0 of 29 Questions completed
You have already completed the quiz before. Hence you can not start it again.
Quiz is loading…
You must sign in or sign up to start the quiz.
You must first complete the following:
0 of 29 Questions answered correctly
Time has elapsed
You have reached 0 of 0 point(s), (0)
Earned Point(s): 0 of 0, (0)
0 Essay(s) Pending (Possible Point(s): 0)
1. In relation to provisions, for a present obligation to exist, which one of the following factors must be present?CorrectIncorrect
2. In accordance with the requirements of IAS 37 Provisions, Contingent Liabilities and Contingent Assets, where measurement uncertainty exists, which one of the following methods is not an appropriate valuation for a provision based on accounting standards?CorrectIncorrect
3. A manufacturer provides warranties at the time of sale to purchasers of its product lines.
Under the terms of the warranty, the manufacturer undertakes to repair or replace items that fail to perform satisfactorily within a period of two years from the date of sale. When should the manufacturer recognise the provision? Select which one of the following is correct.CorrectIncorrect
4. Which of the following does define the term “provision”?CorrectIncorrect
5. An onerous contract is a contract in which __________ of meeting the obligations under the contract __________ the economic benefits expected to be received under it.CorrectIncorrect
6. Which of the following statements does more likely define the term “restructuring”?CorrectIncorrect
7. An entity shall not recognise a contingent liability __________.CorrectIncorrect
8. Zulu Ltd (Zulu) enters into a contract with a customer to deliver a phone package to the customer in return for an upfront payment of $1000. Under the terms of the contract the customer will receive a ‘free’ phone upon signing the contract, and phone service for two years. Zulu also sells phones and phone services separately.
Which one of the following statements is correct?CorrectIncorrect
9. Which one of the following is included in the scope of IAS 37 Provisions, Contingent Liabilities and Contingent Assets?CorrectIncorrect
10. The Acme Building Company Ltd is aware of draft legislation that, when enacted, will require the company to refund certain amounts previously charged to its customers. The company intends to lobby against the legislation. At the reporting date, the planned legislative changes have been approved and are now effective.
Which one of the following treatments would be required at the reporting date?CorrectIncorrect
11. Which of the following circumstances would result in a disclosure of a contingent liability? Select which two options are correct.CorrectIncorrect
12. Which one of the following is a correct statement in relation to provisions and contingencies?CorrectIncorrect
13. Which one of the following represents an appropriate discount rate for measuring a provision based on IAS 37 Provisions, Contingent Liabilities and Contingent Assets?CorrectIncorrect
15. As at 30 June 20X8 (reporting date), STU Ltd (STU) is involved in a legal dispute with a supplier in relation to the early termination of the exclusive licence agreement between the two entities.
The supplier is seeking damages of $40 million. The directors of STU believe they will be successful in defending the claim. STU’s lawyers have advised that it is 90 per cent probable the entity would not be found liable.
In accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets, which one of the following is the most appropriate option for STU when preparing its financial report for 30 June 20X8?CorrectIncorrect
16. International standard IAS37 defines a provision as:CorrectIncorrect
17. In order that a provision should be recognised in an entity’s financial statements, it is necessary that:CorrectIncorrect
18. A past event is an obligating event only if it gives rise to a legally enforceable obligation. True or False?CorrectIncorrect
19. The amount of a provision should be the “best estimate” of the expenditure required to settle the obligation concerned. This estimate:CorrectIncorrect
20. If a provision relates to a large population of items, the amount of the provision should be calculated as:CorrectIncorrect
21. Should a provision be recognised in relation to:
(a) future operating losses?
(b) onerous contracts?CorrectIncorrect
22. In general terms, a contingent liability is a possible obligation that depends upon the outcome of a future event that is within the control of the entity. True or False?CorrectIncorrect
23. Contingent liabilities are:CorrectIncorrect
24. Contingent assets are:CorrectIncorrect
25. International standard IAS10 requires that financial statements should be adjusted to take account of any events occurring between the end of the reporting period and the date when the financial statements are authorised for issue. True or False?CorrectIncorrect
26. A company is preparing its financial statements for the year to 31 March 2016. Assuming that each of the following events occurs after 31 March 2016 but before the financial statements are authorised for issue, which one of them should be classified as a NON-ADJUSTING event?CorrectIncorrect
27. Although the accounting treatment of inventories is prescribed by IAS2 Inventories, a company may also need to apply IAS10 Events After the Reporting Period when determining the inventories figure which should be shown in its financial statements. True or False?CorrectIncorrect
28. The following two issues relate to Spiko Co’s mining activities:
• Issue 1: Spiko Co began operating a new mine in January 20X3 under a five-year government licence which required Spiko Co to landscape the area after mining ceased at an estimated cost of $100,000.
• Issue 2: During 20X4, Spiko Co’s mining activities caused environmental pollution on an adjoining piece of government land. There is no legislation which requires Spiko Co to rectify this damage, however, Spiko Co does have a published environmental policy which includes assurances that it will do so. The estimated cost of the rectification is $1,000,000.
In accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets, which of the following statements is correct in respect of Spiko Co’s financial statements for the year ended 31 December 20X4?CorrectIncorrect
29. On 1 October 20X4, Kalatra Co commenced drilling for oil from an undersea oilfield. Kalatra Co is required to dismantle the drilling equipment at the end of its five-year licence. This has an estimated cost of $30m on 30 September 20X9. Kalatra Co’s cost of capital is 8% per annum and $1 in five years’ time has a present value of 68 cents.
What is the provision which Kalatra Co would report in its statement of financial position as at 30 September 20X5 in respect of its oil operations?CorrectIncorrect
30. When to accrue a provision for Restructuring by closure or re-organization:CorrectIncorrect