ACC 401 Week 8 Quiz - Strayer
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Quiz 7 Chapter 11 and 12
Chapter 11
International Financial Reporting Standards
Multiple Choice—Conceptual
1. The goals of the International Accounting Standards Committee include all of the following except
a. To improve international accounting.
b. To formulate a single set of auditing standards to be applied in all countries.
c. To promote global acceptance of its standards.
d. To harmonize accounting practices between countries.
a. To improve international accounting.
b. To formulate a single set of auditing standards to be applied in all countries.
c. To promote global acceptance of its standards.
d. To harmonize accounting practices between countries.
2. Which of the following is true about the FASB after the mandatory adoption of IFRS by US companies?
a. The FASB will serve in an advisory capacity to the IASB.
b. The FASB will remain the designated standard-setter for US companies, but incorporate IFRS into US GAAP.
c. The role of the FASB post-IFRS adoption has not been determined.
d. The FASB will cease to exist.
a. The FASB will serve in an advisory capacity to the IASB.
b. The FASB will remain the designated standard-setter for US companies, but incorporate IFRS into US GAAP.
c. The role of the FASB post-IFRS adoption has not been determined.
d. The FASB will cease to exist.
3. Milestones in the transition plan for mandatory adoption of IFRS by US companies include all of the following except:
a. Improvements in accounting standards.
b. Limited early adoption of IFRS in an effort to enhance comparability for US investors
c. Mandatory use of IFRS by US entities.
d. All of the above are milestones in the transition plan for mandatory adoption of IFRS by US companies.
a. Improvements in accounting standards.
b. Limited early adoption of IFRS in an effort to enhance comparability for US investors
c. Mandatory use of IFRS by US entities.
d. All of the above are milestones in the transition plan for mandatory adoption of IFRS by US companies.
4. The roles of the IASC Foundation include
a. establishing global standards for financial reporting.
b. coordinating the filing requirements of stock exchange regulatory agencies.
c. financing IASB operations.
d. all of the above are roles of the IASC Foundation.
a. establishing global standards for financial reporting.
b. coordinating the filing requirements of stock exchange regulatory agencies.
c. financing IASB operations.
d. all of the above are roles of the IASC Foundation.
5. Which of the following statements is true regarding the IASC?
a. The IASC is a public-sector, not-for-profit organization.
b. The IASC is accountable to an international securities regulator.
c. The IASC is a stand-alone, private-sector organization.
d. The IASC funds the operations of the IASB through filing fees paid to national securities regulators.
a. The IASC is a public-sector, not-for-profit organization.
b. The IASC is accountable to an international securities regulator.
c. The IASC is a stand-alone, private-sector organization.
d. The IASC funds the operations of the IASB through filing fees paid to national securities regulators.
6. . Concerns of the SEC with regard to the mandatory adoption of IFRS by US entities include all of the following except:
a. the extent to which the standard-setting process addresses emerging issues in a timely manner.
b. the security and stability of IASC funding.
c. the enhancement of IASB independence through a system of voluntary contributions from firms in the accounting profession.
d. the degree to which due process is integrated into the standard-setting process .
a. the extent to which the standard-setting process addresses emerging issues in a timely manner.
b. the security and stability of IASC funding.
c. the enhancement of IASB independence through a system of voluntary contributions from firms in the accounting profession.
d. the degree to which due process is integrated into the standard-setting process .
7. . Under the staged transition to mandatory adoption of IFRS being considered by the SEC,
a. large, accelerated filers would begin IFRS filings for fiscal years beginning on or after December 31, 2011.
b. non-accelerated filers would begin IFRS filings for fiscal years beginning on or after December 31, 2015.
c. large non-accelerated filers would have until fiscal years beginning on or after December 15, 2017 to adopt IFRS.
d. smaller reporting companies would begin IFRS filings for fiscal years beginning on or after December 15, 2016.
.
8. In order to complete its first IFRS filing, including three years of audited financial statements, according to the staged transition to mandatory adoption of IFRS considered by the SEC, a large accelerated filer would need to adopt IFRS beginning in fiscal year
a. 2011.
b. 2012.
c. 2013.
d. 2014.
a. large, accelerated filers would begin IFRS filings for fiscal years beginning on or after December 31, 2011.
b. non-accelerated filers would begin IFRS filings for fiscal years beginning on or after December 31, 2015.
c. large non-accelerated filers would have until fiscal years beginning on or after December 15, 2017 to adopt IFRS.
d. smaller reporting companies would begin IFRS filings for fiscal years beginning on or after December 15, 2016.
.
8. In order to complete its first IFRS filing, including three years of audited financial statements, according to the staged transition to mandatory adoption of IFRS considered by the SEC, a large accelerated filer would need to adopt IFRS beginning in fiscal year
a. 2011.
b. 2012.
c. 2013.
d. 2014.
9. Benefits of the FASB Accounting Standards Codification (ASC) include all of the following except
a. increases the independence of the FASB.
b. aids in the convergence of US GAAP with IFRS.
c. reduces time and effort required to research accounting issues.
d. clearly distinguishes between authoritative and non-authoritative guidance.
a. increases the independence of the FASB.
b. aids in the convergence of US GAAP with IFRS.
c. reduces time and effort required to research accounting issues.
d. clearly distinguishes between authoritative and non-authoritative guidance.
10. SFAS No.162, the Accounting Standards Codification, is directed to
a. auditors.
b. Boards of Directors.
c. securities regulators.
d. entities.
a. auditors.
b. Boards of Directors.
c. securities regulators.
d. entities.
11. IFRS and US GAAP differ with regard to financial statement presentation in all of the following except
a. IFRS generally requires that assets be listed in order of increasing liquidity while US GAAP requires that assets be listed in order of decreasing liquidity.
b. US GAAP requires expenses to be listed by function while IFRS requires expenses to be listed by nature.
c. IFRS prohibits extraordinary items which are allowed by US GAAP.
d. IFRS requires two years of comparative income statements while under US GAAP, three years of income statements are required.
a. IFRS generally requires that assets be listed in order of increasing liquidity while US GAAP requires that assets be listed in order of decreasing liquidity.
b. US GAAP requires expenses to be listed by function while IFRS requires expenses to be listed by nature.
c. IFRS prohibits extraordinary items which are allowed by US GAAP.
d. IFRS requires two years of comparative income statements while under US GAAP, three years of income statements are required.
12. The major difference between IFRS and US GAAP in accounting for inventories is that
a. US GAAP prohibits the use of specific identification.
b. IFRS requires the use of the LIFO cost flow assumption.
c. US GAAP prohibits the use of the LIFO cost flow assumption
d. US GAAP allows the use of the LIFO cost flow assumption.
a. US GAAP prohibits the use of specific identification.
b. IFRS requires the use of the LIFO cost flow assumption.
c. US GAAP prohibits the use of the LIFO cost flow assumption
d. US GAAP allows the use of the LIFO cost flow assumption.
13. One difference between IFRS and GAAP in valuing inventories is that
a. IFRS, but not GAAP, allows reversals so that inventories written down under lower-of-cost-or-market can be written back up to the original cost .
b. GAAP defines market value as replacement cost where IFRS defines market as the selling price.
c. GAAP strictly adheres to the historical cost concept and does not allow for write-downs of inventory values while IFRS embraces fair value.
d. IFRS, but not GAAP, requires that inventories be valued at the lower of cost or market.
a. IFRS, but not GAAP, allows reversals so that inventories written down under lower-of-cost-or-market can be written back up to the original cost .
b. GAAP defines market value as replacement cost where IFRS defines market as the selling price.
c. GAAP strictly adheres to the historical cost concept and does not allow for write-downs of inventory values while IFRS embraces fair value.
d. IFRS, but not GAAP, requires that inventories be valued at the lower of cost or market.
14. In accounting for research and development costs.
a. the general rule under both US GAAP and IFRS is that research and development costs should be expensed as incurred .
b. IFRS generally expenses all research and development costs while US GAAP expenses research costs as incurred but capitalizes development costs once technological and economic feasibility has been demonstrated.
c. US GAAP generally expenses all research and development costs while IFRS expenses research costs as incurred but capitalizes development costs once technological and economic feasibility has been demonstrated.
d. both US GAAP and IFRS expense research costs as incurred but capitalize development costs once technological and economic feasibility has been demonstrated.
.
15. Property, plant and equipment are valued at
a. historical cost under both IFRS and US GAAP.
b. historical cost or revalued amounts under both IFRS and US GAAP.
c. revalued amounts under IFRS.
d. historical cost under US GAAP while IFRS allows the assets to be valued at either historical cost or revalued amounts.
a. the general rule under both US GAAP and IFRS is that research and development costs should be expensed as incurred .
b. IFRS generally expenses all research and development costs while US GAAP expenses research costs as incurred but capitalizes development costs once technological and economic feasibility has been demonstrated.
c. US GAAP generally expenses all research and development costs while IFRS expenses research costs as incurred but capitalizes development costs once technological and economic feasibility has been demonstrated.
d. both US GAAP and IFRS expense research costs as incurred but capitalize development costs once technological and economic feasibility has been demonstrated.
.
15. Property, plant and equipment are valued at
a. historical cost under both IFRS and US GAAP.
b. historical cost or revalued amounts under both IFRS and US GAAP.
c. revalued amounts under IFRS.
d. historical cost under US GAAP while IFRS allows the assets to be valued at either historical cost or revalued amounts.
16. The amount of a long-lived asset impairment loss is generally determined by comparing
a. the asset’s carrying amount and its fair value under US GAAP.
b. the asset’s carrying amount and its discounted future cash flows less cost to sell under IFRS.
c. the asset’s carrying amount and its undiscounted future cash flows under US GAAP.
d. the asset’s carrying amount and its undiscounted future cash flows less disposal cost under IFRS.
a. the asset’s carrying amount and its fair value under US GAAP.
b. the asset’s carrying amount and its discounted future cash flows less cost to sell under IFRS.
c. the asset’s carrying amount and its undiscounted future cash flows under US GAAP.
d. the asset’s carrying amount and its undiscounted future cash flows less disposal cost under IFRS.
17. In accounting for liabilities, IFRS interprets “probable” as
a. likely.
b. more likely than not.
c. somewhat possible.
d. possible and not remote.
a. likely.
b. more likely than not.
c. somewhat possible.
d. possible and not remote.
18. Accounting under IFRS and US GAAP is similar for all of the following topics except
a. changes in estimates.
b. related party transactions.
c. research and development costs.
d. changes in methods.
a. changes in estimates.
b. related party transactions.
c. research and development costs.
d. changes in methods.
Use the following information to answer the next three questions.
On January 1, 2010, AirFrance purchases an airplane for €14,400,000. The components of the airplane and their useful lives are as follows:
Component Cost Useful life
Frame €7,200,000 24 years
Engine 4,800,000 20 years
Other 2,400,000 10 years
AirFrance uses the straight-line method of depreciation. The asset is assumed to have no salvage value.
Frame €7,200,000 24 years
Engine 4,800,000 20 years
Other 2,400,000 10 years
AirFrance uses the straight-line method of depreciation. The asset is assumed to have no salvage value.
19. Under IFRS, the entry to record the acquisition of the airplane would include
a. a debit to Asset/ Airplane of €14,400,000.
b. a debit to Asset/ Airplane frame of €14,400,000.
c. a debit to Asset/ Airplane engine of €4,800,000.
d. cannot be determined from the information given.
a. a debit to Asset/ Airplane of €14,400,000.
b. a debit to Asset/ Airplane frame of €14,400,000.
c. a debit to Asset/ Airplane engine of €4,800,000.
d. cannot be determined from the information given.
20. Under US GAAP, the entry to record depreciation expense on the asset at December 31, 2011 will include
a. a credit to accumulated depreciation of €1,200,000.
b. a debit to depreciation expense of €1,440,000
c. a debit to depreciation expense of €800,000.
d. a credit to accumulated depreciation of €600,000.
a. a credit to accumulated depreciation of €1,200,000.
b. a debit to depreciation expense of €1,440,000
c. a debit to depreciation expense of €800,000.
d. a credit to accumulated depreciation of €600,000.
21. Under IFRS, the entry to record depreciation expense on the asset at December 31, 2011 will include a credit to accumulated depreciation of
a. €1,440,000.
b. €1,200,000
c. €800,000.
d. €600,000.
a. €1,440,000.
b. €1,200,000
c. €800,000.
d. €600,000.
22. Accounting terminology that differs between IFRS and US GAAP include all of the following except
a. the use by IFRS of “turnover” for revenue.
b. the use by IFRS of “share premium” for additional paid-in-capital.
c. the use by IFRS of “other capital reserves” for retained earnings.
d. the use by IFRS of “issued capital” for common stock.
a. the use by IFRS of “turnover” for revenue.
b. the use by IFRS of “share premium” for additional paid-in-capital.
c. the use by IFRS of “other capital reserves” for retained earnings.
d. the use by IFRS of “issued capital” for common stock.
23. New terminology introduced under the joint IFRS- US GAAP Customer Consideration (Allocation) Model includes all of the following except
a. revenue recognition voids.
b. contract rights.
c. net contract asset/ liability.
d. performance obligations.
a. revenue recognition voids.
b. contract rights.
c. net contract asset/ liability.
d. performance obligations.
24. Under IFRS, the criteria to determine whether a lease should be capitalized include
a. the present value of the minimum lease payments is 90% or more of the fair value of the asset at the inception of the lease.
b. the term of the lease is 75% or more of the economic life of the asset.
c. the term of the lease is equal to substantially all of the economic life of the asset.
d. the present value of the minimum lease payments is equal to substantially all of the fair value of the asset at the inception of the lease.
a. the present value of the minimum lease payments is 90% or more of the fair value of the asset at the inception of the lease.
b. the term of the lease is 75% or more of the economic life of the asset.
c. the term of the lease is equal to substantially all of the economic life of the asset.
d. the present value of the minimum lease payments is equal to substantially all of the fair value of the asset at the inception of the lease.
Use the following information to answer the next three questions.
Bellingham Electronics Inc. offers one model of laptop computer for £1000 and a two-year warranty for £250. The retailer, as part of a Boxing Day promotion, offers a limited-time offer for the laptop, including delivery and the two-year warranty for £1,180. The cost of the computer to Bellingham is £700. Any warranty repairs are assumed to be done ratably over time. Bellingham accounts for transacti
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