraising capabilities and trained staff are NOT regarded as assets because they:
A) are monetary items
B) cannot be measured
C) are not controlled by the entity
D) are too difficult to manage
Q3) Under the revaluation method of measuring an intangible, the asset is carried at fair value and subject to charges for:
A) amortisation and impairment
B) inflation in value
C) interest expense
D) increment in value
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Chapter 16: Impairment of Assets
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Q1) When an asset is measured using the revaluation model, any impairment loss is treated as:
A) a revaluation decrement
B) a revaluation increment
C) a set-off against depreciation expense
D) an addition to depreciation expense.
Q2) Hayfield Limited recognised an impairment loss of $200 against a cash-generating unit containing the following assets: Buildings $500; Roads $300; Equipment $600. The net carrying amount of the Roads after allocation of the impairment loss is:
A) $100
B) $235
C) $257.
D) $300
Q3) If an entity does not expect to recover the carrying amount of an asset, the entity has incurred:
A) an impairment loss
B) a depreciation expense
C) an amortisation cost
D) a loss on disposal
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Page 18
Chapter 17: Accounting for Mineral Resources
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Sample Questions
Q1) Which of the following methods is inconsistent with historical cost accounting?
A) the area of interest method
B) the successful efforts method
C) the appropriation method
D) the full cost method
Q2) Which of the following is NOT included as part of the initial cost of exploration and evaluation assets?
A) exploratory drilling
B) miming acquisition rights
C) trenching
D) pre-exploration survey fees
Q3) Which of the following methods best reflects the volatility inherent in E&E activities?
A) the area of interest method
B) the successful efforts method
C) the appropriation method
D) the full cost method
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19
Chapter 18: Agriculture
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Q1) Milko owns dairy cattle. The market value of the cattle is calculated by reference to the litres of milk able to be produced and the lactation rate of the cows. The cattle are regularly sold at auction. Costs incurred to transport the cattle to auction are $500 per truck. Each truck can transport approximately 100 cattle.
\(\begin{array}{ll}
\text { Number of mature cows held at } 30 \text { June } 2013 & 5000 \\
\text { Average liters of production per cow } & 6000 \text { liters } \\
\text { Lactation rate } & 50 \% \\
\text { Price per litre } & 40 \text { cents } \end{array}\)
The market value for each cow at 30 June 2013 is:
A) $1000
B) $1195
C) $1200
D) $1205
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Chapter 19: Financial Statement Presentation
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Q1) Under AASB 101 profit or loss attributable to non-controlling interests is prescribed for presentation in:
A) an equity statement
B) a statement of financial position
C) a statement of profit or loss and other comprehensive income
D) a statement of cash flows.
Q2) Which of the following is NOT an example of an adjusting event under AASB 110?
A) the settlement after reporting date but prior to the date that the financial statements are authorised for issue of a court case which had commenced prior to reporting date.
B) the sale of inventories after reporting date but prior to the date that the financial statements are authorised for issue for an amount below cost.
C) uninsured damage to a material item of machinery after reporting date but prior to the date that the financial statements are authorised for issue for an amount below cost.
D) receipt of advice after reporting date but prior to the date that the financial statements are authorised for issue that a material debtor has been placed in liquidation.
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Chapter 20: Statement of Cash Flows
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Q1) AASB 107 encourages, but does NOT require, the disclosure of:
I the amount of undrawn borrowing facilities that may be available for future operating activities and to settle capital commitments, indicating any restrictions on the use of these facilities
II the aggregate amount of cash flows that represent increases in operating capacity separately from those cash flows that are required to maintain operating capacity
III the amount of the cash flows arising from the operating, investing and financing activities of each reportable segment
IV the name(s) of the entity's bankers
A) I, II and IV
B) II, III and IV
C) I, III and IV
D) I, II and III.
Q2) The basis of measurement used in the Statement of Cash Flows is:
A) accrual
B) cash and cash equivalents
C) net present value
D) market value.
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22
Chapter 21: Earnings Per Share
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Q1) A company issues bonus shares for no consideration on 1 August 2014. For the reporting period ended 30 June 2015, the calculation of:
A) only basic earnings per share must be adjusted retrospectively for all periods that are presented in the financial statements
B) only the diluted earnings per share must be adjusted retrospectively for all periods that are presented in the financial statements
C) both basic earnings per share and diluted earnings per share must be adjusted retrospectively for all periods that are presented in the financial statements
D) both basic earnings per share and diluted earnings per share may be adjusted retrospectively at the option of the entity for all periods that are presented in the financial statements
Q2) EPS refers to:
A) equity per share
B) earnings per shareholder
C) earnings per share
D) earnings per subsidiary
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Chapter 22: Operating Segments
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Q1) CODM refers to:
A) Chief Of Divisional Management;
B) Chief Operating Decision Maker;
C) Company Operational Documentation Manual;
D) Company Official Director Meeting.
Q2) Bloomsville Ltd has a board of directors that consist of a Managing Director (MD) and non-executive directors. The MD has a regular monthly meeting with the Chief Operating Officer (COO) and the managers of Bloomsville's three business units. During the meeting, each manager would present an update of their unit's financial performance. The financial information is then reviewed by the MD and the COO to assess the performance of each business unit and to make decisions related to resource allocation. In this case, who is the CODM of Bloomsville?
A) The board of directors.
B) The MD and the COO.
C) The MD, the COO, and the three managers.
D) The MD only.
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Page 24
Chapter 23: Operating Segments
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Q1) Which of the followings are most likely to be considered as key management personnel of an entity?
\(\begin{array}{|l|l|l|l|}
\hline \text { I. } & \text { Chief Financial Officer } & \text { III. } & \text { Non-executive directors } \\
\hline \text { II. } & \text { Admin Officer } & \text { IV. } & \text { General manager } \\ \hline
\end{array}\)
A) I, II, and III;
B) II, III, and IV;
C) I, III, and IV;
D) I, II, III, and IV.
Q2) According to AASB 124, related party disclosures are required irrespective of whether there have been related party transactions when:
A) significant influence exists;
B) control exists;
C) economic dependence exists;
D) all of the above.
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Chapter 24: Business Combinations
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Q1) Goodwill is measured as the difference between the:
A) cost of the assets given up, and the cost of the net assets acquired
B) cost of the net assets acquired, and the net present value of the consideration given up
C) present value of the consideration transferred, and the present value of the net assets acquired
D) consideration transferred, and the fair value of the assets and liabilities acquired
Q2) Net employee benefit liabilities acquired in a business combination are measured by using the:
A) present value method
B) estimated total of future cash outflows, undiscounted
C) face value of the liabilities
D) cash method.
Q3) The consideration transferred in a business combination is measured as the fair value of the:
A) net assets acquired
B) costs directly attributable to the combination
C) consideration given only
D) consideration given plus directly attributable costs.
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Page 26
Chapter 25: Consolidation: Principles and Accounting Requirements
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Q1) Truong Limited acquired 60% of the shares of Quang Limited through the Australian Securities Exchange. The share acquisition cost Truong Limited $500 000. As a result of the share acquisition, Truong Limited gained control over Quang Limited. In its accounting records, Truong will recognise:
A) an investment at a cost of $500 000
B) an investment with a market value of $300 000
C) an increase in share capital of $500 000
D) an increase in share capital of $300 000.
Q2) In a business combination the revaluation of non-current assets in the records of the subsidiary means that the subsidiary has effectively adopted the:
A) parent-entity model of consolidation
B) proprietary model of accounting
C) cost model of accounting
D) revaluation model of accounting.
Q3) In a consolidated group of entities, control over the subsidiaries in the group:
A) may not be shared control
B) can be shared with other parties
C) can be less than 100% control
D) can be less than 50% control.
Page 27
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Chapter 26: Consolidation: Intragroup Transactions
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Q1) Andronico Limited provided an advance of $500 000 to its subsidiary Galactico Limited. On consolidation, the following adjustment is needed in relation to this intragroup advance:
A) no adjustment needed
B) \(\text { DR } \quad \text { Advances to subsidiaries } \quad \$ 500,000\)
\(\text { CR Advances from parent } \quad \$ 500,000\)
C) \(\text { DR } \quad \text { Advances from parent } \quad \$ 500,000\)
\(\text { CR } \quad \text { Advances to subsidiaries } \quad \$ 500,000\)
D)\(\begin{array} { l l l l }
\text { DR } & \text { Advances from parent } & \$ 500,000 & \\
\text { CR } & \text { Cash } & & \$ 500,000 \end{array}\)
Q2) A subsidiary sold inventory to its parent entity in Year 1 at a profit of $5000. At balance sheet date the parent had not sold the inventory. The company tax rate is 30%. The Year 1 consolidation worksheet will contain the following adjustment entry for inventory:
A) DR Inventory $5 000
B) DR Inventory $ 3 500
C) CR Inventory $5 000
D) CR Inventory $3 500
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Page 28
Chapter 27: Consolidation: Non Controlling Interest
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Q1) A Ltd holds a 60% interest in B Ltd. On 1 July 2014 B Ltd transferred a depreciable non-current asset to A Ltd at a profit of $5000. The remaining useful life of the asset at the date of transfer was 4 years and the tax rate is 30%. The impact of the above on the NCI share of profit for the year ended 30 June 2015 is:
A) an increase of $2625
B) a decrease of $2625
C) an increase of $1050
D) a decrease of $1050.
Q2) If a gain on bargain purchase arises on a business combination, the non-controlling interest:
A) is allocated 100% of the gain
B) has no involvement with the gain
C) is entitled to a proportionate share of the gain based on its level of share ownership
D) receives a proportionate share of the gain after adjustments for tax effects have been made.
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Chapter 29: Joint Arrangements
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Q1) A 50:50 joint operation was commenced between two participants. Participant One contributed cash of $50 000, and Participant Two contributed a Building with a fair value of $50 000 and a carrying amount of $40 000. Using the line-by-line method of accounting, Participant Two would record:
A) DR \(\quad\)Building in JO \(\quad\)\(\quad\)\(\$ 40,000\)
CR \(\quad\) Building \(\quad\)\(\$ 40,000\);
B) DR \( \quad \) Building in JO\(\quad\) \( \$ 50,000 \)
\( \mathrm{CR} \quad \) Building\(\quad\) \( \$ 40,000 \)
\( \mathrm{CR} \quad \)\(\text { Gain on sale of building }\)\(\quad\) \( \$10,000 \)
C) DR \(\quad\)Investment in joint operation \(\quad\)\( \$ 50000 \)
CR \(\quad\)Building\(\quad\) \( \quad \$ 40000 \);
\(\text { CR } \quad \text { Gain on sale of building } \quad \$ 10000 \text { : }\)
D) \(\begin{array} { r c c }
\text { DR } & { \text { Cash in JO } } & \$ 25,000 \\
\text { DR } & \text { Building in JO } & \$ 20,000 \\
\text { CR } & \text { Building } & \$ 40,000 \\
\text { CR } & \text { Gain on sale of building } & \$ 10,000 . \end{array}\)
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Chapter 30: Associates and Joint Ventures
Available Study Resources on Quizplus for this Chatper
26 Verified Questions
26 Flashcards
Source URL: https://quizplus.com/quiz/70198
Sample Questions
Q1) Where an investor sells inventory to an associate and the inventory is still on hand at the end of the year the investor's share of the associate's profits is:
A) not affected as unrealised profits are only considered to arise in a parent-subsidiary relationship;
B) not affected as the unrealised profit is in the books of the investor, not the associate; C) increased by the investor's share of the unrealised profit;
D) decreased by the investor's share of the unrealised profit.
Q2) Clovelly Ltd owns 25% of Bronte Ltd. Bronte's profit after tax for the year ended 30 June 20X5 is $30 000. The tax rate is 30%. On 1 July 20X3, Bronte Ltd sold an item of plant to Clovelly Ltd for $8000. The carrying amount of the asset on this date in Bronte Ltd's records was $3000. The plant had a remaining useful life of 5 years. Clovelly's share of Bronte's profit for the year ended 30 June 20X5 is:
A) $6800
B) $7325
C) $7675
D) $7750
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