The IASB Web site ( summarizes each of the current International Financial Reporting Standards. Required: Answer each


The IASB Web site ( summarizes each of the current International Financial Reporting Standards.

Answer each of the following questions.
a. In measuring inventories at the lower of cost or net realizable value, does net realizable value mean?
i. Estimated replacement cost, or
ii. Estimated selling price less estimated costs to complete and sell the inventory?
b. Under International Financial Reporting Standards, which of the following methods is (or are) acceptable to account for an investment in a joint venture?
i. Cost method
ii. Equity method
iii. Proportionate consolidation
iv. Consolidation
c. Which of the following would be classified as an extraordinary item?
i. Loss from settlement of a product liability lawsuit
ii. Claims paid by an airline as a result of a plane crash
iii. Destruction of a communications satellite during launch
iv. None of the above
d. In Year 1, an enterprise accrued its warranty obligation based on its best estimate of the expected cost to repair defective products during the three-year warranty coverage period. During Year 2, warranty claims were significantly more than expected due to unrecognized quality-control problems in Year 1. Is it appropriate to restate the financial statements for Year 1 to reflect the revised estimate of the warranty obligation?
e. True or false: An enterprise with a December 31 year-end declares a dividend on its common shares on January 5. The dividend is recognized as a liability at year-end.
f. After initial recognition, which of the following financial assets is (are) not remeasured at fair value?
i. Options on unquoted equity securities
ii. Marketable securities (equities)
iii. Derivative financial instruments that are financial assets
iv. Fixed maturity instruments the enterprise intends to hold to maturity
Which of the following is true? An enterprise that follows the policy of revaluing its property, plant, and equipment may apply that policy:
i. To all assets within a single country on a country-by-country basis
ii. To all assets within a single broad class, such as to land and buildings
iii. To all assets of a certain age, such as all assets 10 years old or older.
h. True or false: Interest costs on funds borrowed by an enterprise to finance the construction of a new building must be capitalized as part of the cost of the building.

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...
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International Accounting

ISBN: 9780136111474

7th Edition

Authors: Frederick D. Choi, Gary K. Meek

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