Q&a Cfas
Q&a Cfas
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they make, the methods of decision making they excludes owner changes in equity, such as subscription,
employ, the information they already possess or can issuance, and reacquisition of share capital and
obtain from other sources, and their ability to process declaration of dividends. *
information. Consequently, for information to be useful
a. Other comprehensive income
there must be a linkage between these users and the
decisions they make. This link is b. Changes in equity
a. relevance. c. Total comprehensive income
b. reliability. d. Profit or loss
c. understandability. carrying amont
d. materiality. According to PFRS 14, rate-regulation is *
PAS 1 requires an assessment of the entity’s ability to There is no principal market for the financial asset.
continue as a going concern each time financial What is the fair value of the asset? *
statements are prepared. Who is responsible in making Captionless Image
this assessment? *
a. 71
a. Accountant
b. 72
b. Auditor
c. 74
c. Management
d. 76
d. Government regulatory body
Which of the following is not one of the general a. relevance.
features of financial statements under PAS 1? *
b. reliability.
a. Fair presentation and compliance with PFRSs
c. consistency.
b. Going Concern
d. comparability.
c. Cash Basis
d. all of these
Which of the following is not one of the criteria when
determining whether a contract is or contains a lease? *
Which of the following is considered a qualitative factor
a. Identified asset in making materiality judgments? *
b. Identified liability a. the context of an item in relation to the current
economic state of the environment where the entity
c. Right to obtain substantially all of the economic
operates.
benefits from use of an identified asset throughout the
period of use b. 10% of profit or loss, in absolute terms
d. Right to direct the use of the identified asset c. 5% of total revenues
throughout the period of use
d. 1% of total assets
PFRS 12 applies to *
The revised Conceptual Framework defines an asset as *
a. contracts relating to post-employment benefit plans.
a. a resource controlled by the entity as a result of past
b. interest in joint arrangements that does not give the events and from which future economic benefits are
entity joint control or significant influence over the expected to flow to the entity.
arrangement.
b. a present economic resource controlled by the entity
as a result of past events. An economic resource is a
right that has the potential to produce economic b. showing only the net debit or the net credit balance
benefits. of the accounts.
c. a physical object that can produce economic benefits c. a or b, as a matter of accounting policy choice
for the entity.
d. An entity shall not present regulatory deferral
d. All of these. accounts in the statement of financial position, but only
disclose them in the notes.
The overall objective of financial reporting is to provide d. An entity can never be both a lessor and a lessee of
information * the same leased asset.
b. about an entity's financial performance during a It is the accounting process of assigning numbers,
period. commonly in monetary terms, to the economic
transactions and events. *
c. that is useful to primary users in making economic
decisions about providing resources to the entity. a. analyzing
d. interpreting
Information is neutral if it *
Which of the following is most likely to result in the b. monetary unit assumption.
recognition of a liability? *
c. conservatism assumption.
a. Customers become entitled to rebates for their past
d. going concern.
purchases.
Materiality judgment is least likely to be applied in a. Amortized over the life of the assets acquired.
which of the following? *
b. Reassessed as to the accuracy of its measurement
a. in determining whether an item warrants separate and then recognized immediately in profit or loss.
presentation in the financial statements or is to be
c. Reassessed as to the accuracy of its measurement
aggregated with other items
and then recognized in retained earnings.
b. in determining whether the information could
d. Carried as a capital reserve indefinitely.
influence the decisions of users, and therefore, must be
presented in the financial statements
c. in determining whether the cost of processing and Which of the following is considered an agricultural
communicating information exceeds the benefits produce? *
expected to be derived from it
a. eggs to be hatched into chicks
d. whether additional information needs to be provided,
including the level of detail and conciseness of the b. condensed milk
information’s presentation c. dairy cow
d. felled trees
Certain criteria must be met before a contract with a
customer is accounted for under PFRS 15. Which of the
following precludes a contract from being accounted for Biological assets and agricultural produce are
under PFRS 15? * recognized when all of the following are present except
c. The contract does not result to a change in the risk, c. probable future event
timing or amount of the entity’s future cash flows. d. fair value or cost can be measured reliably
d. The contract is neither oral nor written but rather
implied by the entity’s business practices.
According to PAS 38, which of the following may be
recognized as cost of intangible asset? *
The assumption that a business enterprise will not be a. Research costs incurred in self-generating an
sold or liquidated in the near future is known as the * intangible asset
b. Costs of an internally generated customer lists c. its carrying amount is less than its value in use.
c. Purchase cost of an externally acquired publishing d. its fair value less disposal costs exceeds its
title recoverable amount.
c. Property that is leased out to another entity under a On January 1, 20x1, Entity A registers a patent for a
finance lease total registration and legal costs of ₱600,000. Entity A
estimates that the patent has a remaining useful life of
d. Building being rented from another entity and leased
25 years. How much is the amortization expense for
out under various operating sub-leases
20x1? *
a. 30,000
The acquisition date is *
b. 24,000
a. the date on which the acquirer obtains control of the
c. 16,000
acquiree.
d. 0
b. the opening date.
c. ₱.2M
Entity A acquires equipment by issuing shares of stocks. a. the beginning of the earliest period for which an
How should Entity A report the transaction in the entity presents full comparative information under
statement of cash flows? * PFRSs in its first PFRS financial statements.
a. Operating activities
b. Investing activities
b. the end of the earliest period for which an entity c. Agricultural produce is harvested product from a
presents full comparative information under PFRSs in its biological asset before any processing.
first PFRS financial statements.
d. PAS 41 is used to account for both consumable and
c. the beginning of the first PFRS reporting period. bearer plants.
d. a and c
Exploration and evaluation assets are exploration and
evaluation expenditures recognized as *
a. assets in accordance with the entity’s accounting Under PFRS 1, the early application of PFRSs that have
policy. not yet become effective as of the current reporting
period *
b. expenses in accordance with applicable PFRSs.
a. is required.
c. assets in accordance with (a) above, subject to the
limitations provided under PAS 8 Accounting Policies, b. is permitted, but not required.
Changes in Accounting Estimates and Errors.
c. is required, but not permitted.
d. any of these
d. is prohibited.
a. P300,000
Which of the following statements is incorrect regarding b. P10 million
the accounting for biological assets? *
c. P100,000
a. Agricultural land used in growing agricultural produce
can never qualify for recognition as biological asset. d. P90,000
d. (478,000)
The essential elements of an intangible asset do not
include *
According to PAS 34, measurements in the interim
a. identifiability.
period are made on *
b. probable outflow of resources embodying economic
a. a discrete basis.
benefits.
b. a year-to-date basis.
c. control.
c. an item-by-item basis.
d. future economic benefits.
d. a or b, as matter of accounting policy choice. d. a, b or c, whichever is most appropriate
B. Prospective application
c. Taxable differences
According to PAS 8, a change in accounting estimate is
accounted for b. Temporary differences
d. Deductible differences
c, 90, 000
Income computed using PFRSs is P100,000 while income
computed using tax laws is P80,000. The P20,000 d, 94,500
difference is a
[(20 employees x 1 day x 12 months) - 150 days] x
a. Taxable temporary difference P1,000 x 105% = 94,500.
b. Deductible temporary difference Under its post-employment benefit plan, Entity A agrees
to make annual contributions of P500,000 to a
c. Permanent difference
retirement fund. When an employee retires, he or she is
d. No difference entitled to a lump sum payment and monthly pension
payments to be determined based on the level of
contributions and the investment performance of the
During the period, deferred tax assets increase by 500 fund.
while deferred tax liabilities increase by P600. The net
change of 100 is a
In 20x1, due to cash flow problems, Entity A was only
able to contribute half of the agreed contributions. In
a. deferred tax expense 20x2, Entity A contributed P900,000 to the fund. How
much retirement benefit expenses should Entity A
b. deferred tax income recognize in 20x1 and 20x2, respectively?
c. deferred tax liability A. 200k and 900k
d. deferred tax B. 200k and 500k
Pas 20
Entity A has 20 employees who are each entitled to one Non-monetary grants are measured at
day paid vacation leave for each month of service
rendered. Unused vacation leaves are carried forward a. the fair value of the non-monetary asset.
and can be used in future periods if the current period's b. nominal amount.
entitlement is not used in full. Moreover, employees are
entitled to a cash payment for unused entitlement c. the amount of cash received or receivable.
when they leave the entity. All the employees have
d. a or b
rendered service throughout the current year and have
taken a total of 150 days of vacation leaves. The
average daily rate of the employees in the current
Pas 32
period is P1,000. However, a 5% increase in the rate is
expected to take into effect in the following year. Based A contract that will be settled by the entity (receiving
on Entity A's past experience, the average annual or) delivering a fixed number of its own equity
employee turnover rate is 20%. How much will Entity A instruments in exchange for a fixed amount of cash or
another financial asset is most likely to be classified by a. Entity A reacquires its own shares for P10,000. The
the issuer as shares were originally issued for $4,000. Entity A
recognizes a loss of P6,000.
Pas 38
On January 1, 20x1, Entity A registers a patent for a to a. Land held for long-term capital appreciation rather
registration and legal costs of P600,000. Entity A than for short-term sale in the ordinary course of
estimates that the patent has a remaining useful life of business
25 years. How much is the carrying amount of the
b. Land held for a currently undetermined future use.
patent on December 31, 20x1? 1
c. A building owned by the entity (or held by the entity
under a lease) and leased out under one or more
a. 576,000 operating leases.
d. 580,000
According to PAS 40, an investment property is
Legal life of patent is maximum of 20 years
measured as follows:
600,000/20=30k
a. cost Cost Model or Fair value Model
600k-30k=570k
b. cost Cost Model
a. research cost.
Derecognition of investment property is not required
b. development cost.
when
c. regular expense.
a. it becomes the subject of an operating lease.
d. ignored.
b. it is sold.
PAS 40
PAS 41
Which of the following assets may be classified as
Which of the following is outside the scope of PAS 41?
investment property?
a. dairy cattle used in the production of milk
a. Land held for long-term capital appreciation
b. chickens used in the production of meat
b. Fuipment held for lease
C. rice plants and other crops that produce agricultural
c. Intangible asset held for lease
products only once
d. Building held for lease
d. mango trees and other plants that produce
e. a and d only agricultural products repeatedly over a long period of
time
3. Which of the following is considered an agricultural Read Co. and Learn Co. are publishers of textbooks.
produce? Read and Learn enters into a contract to put up a
bookstore which shall be named Knowledge Bookstore.
a. fruit cocktail
Knowledge will have its own assets, incur its own
b. fruit tree liabilities, and earn and incur its own revenues and
expenses. Read and Learn will each have a 50% interest
c. picked or harvested fruit in the net assets and profits of Knowledge. The
d. dried fruit arrangement between Read and Learn is most likely a
a. joint operation.
According to PAS 41, biological assets are measured as b. jointly controlled net assets.
follows: c. joint venture.
a. initial: fair value less cost to sell and Subsequent: fair d. none of these
value less cost to sell
PAS 12
d. neither a nor b
Which of the following statements is incorrect regarding
PFRS 15
the inputs that can be used to measure fair value?
Arrange the following steps of revenue recognition in
I. Level I inputs are the most reliable fair value
accordance with PFRS 15.
measurements and Level III inputs are the least reliable.
I. Identify the performance obligations in the contract
II. Level III measurements are quoted prices in active
markets for identical assets or liabilities. II. Recognize revenue when (or as) the entity satisfies a
performance obligation
III. A fair value measurement based on management
assumptions only (no market data) would not be III. Determine the transaction price
acceptable under current standards.
IV. Identify the contract with the customer
IV. The level in the fair value hierarchy of a fair value
measurement is determined by the level of the highest V. Allocate the transaction price to the performance
level significant inpu obligations in the contract *
PFRS 16
Lease Payments = 502,500 c. issuer indemnifies the policyholder for losses when
the insured event occurs
Lease payments = Fixed Lease payment x Lease term
d. transfer of significant insurance risk from the issuer
502,500 Fixed Lease payment x 3
to the policyholder
Fixed Lease payment = 502,500/3
Solution:
PFRS 17