CFAS Finals
CFAS Finals
*A. Held for use in the production or supply of goods or services, for rental to
others, or for administrative purposes.
B. Identifiable nonmonetary asset without physical substance
C. A resource controlled by an entity as a result of past events.
D. A resource from which future economic benefits are expected to flow to the
entity
3. Under PAS 38, an intangible asset that was acquired separately shall initially
be recognized at
A. Recoverable amount
B. Either cost or fair value at the choice of the acquirer
C. Fair value
*D. Cost
11. When government grants related to income become repayable due to nonfulfillment
of a condition attaching to it, the repayment: (choose the incorrect statement)
A. Should be treated as a change in accounting estimate
B. Should be accounted for prospectively
C. Should be first applied against any unamortized deferred income
*D. Should be recognized as a debit to retained earnings to the extent that the
repayment
exceeds any such deferred income
12. Which of the following is not specifically excluded from the purview of PAS 20?
A. Government participation in ownership of the entity
B. Government grant covered by PAS 41
C. Government assistance provided in the form of tax benefits
*D. Forgivable loan from the government
14. In the case of grants related to income, which of these accounting treatments
is prescribed by PAS 20?
A. Credit the grant to “general reserve” under shareholders’ equity.
*B. Present the grant in the income statement as “other income” or as a separate
line item, or
deduct it from the related expense.
C. Credit the grant to “retained earnings” on the statement of financial position.
D. Credit the grant to sales or other revenue from operations in the income
statement.
18. The period of time during which interest must be capitalized ends when
*a. The asset is substantially complete and ready for the intended use.
b. No further interest is being incurred.
c. The asset is abandoned, sold or fully depreciated
d. The activities that are necessary to get the asset ready for the intended use
have begun.
20. Which of the following is not a condition that must be satisfied before
interest capitalization can begin on a qualifying asset?
a. Interest is being incurred.
b. Expenditures for the asset have been made
*c. The interest rate is equal to or greater than the cost of capital
d. Activities necessary to get the asset ready for the intended use are in
progress.
25. On the loss of significant influence, the investor shall recognize in profit or
loss any difference between:
a. The initial carrying amount of any retained investment, any proceeds from
disposing of the part interest and the carrying amount of the investment at the
date when significant influence is lost.
b. The fair value of any retained investment and the carrying amount of the
investment at the date significant influence is lost.
c. Any proceeds from the disposing of the part interest and the carrying amount of
the investment at the date significant influence is lost.
*d. The fair value of any retained investment, any proceeds from disposing of the
part interest and the carrying amount of the investment at the date significant
influence is lost.
30. When an entity holds between 20% and 50% 0f the voting power of an investee,
which statement is true?
a. The investor must use the equity method.
*b. The investor should use the equity method unless circumstances indicate that is
unable to exercise significant influence over the investee.
c. The investor must use the fair value method unless it can be clearly
demonstrated that the investor has significant influence over the investee.
d. The investor must use the fair value method.
34. Assets intended to be held and used for productive purposes may suffer from
impairment in each of the following circumstances except
A. A change in the way the assets are used or physical change in the assets
B. Asset costs incurred exceed the original amounts planned
*C. Discounted expected future cash flows and interest charges are less than the
carrying amount of the asset
D. A significant adverse change in legal factors that might affect the assets’ fair
value
35. Under the reporting requirements for impaired assets, impairment losses for
assets to be held and used shall be reported
A. As an extraordinary item
B. As a component of discontinued operations
*C. As a component of income from continuing operations
D. As a change in accounting estimate
38. Sloan Corporation is performing its annual test of the impairment of goodwill
for its Financing reporting unit. It has determined that the fair value of the unit
exceeds it carrying value. Which of the following is correct concerning this test
of impairment?
*A. Impairment is not indicated and no additional analysis is necessary.
B. Goodwill should be written down as impaired.
C. The assets and liabilities should be valued to determine if there has been an
impairment of goodwill.
D. Goodwill should be retested at the entity level.
41. Which statement is incorrect concerning the estimate of future cash flows?
a. Future cash flows shall be based on reasonable and supportable assumptions
b. Future cash flows shall be based on the most recent budget, usually up to a
maximum of 5 years
c. Future cash flows do not include income tax
*d. The discount rate used in estimating future cash flows shall be the current
rate after tax
42. Which statement in incorrect if the property is partly investment property and
partly owner-occupied?
A. If the investment and owner-occupied portions could be sold or leased out
separately, the portions should be accounted for as investment property and owner-
occupied property.
B. If the investment and owner-occupied portions could not be sold or leased out
separately, the property is investment property if only an insignificant portion is
held for manufacturing or administrative purposes. .
C. When ancillary services are provided by the enterprise to the occupants of the
property and these services are relatively insignificant component of the
arrangement, the property is investment property.
*D. A hotel is normally an investment property because services provided to the
guests are an insignificant component of the arrangement.
46. Transfers from investment property to property, plant, and equipment are
appropriate
*A. When there is change of use
B. Based on the entity’s discretion.
C. Only when the entity adopts the fair value model under PAS 38
D. The entity can never transfer property into another classification on the
statement of financial position once it is classified as investment property.
50. Linden Corporation has investment property that is held to earn rental income.
Linden prepares for its financial statements in accordance with PFRS. Linden uses
the fair value mode for reporting the investment property. Which of the following
is true?
*A. Changes in fair value are reported as profit or loss in the current period.
B. Changes in fair value are reported as other comprehensive income for the period.
C. Changes in fair value are reported as an extraordinary gain on the income
statement.
D. Changes in fair value are reported as deferred revenue for the period.