Questions -
Question 1 - An entity is required in AASB 101 to produce:
a statement of changes in equity.
a statement of financial position.
a statement of profit or loss and other comprehensive income.
all of the given answers.
Question 2 - Amounts reclassified to profit or loss in the current period that were recognised in 'other comprehensive income' in the current or previous periods are known as a:
disposal of revenue or expenses.
derecognition of transactions.
reclassification adjustment.
reprocessed transaction.
Question 3 - Recognising deferred tax assets and deferred tax liabilities as per AASB 112 creates some conflict with the definition of assets and liabilities in the AASB conceptual framework. Key issues in this regard are:
it is questionable whether or not the company controls the benefits from the deferred tax asset, and there is not a present obligation to transfer the funds represented in the deferred tax liability to the government.
the company really has no claim against the government for the amount of the deferred tax asset and it is not probable that the company will have to pay the deferred tax liability.
setting off the deferred tax asset and deferred tax liability does not meet the requirements of the AASB conceptual framework and there is a contingent element involved in the recognition of the deferred tax asset.
the AASB conceptual framework does not permit the recognition of the rights to future revenues implicit in assets to trigger obligations to future expenses implicit in liabilities and the extent to which a deferred tax liability is recognised should not depend on management's intention to sell a revalued asset.
Question 4 - If a tax rate change from 30% to 25% results in an adjustment to the deferred tax liability account of $50 000, what is (a) the amount of the temporary differences and (b) the type of temporary differences?
A. $ 1 000 000; (b) taxable temporary differences
B. $ 1 000 000; (b) deductible temporary differences
C. $ 50 000; (b) taxable temporary differences
D. $ 50 000; (b) deductible temporary differences
Question 5 - Land and buildings may be valued at:
recoverable amount.
opportunity cost.
fair value.
recoverable amount or fair value.
Question 6 - In the case of a share issue being oversubscribed, excess application monies:
will always be refunded to applicants.
may be used to reduce future amounts owing on allotment if the shares are issued on a pro rata basis.
must be recorded as revenue in the current financial period.
must be placed in a trust account until a refund is requested by applicants.
Question 7 - Share splits are conducted because it is believed that:
excess capital leads to reduced return ratios, which the market does not view favourably.
increasing the number of shares issued makes the company appear larger and more stable.
decreasing the price per share makes them more marketable.
investors view this as a bonus because they now have more shares than they previously held.
Question 8 - Mistril Ltd provides the following information for the period ended 30 June 2015:
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$000
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Interest revenue
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50
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Opening balance interest receivable
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25
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Closing balance interest receivable
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15
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Debentures (asset) discount amortisation
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6
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Income tax expense
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15
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Opening balance income tax payable
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29
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Closing balance income tax payable
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33
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Opening balance deferred tax liability
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9
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Closing balance deferred tax liability
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4
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Dividend revenue
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10
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Opening balance of dividend receivable
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6
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Closing balance of dividend receivable
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9
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What are the cash flows from interest, dividends and tax for the period?
Cash inflow from interest $34 000; cash inflow from dividends $13 000; cash outflow tax $14 000
Cash inflow from interest $54 000; cash inflow from dividends $7000; cash outflow tax $16 000
Cash inflow from interest $66 000; cash inflow from dividends $7000; cash outflow tax $6000
Cash inflow from interest $84 000; cash inflow from dividends $25 000; cash outflow tax $82 000
Question 9 - Examples of equitable or constructive obligations include:
a state government promises economic support to householders and businesses affected by recent bushfires. It has in the past provided at least this level of support.
management of a retail store decides to offer compensation to customers as a result of faulty scooters purchased from the store and causing injury. The manufacturers are normally considered liable for this type of fault.
a company that has published policies regarding support for the environment and has in the past rehabilitated polluted sites has identified contamination it has caused in land surrounding one of its production sites. Not correcting the problem with the site will lead to serious difficulties with the local community.
a state government promises economic support to householders and businesses affected by recent bushfires. A company that has published policies regarding support for the environment and has in the past rehabilitated polluted sites has identified contamination it has caused in land surrounding one of its production sites. Not correcting the problem with the site will lead to serious difficulties with the local community.
Question 10 - Which of the following is not an example of an item that would be a contingent asset?
A possible receipt of damages that is associated with a legal claim made against another entity.
A claim by a company against the State government about some land expropriated in 1997 for which the directors are of the opinion based on previous negotiations with the government that there is a strong indication of the claim being probable in the next period.
A company has started negotiations with a potential new customer and the directors are of the opinion that it is probable that there will be a sale in future periods from these negotiations.
None of the other options; all are contingent assets.