International Accounting Exam Materials
Course Introduction
International Accounting explores the principles, standards, and practices governing financial reporting and analysis in a global context. The course examines the influence of diverse economic, cultural, legal, and political environments on accounting systems and regulatory frameworks across countries. Key topics include International Financial Reporting Standards (IFRS), comparison of international accounting practices, the process of financial statement translation and consolidation for multinational corporations, and the impact of international taxation and transfer pricing. Students also gain insights into the challenges and opportunities of harmonizing accounting standards, as well as the ethical considerations and professional responsibilities faced by international accountants.
Recommended Textbook
Australian Financial Accounting 7th Edition by Craig Deegan
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Page 2
Chapter 1: An Overview of the Australian External Reporting Environment
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Q1) Corporate governance is the framework of rules,relationships,systems and processes within and by which authority is exercised and controlled in corporations.
A)True
B)False
Answer: True
Q2) Pursuant to sections 298-300A of the Corporations Act,the Directors' Report must include:
A) details of directors' emoluments.
B) details of all related-party transactions.
C) a copy of the independent audit report.
D) details of compliance with the ASX Principles of Good Corporate Governance.
Answer: A
Q3) The publication of a standard,exposure draft or final SIC interpretation requires approval by:
A) the chairman of the IASB
B) a simple majority of the IASB's 14 members
C) nine of the IASB's 14 members
D) 12 of the IASB's 14 members
Answer: C
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Chapter 2: The Conceptual Framework of Accounting and Its Relevance
to Financial Reporting
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Q1) Prudence is exercised in the preparation and presentation of financial statements when asset values are never shown in excess of their realisable values but could be understated,and liabilities are never to be understated.
A)True
B)False
Answer: False
Q2) When an AASB standard conflicts with the Framework,the former prevails.
A)True
B)False
Answer: True
Q3) The IASB Conceptual Framework adopts which approach to determining profits?
A) revenue/expense approach
B) matching principle approach
C) asset/liability approach
D) cash basis approach
Answer: C
Q4) The recognition criteria for liabilities are consistent with those for assets.
A)True
B)False
Answer: True
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Chapter 3: Theories of Accounting
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Q1) An empirically based theory could be described as being:
A) developed and supported on the basis of observations.
B) based on a set of accepted scales and measures.
C) based on a political approach developed in the early nation states.
D) related to a specific time period and not able to be generalised.
Answer: A
Q2) Corporate social responsibility reporting is consistent with stakeholder theory.
A)True
B)False
Answer: True
Q3) An asset that has a deprival value of zero is likely to be: A) goodwill.
B) intangible assets.
C) land.
D) goodwill and intangible assets.
Answer: D
Q4) PAT outlines the best (or most positive)way of preparing accounting reports.
A)True
B)False
Answer: False
Page 5
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Chapter 4: An Overview of Accounting for Assets
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Q1) How should borrowing costs relating to an asset being constructed over a substantial period of time be treated in the accounts?
A) expensed as incurred
B) capitalised and amortised over the period of the construction of the asset
C) accrued and amortised over the period of the loan
D) capitalised as part of the cost of the asset
Q2) If an impairment loss recognised in prior periods for a revalued asset no longer exists,AASB 136 Impairment of Assets requires a reporting entity to:
A) reverse the impairment loss to increase the asset to its recoverable amount.
B) reverse the impairment loss in profit and loss, only if the asset adopts the revaluation model.
C) treat this as a prior period adjustment and recognise the reversal as a gain.
D) ignore this information as previously written off assets are precluded from being reinstated.
Q3) Previously written-off assets are allowed to be reinstated under AASB 136 Impairment of Assets.
A)True
B)False
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Chapter 5: Depreciation of Property, plant and Equipment
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Q1) A non-current asset that is subjected to depreciation is no longer subjected to impairment testing.
A)True
B)False
Q2) Which of the following statements is applicable to the declining-balance method of depreciation?
A) The expense is constant for the useful life of the asset.
B) The process is complex because you need to know the carrying amount, residual value and estimated useful life of the asset.
C) A company subject to political costs is more likely to select this depreciation method.
D) Assumes that the consumption of the asset is a function of time.
Q3) When sale proceeds are deferred the discount rate to be used is the rate at which the vendor could invest the amount under similar circumstances and conditions.
A)True
B)False
Q4) In accordance with AASB 116,how should a company treat additions,major repairs and improvements and replacements?
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Chapter 6: Revaluations and Impairment Testing of
Non-Current Assets
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Q1) An entity that elects the revaluation model to measure a class of asset is permitted to revert back to the cost model provided that this will provide more relevant and reliable information.
A)True
B)False
Q2) Explain the process that an entity must undertake when converting from the cost model to the valuation model basis of accounting for its non-current assets.
Q3) The fair value of a non-current asset is defined in AASB 116 as the gross amount for which the asset can be sold when the entity is preparing to liquidate.
A)True
B)False
Q4) Recoverable amount is the amount expected to be recovered through the ongoing use and subsequent disposal of an asset.
A)True
B)False
Q5) Discuss the potential usefulness of the gross method in revaluation of non-current assets.
Page 8
Q6) Differentiate depreciation expense from impairment loss.
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Chapter 7: Inventory
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Q1) Which of the following statements is correct with respect to positive accounting theory?
A) Managers of firms with bonus-based contracts prefer LIFO method of valuation basis, if permitted.
B) Managers of firms with bonus-based contracts prefer FIFO method of valuation basis.
C) Managers prefer the FIFO method of valuation basis.
D) Managers with debt covenants prefer LIFO method, if permitted.
Q2) The cost of sub-contracted work is not included in costs of conversion for the purposes of calculating the cost of inventory.
A)True
B)False
Q3) Under the perpetual system,a difference with the stocktake records might indicate:
A) damaged stock.
B) theft of stock.
C) obsolete stock.
D) all of the given answers.
Q4) Identify and discuss the items included as inventory cost.
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Chapter 8: Accounting for Intangibles
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Q1) An intangible asset with a finite useful life can be amortised when:
A) the asset has been purchased.
B) the asset is available for use.
C) the asset is derecognised.
D) None of the given answers are correct.
Q2) The cost of a separately acquired intangible asset includes its purchase price and directly attributable cost for preparing the asset for its intended use.
A)True
B)False
Q3) Which of the following statements in regard to goodwill is/are correct in accordance with AASB 136 Impairment of Assets?
A) Goodwill may be amortised when it has a finite life.
B) Goodwill is subjected to impairment testing every three years.
C) Upward revaluation of goodwill is permitted as long as it is a reversal of prior years' impairment losses.
D) None of the given statements are correct.
Q4) Discuss the concerns held by Australia corporate executives on the amortisation of intangibles prior to Australia's 2005 adoption of IFRS.
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Page 10
Chapter 9: Accounting for Heritage Assets and Biological Assets
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Q1) Discuss the controversy in the recognition of heritage assets in the statement of financial position.
Q2) Biological assets are defined in AASB 141 as a 'living animal or plant'.
A)True
B)False
Q3) Biological assets may be difficult to classify as current or non-current because:
A) The asset may unexpectedly become ill or die.
B) The value of the asset may change depending on management's intention.
C) The operating cycle of the entity may be unknown.
D) The same physical assets may have either a shorter or longer life span depending on management intention.
Q4) Outline the different ways an entity engaged in agricultural activity could recognise revenue.
Q5) Biological assets have a natural capacity to grow and/or procreate that directly affects the value of the asset.
A)True
B)False
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Chapter 10: An Overview of Accounting for Liabilities
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Q1) Under AASB 101 something may be classified as a current liability even when it is not expected to be settled for a period in excess of 12 months.
A)True
B)False
Q2) The market will only pay a premium for debentures if the par value of those debentures is lower than the market interest rate.
A)True
B)False
Q3) Adopting the effective-interest method means that the balance of the debenture liability represents:
A) the par value of the debenture.
B) the present value of the liability throughout the debenture term.
C) the adjustment to the debenture par value.
D) the borrowing cost.
Q4) Explain,in the context of Positive Accounting Theory,the implications of making professional judgments in respect to recognising and measuring liabilities.
Q5) Explain in what situations,and why,some provisions should be measured at present values.
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Chapter 11: Accounting for Leases
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Q1) Lease incentives are:
A) not covered by AASB 117 and therefore may lead to divergent practices.
B) revenues for the lessees and may be recorded in the initial period of the lease contract.
C) designed to entice lessees to enter into non-cancellable operating leases.
D) not covered by AASB 117 and therefore may lead to divergent practices and designed to entice lessees to enter into non-cancellable operating leases.
Q2) The discount rate to be used in calculating the present value of the minimum lease payments is the interest rate implicit to the lease,or if this is not practicable to do so,the lessor's incremental borrowing rate.
A)True
B)False
Q3) A leased asset under a finance lease should be amortised over the asset's expected useful life if there is a bargain purchase option in the lease agreement. A)True
B)False
Q4) Describe how a lessee would account for the depreciation (amortisation)of a leased asset.
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Page 13
Chapter 12: Accounting for Employee Benefits
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Q1) In Australia,employee entitlements are protected in the case of company insolvency because:
A) Employees are given first priority for payment after the taxation department and the company administrators.
B) Employees are given some preferential access to payment, but after secured creditors.
C) ASIC monitors companies' annual reports to ensure that their assets are greater than the total secured debt and employee entitlements.
D) Employees are encouraged to withdraw their labour in the case of a company beginning to fail in order to minimise their loss of employee entitlements.
Q2) Defined benefit plans are fairly simplistic and AASB 119 devotes only a small section to them.
A)True B)False
Q3) Explain why recording a surplus of the fair value of a defined benefit superannuation plan's assets over the present value of the accrued benefits,as an asset in the books of the employee may not be consistent with the AASB Framework.
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Page 14
Chapter 13: Share Capital and Reserves
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Q1) Explain the options available for a company when an investor fails to pay the amounts due on subsequent calls.
Q2) Which of the following share issue costs does not qualify as a deduction from share capital?
A) advertising of share issue
B) costs of prospectus issue
C) administration overheads
D) audit expenses associated with the issue of a prospectus
Q3) Discuss,with examples,how the recognition criteria for assets and liabilities provide the criteria for the recognition of equity.
Q4) A forfeited shares account is:
A) a revenue account.
B) an expense account.
C) a liability account.
D) an asset account.
Q5) Preference shares may be classified as a liability,an equity item,or have features of both.Explain with examples,how to determine such a classification.
Q6) Explain the differences between a rights issue and share options.
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Chapter 14: Accounting for Financial Instruments
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Q1) Explain the reason for the rise in the development and use of financial instruments in recent years.Describe some of the key accounting issues regulators have had to face in light of this increased use and development.
Q2) AASB 139 stipulates how financial instruments are to be recognised and measured.Specifically these instruments could be:
A) recorded at their fair value with any changes included in the period's profit or loss unless the instrument was acquired as a hedge.
B) recorded at fair value with any changes recorded directly to equity and only transferred to profit when the asset is derecognised.
C) measured and amortised at cost using the effective interest method.
D) all of the given answers.
Q3) Distinguish futures contracts entered for hedge purposes from futures contracts entered for speculative purposes.
Q4) Which of the following financial instruments can underlie an option contract?
A) interest bearing instruments
B) financial assets
C) shares in other entities
D) all of the given answers
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Page 16
Chapter 15: Revenue Recognition Issues
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Q1) IASB and FASB initiated a joint project to clarify the principle for recognising revenue and develop a common revenue standard for IFRS and US GAAP so as to:
A) remove inconsistencies and weaknesses in existing revenue requirements.
B) provide a more robust framework for addressing revenue issues.
C) simplify the preparation of financial statements.
D) All of the given answers are correct.
Q2) Discuss the different conditions detailed in IASB (2011)that must be satisfied before the percentage-of-completion method can be used.
Q3) Under the AASB (IASB)Conceptual Framework an increase in economic benefits in the form of the reduction of a liability that is not a contribution by equity participants and results in an increase in equity during the reporting period,is income.
A)True
B)False
Q4) Describe the output and input measures of performance that an entity is required to use when measuring the progress to date on a construction contract.
Q5) Explain the accounting treatment when a third party supplies the awards under a customer loyalty programme.
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Chapter 16: The Statement of Comprehensive Income and Statement of Changes in Equity
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Q1) Different measurement models affect the determination of income and expenses.The different measurement models include:
A) historical cost, fair value, present value.
B) historical cost, direct costs, indirect costs.
C) current cost, historical cost, overhead cost.
D) market value, opportunity cost, historical cost.
Q2) 'Profit is a measure of financial performance'.How might it be deficient as a measure of an entity's overall performance?
What is typically excluded from newspaper reports discussing an entity's performance?
Q3) All adjustments to equity other than those related to transactions with owners in their capacity as owners are disclosed in the statement of comprehensive income (AASB 101).
A)True
B)False
Q4) What is a prior period error?
How has the treatment of prior period errors changed from the former AASB 1018 to the current AASB 108?
What is the major implication of this change?
Page 18
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Chapter 17: Accounting for Share-Based Payments
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Q1) On 1 July 2012 Lancaster Ltd grants 100 share options to each of its 50 employees conditional upon the employee working for the entity for the next 3 years.The entity estimates the fair value of each share option at $13.Based on probability estimates,25 employees are expected to leave the entity before the options vest.In accordance with AASB 2,how much remuneration expense related to the share option issue should Lancaster Ltd recognise for the year ended 30 June 2013?
A) zero
B) $10 833
C) $32 500
D) $65 000
Q2) On 1 July 2012 Chester Ltd granted an executive director a choice between receiving a cash payment equivalent to 5000 shares or receiving 6000 shares.The grant is conditional upon the director being under the employ of the entity for 3 years.What is the accounting treatment for this share-based payment arrangement that is consistent with AASB 2?
A) similar treatment with cash-settled transactions
B) similar treatment with equity-settled transactions
C) similar to a compound financial instrument
D) recognise salaries benefit expense at vesting date
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Page 19
Chapter 18: Accounting for Income Taxes
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Q1) Temporary differences:
A) arise due to differences between income tax legislation and accounting rules, in a particular period, and are reversed in subsequent periods.
B) can be both deductible temporary differences or taxable temporary differences.
C) must be considered, and accounted for, by the creation of deferred tax asset and liabilities for all statement of financial position items (e.g. including asset revaluations), rather than just statement of comprehensive income items, which is a major change created by the new standard.
D) arise due to changes in the income tax rate.
Q2) When considering the recognition of assets and liabilities for tax purposes,reference is made to the:
A) depreciation rate
B) carrying amount
C) tax base
D) historical cost
Q3) Discuss the assumptions made when recognising a deferred tax asset or a deferred tax liability.
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Chapter 19: The Statement of Cash Flows
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Q1) Lions Ltd engaged in the following activities for the year ended 30 June 2014: Sold shares in Kangaroo Ltd for $70 000.The investment had a carrying amount of $66 000.
Purchased shares in Cats Ltd for $52 000
Purchased government bonds for $100 000
Issued Lions Ltd shares for $100 000
What is the net cash flow used in investing activities?
A) $18 000
B) ($18 000)
C) ($148 000)
D) ($82 000)
Q2) Which of the following would not be an operating activity cash outflow?
A) taxes paid
B) acquisition of goods and services
C) acquisition of intangible assets
D) employee benefits paid
Q3) AASB 107 requires ledger accounts to be reconstructed in order to calculate cash flows from operating activities.
A)True
B)False
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Chapter 20: Accounting for the Extractive Industries
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Q1) The successful-effort method of accounting for pre-production costs does not:
A) permit the carrying forward of any exploration and evaluation costs.
B) match the total costs of exploration and evaluation against the revenue arising from the few successful projects.
C) prohibit the creation of reserves to smooth income by delaying the recognition of expenses and matching them against unrelated revenues.
D) involve the immediate write-off of any exploration and evaluation costs.
Q2) Discuss the financial reporting issues associated with minerals,oil and gas reserves and resources that have been identified for consideration by the International Accounting Standards Board.
Q3) The costs incurred in the development and construction phases require more judgment in determining whether or not they constitute an asset for the entity than other stages in the operation.
A)True
B)False
Q4) Discuss the disclosure requirements of AASB 6 for entities engaged in exploration for and evaluation of mineral resources.
Q5) Discuss how an entity accounts for restoration costs and the measurement used.
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Chapter 21: Accounting for General Insurance Contracts
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Q1) The financial statements shall disclose in relation to the outstanding claims liability the component related to the risk margin.
A)True
B)False
Q2) In undertaking a liquidity adequacy test,if the present value of future claims exceeds the unearned premium liability:
A) The difference must be recorded as an asset under AASB 1023.
B) A further liability should be recorded to 'make up' the deficiency.
C) An expense should be recorded by initially writing down any related intangible assets.
D) A further liability should be recorded to 'make up' the deficiency and an expense should be recorded by initially writing down any related intangible assets and related deferred acquisition costs.
Q3) Unclosed business is defined as business written close to the reporting date for which the date of attachment of the risk is before the end of the reporting date.
A)True
B)False
Q4) Discuss the disclosure requirements for the statement of comprehensive income.
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Chapter 22: Accounting for Superannuation Plans
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Q1) A defined benefit plan is also known as an accumulation fund.
A)True
B)False
Q2) Contrast the measurement of assets as required in AAS 25 for superannuation funds with that required in AASB 1023 for general insurers.
Q3) The assets of a superannuation fund include:
A) contributions receivable from employer and employees.
B) cash and other monetary assets.
C) investments of the plan.
D) all of the given answers.
Q4) AAS 25 requires that all the assets of superannuation plans be measured at:
A) historical cost, depreciated where appropriate.
B) replacement cost net of accumulated depreciation where appropriate.
C) net market value.
D) net realisable value if they are investments. Operating assets are to be valued at historical cost and depreciated where appropriate.
Q5) Discuss the options available for defined benefit superannuation plans.
Q6) What are the implications of not having the force of law in adopting the requirements of AAS 25 on financial reports?
Page 24
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Chapter 23: Events Occurring After the End of the Reporting Period
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Q1) If new events or conditions indicate that the entity will not be able to continue as a going concern,the entity must:
A) treat this as an adjusting event and adjust the affected accounts in the financial report.
B) treat this as a non-adjusting event and discloses the reason for the breach of the going concern assumption.
C) prepare its financial report on a going concern basis and ask the auditor to indicate in the opinion the breach of the going concern basis.
D) disclose the assets and liabilities in the statement of financial position on a liquidation basis.
Q2) Which of the following material after-reporting-date events is not considered a non-adjusting event?
A) a major acquisition of capital assets after the reporting date
B) destruction of inventory by vandals after the reporting date
C) changes in tax rates or tax laws enacted or announced after the reporting date
D) destruction of inventory on consignment by vandals before the reporting date
Q3) Discuss the two types of events after the reporting period.
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Page 25
Chapter 24: Segment Reporting
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Q1) Segment expenses do not include:
A) joint venturer's expenses relating to the operation of joint venture operations.
B) losses on sales of investments or extinguishment of debt unless the segment's operations are primarily financial in nature.
C) income tax expense.
D) losses on sales of investments or extinguishment of debt unless the segment's operations are primarily financial in nature and before income tax expense.
Q2) Discuss the advantages and disadvantages to the users and preparers of financial reports of disclosing segment data.
Q3) AASB 8 is more:
A) rules based.
B) cost based.
C) principles based.
D) profit based.
Q4) Discuss the issues involved in allowing management to determine the basis of measurement for operating segments.
Q5) Discuss the reasons for the release of IFRS 8.
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Page 26
Chapter 25: Related Party Disclosures
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Q1) The annual remuneration report of the entity is to be put to a non-binding vote of the shareholders.
A)True
B)False
Q2) Reasons for the requirement to disclose related-party transactions include:
A) the risk that the performance and position of the reporting entity will be negatively affected by the transactions.
B) key stakeholders of the entity include related parties who should be kept informed of their transactions.
C) they may be used to minimise total taxation payable by a group of related entities.
D) the risk that the performance and position of the reporting entity will be negatively affected by the transactions and related-party transactions may be used to minimise total taxation payable by a group of related entities.
Q3) Related parties are not considered to be interdependent.
A)True
B)False
Q4) Discuss the objective of AASB 124 Related Party Disclosures.
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Chapter 26: Earnings Per Share
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Q1) In calculating earnings per share,as per AASB 133 Earnings per Share options issued by the entity are assumed exercised at the beginning of the period or,if later,the date of issue of the option.
A)True
B)False
Q2) Why is the EPS number that important in financial reporting that there is one accounting standard devoted to this calculation process?
Q3) For the purpose of calculating dilutive earnings per share,options on issue are:
A) assumed exercised and converted at the beginning of the period or the date of issue, whichever is latest.
B) assumed dilutive only when it results in an issue of ordinary shares for less than the average market price during the period.
C) assumed dilutive only when it results to an issue of ordinary shares for less than the end-of-period market price.
D) treated similar to a bonus issue.
Q4) To maximise the dilution of basic earnings per share,discuss the requirements of AASB 133 Earnings per Share in determining whether potential ordinary shares are dilutive or antidilutive.
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Page 28
Chapter 27: Accounting for Group Structures
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Q1) A consolidated entity is defined as:
A) the company and its subsidiaries at the end of the financial year. Subsidiaries are companies and trusts as defined in terms of the Corporations Act.
B) a combined entity constituted by a parent entity and its controlled entities.
C) a trust or partnership registered as a management investment scheme and all the entities it controls at the end of the financial year.
D) the parent company, non-controlling interests and subsidiaries owned by that parent company as at the end of the financial year.
Q2) 'Control' over a subsidiary,once determined as being in existence,can only be lost with a change in the level of ownership.
A)True
B)False
Q3) Control is defined in AASB 10 as the 'capacity to manage the policies of another entity'.
A)True
B)False
Q4) What are the three key elements of the definition of control?
Enumerate several factors that may provide an indication of control.
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Chapter 28: Further Consolidation Issues I: Accounting for
Intragroup Transactions
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Q1) The treatment of dividends,paid by a subsidiary,that are identified as paid out of pre-acquisition profits in the period they are paid is to:
A) Capitalise the dividend in the books of the parent entity as a further investment in the subsidiary. This amount will be eliminated on consolidation.
B) Record dividend revenue and the receipt of cash in the books of the parent entity and then test the subsidiary for impairment.
C) Record a return of the investment in the subsidiary by decreasing the investment in the subsidiary in the books of the parent entity. The amount of the investment will be eliminated on consolidation.
D) Record a decrease in pre-acquisition reserves or retained profits in the books of the subsidiary so that on consolidation the elimination entry will automatically eliminate the effect of the dividend.
Q2) The level of equity ownership is not a factor in deciding what proportion of a transaction between entities in a group should be eliminated.
A)True
B)False
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Chapter 29: Further Consolidation Issues II: Accounting for
Non-Controlling Interests
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Q1) One of the steps in preparing consolidated financial statements is working out the amounts to be attributed to non-controlling interests to determine the amount to be eliminated in the consolidation process.
A)True
B)False
Q2) Under the proprietary concept of consolidation,non-controlling interests are shown as a liability.
A)True
B)False
Q3) Describe the three steps involved in preparing consolidated financial statements.
Q4) Discuss the three elements considered when calculating non-controlling interests.
Q5) There is no adjustment for things such as management fees when determining non-controlling interest,because:
A) They are not a material item.
B) They do not involve non-controlling interest.
C) They are considered to be realised.
D) They relate only to the parent entity.
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Chapter 30: Further Consolidation Issues IV: Accounting for
Changes in the Degree of Ownership of a Subsidiary
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Q1) Discuss what happens when a parent loses control over a subsidiary
Q2) Spock Ltd acquired a 10 per cent holding in Kirk Ltd on 1 July 2017 for $350 000 cash,being the fair value of consideration transferred. On 30 June 2018,Spock Ltd acquired a further 75 per cent of the contributed capital of Kirk Ltd for $3 300 000,which represents the fair value of consideration transferred.After the latest acquisition,Spock Ltd gained control of Kirk Ltd.The fair value of the net assets acquired and the liabilities assumed of Kirk Ltd at the acquisition date of 30 June 2018 was $3 500 000 and all assets were recorded at far value in the financial statements of Kirk Ltd.
Goodwill is also attributed to the non-controlling interest.
Based on the above information,which of the following accounting treatments is not in accordance with AASB 10?
A) Goodwill on acquisition of Kirk Ltd to be eliminated on consolidation is $765 000.
B) Gain on acquisition of additional investment in Kirk Ltd to be recognised in 2018 is $90 000.
C) Non-controlling interest in Kirk Ltd on 30 June 2018 is $660 000.
D) None of the given choices are in accordance with AASB 10.
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Chapter 31: Accounting for Equity Investments,including
Investments in Associates and Joint Arrangements
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Q1) Explain how an investor may lose significant influence without a change in ownership levels.How should one account for such loss of significant influence?
Q2) If a joint venture is deemed to be a reporting entity according to terms contained in the AASB Conceptual Framework,then general purpose financial reports that comply with the relevant accounting standards may need to be prepared.
A)True
B)False
Q3) Investments are commonly classified into equity investments,cash investments,property investments and bonds.
A)True
B)False
Q4) Where a joint venturer prepares consolidated financial statements then the equity method will be used in the consolidated financial statements.
A)True
B)False
Q5) Discuss the accounting treatment for a joint operation as prescribed in AASB 11 Joint Arrangements.
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Chapter 32: Accounting for Foreign Currency Transactions
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Q1) Issues in relation to foreign currency arise when a reporting entity based in Australia has transactions with an overseas entity and the transaction is denominated in Australian currency.
A)True
B)False
Q2) Exchange gains or losses on a qualifying asset that arise before it ceases to be a qualifying asset are to be deferred and amortised over the life of the asset according to AASB 123.
A)True
B)False
Q3) The spot rate is defined in AASB 121 as:
A) the rate at which the currency to be exchanged is currently selling against a bundle of currencies of major trading partners.
B) the exchange rate for immediate delivery of currencies to be exchanged.
C) one identified exchange rate for the relevant currencies from the period on or around the date of the transaction.
D) the current exchange rate as implied by forward-exchange contracts in place at the time of the transaction.
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Chapter 33: Translating the Financial Statements of Foreign Operations
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Q1) The primary economic environment in which an entity operates is normally the one in which it primarily generates and expends cash.
A)True
B)False
Q2) AASB 121 specifies that post-acquisition movements in equity other than retained profits or accumulated losses are translated at:
A) the spot rate.
B) the forward rate.
C) the market rate.
D) none of the given answers.
Q3) When a parent entity has an overseas subsidiary the first task before consolidation is to:
A) translate the financial statements from the functional currency to the presentation currency.
B) translate the financial statements from the presentation currency to the functional currency.
C) determine the functional currency of the overseas subsidiary.
D) determine the functional currency of the parent entity.
Q4) Distinguish monetary items from non-monetary items.Provide two examples of each.
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Chapter 34: Accounting for Corporate Social Responsibility
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Q1) Triple-bottom-line reporting has been defined as providing information about:
A) the financial, economic and environmental performance and position of an entity.
B) the profitability, sustainability and human relations performance of an entity.
C) the social value, economic impact and community support provided by an entity.
D) the economic, environmental and social performance of an entity.
Q2) There is significant diversity in the approaches adopted to disclose social and environmental information.Examples of broad approaches adopted include:
A) eco-balance approach.
B) target-based reporting.
C) zero-based reporting.
D) eco-balance approach and target-based reporting.
Q3) A specific Australian requirement for companies to provide environmental information in their annual reports is available in AASB 137 Provisions,Contingent Liabilities and Contingent Assets.
A)True
B)False
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