Pas 21-The Effects of Changes in Foreign Exchange Rates

PAS 21- THE EFFECTS OF CHANGES IN FOREIGN EXCHANGE RATES
1. It is the currency of the primary economic environment in which the entity operates.
- Functional Currency
2. What are the two ways of conducting foreign activities?

- Foreign currency transaction and Foreign operation
3. What is the difference between Monetary items and Non-monetary items?
- Monetary items are currencies held, assets and liabilities to be received or paid in a fixed or
determinable amount of money like Cash and Cash Equivalents, Accounts Receivable, Notes
Receivable, Loans Payable, and etc. While non-monetary items are those which do not give rise
to the receipt or payment of a fixed or determinable amount of money like Inventories, Prepaid
Assets, Unearned Revenues, Property, Plant and Equipment.
4. It is the spot exchange rate at the reporting date.

- Closing Rate
5. What are the primary factors in determining functional currency?

- Sales price and Cost of Goods Sold/ Cost of services provided
PAS 12 - INCOME TAXES
1. What are the two types of temporary differences?

- Taxable temporary differences and deductible temporary differences
2. Differentiate permanent differences from temporary differences.
- Permanent differences do not have future tax consequences (non taxable or non deductible),
while temporary differences have future tax consequences (taxable or deductible)
3. How will you define taxable profit?
- It is the profit or loss determined in accordance with the rules established by the tax
authorities. This is based on the Philippine tax laws
4. Under PAS 12, we will refer to taxes that are based on what kind of profit?
- Taxable profit
5. Give atleast 2 examples of non deductible expense.

- Tax penalties, surcharges, fines, life insurance premium
PAS 20 - ACCOUNTING FOR GOVERNMENT GRANTS AND DISCLOSURE OF

GOVERNMENT ASSISTANCE
1. Government grants are recognized if there is a reasonable assurance that?
Answer: the attached conditions will be complied with and the grants will be received
2. Grants related to assets may be presented either by?
Answer: Gross Presentation or Net Presentation
3. The method in which the grant is deducted from the carrying amount of the related asset
Answer: Net Presentation or Net Method
4. Why can the receipt of government assistance by an entity be significant for the preparation
of the financial statements?
A. To find an appropriate method of accounting for the transfer of resources
B. To give an indication of the extent to which the entity has benefited from such assistance
C. To identify the conditions giving rise to the period over which the grant will be earned in order
to determine costs and expenses
D. A and B ✔️
E. All of the Above
5. Receipt of a grant provides of itself conclusive evidence that the conditions attaching to the
grant have been or will be fulfilled.
True or False
Answer: False ✔️
PAS 16 - PROPERTY, PLANT AND EQUIPMENT
1.Two criteria that should be considered in the recognition of property plant and equipment
-FUTURE ECONOMIC BENEFITS
-COST RELIABLY MEASURABLE
2.Type of measurement of property plant and equipment that is measured at cost

- INITIAL MEASUREMENT
3.An increase or decrease in the carrying amount of a PPE resulting from revaluation is
recognize in other comprehensive income and accumulated in equity.
-REVALUATION SURPLUS
4.Refers to the removal of a previously recognized asset or liability from an entity’s statement of
financial position.
-DERECOGNITION
5.Accounting method of allocating the cost of a tangible or physical asset over its useful life or
life expectancy. It represents how much of an asset’s value has been used up.
-DEPRECIATION
PAS 19 - EMPLOYEE BENEFITS
1. All forms of consideration given by an entity in exchange for services rendered by employees
or for the termination of employment.
* EMPLOYEE BENEFITS
2. Established by the law and operated by government.

* STATE PLANS
3. Prescribes the accounting for employee benefits by employers.

* PAS 19
4. The right to paid absences may be either blank or blank.

* ACCUMULATING OR NON-ACCUMULATING
5. What are the 4 categories of employee benefits?

* SHORT-TERM EMPLOYEE BENEFITS, POST-EMPLOYMENT BENEFITS, OTHER LONG-
TERM EMPLOYEE BENEFITS, and TERMINATION BENEFITS

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PAS 21- THE EFFECTS OF CHANGES IN FOREIGN EXCHANGE RATES

2. What are the two ways of conducting foreign activities?

3. What is the difference between Monetary items and Non-monetary items?

4. It is the spot exchange rate at the reporting date.

5. What are the primary factors in determining functional currency?

PAS 12 - INCOME TAXES

1. What are the two types of temporary differences?

2. Differentiate permanent differences from temporary differences.

3. How will you define taxable profit?

5. Give atleast 2 examples of non deductible expense.

PAS 20 - ACCOUNTING FOR GOVERNMENT GRANTS AND DISCLOSURE OF

1. Government grants are recognized if there is a reasonable assurance that?

2. Grants related to assets may be presented either by?

Answer: Gross Presentation or Net Presentation

Answer: Net Presentation or Net Method

PAS 16 - PROPERTY, PLANT AND EQUIPMENT

2.Type of measurement of property plant and equipment that is measured at cost

PAS 19 - EMPLOYEE BENEFITS

2. Established by the law and operated by government.

3. Prescribes the accounting for employee benefits by employers.

4. The right to paid absences may be either blank or blank.

5. What are the 4 categories of employee benefits?

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