Question

1. Compliance with the IFRS is enforced by:

a. FASB, b. government regulators, c. IAS, or d. IASB

2. Under IFRS unrealized holding gains and losses on held-for-trading equity investments of less than 20 percent are recorded in _____, and unrealized holding gains and losses on non-trading equity investments of less than 20 percent are recorded in _______.

a. net income; net income. b. net income; other comprehensive income. c. other comprehensive income; net income. d. other comprehensive income; other comprehensive income

3. ABC co. purchases XYZ Co. for less than the fair value of XYZ Co.'s net assets (ie. a bargain purchase). How should ABC co. record the difference between the fair value of XYZ Co's net assets and the purchase price?

a. amortization expense. b. gain. c. goodwill. d. loss

4. On December, 31 2018, Buthainah Corp. owned a patent. The carrying amount of the patent (following the amortization journal entry on December 31, 2018) is 100,000/ The recoverable amount of the patent is determined to be $70,000. Which of the following is true regarding the journal entry that Buthainah Corp. should record on December 31, 2018.

a. Debit to loss on impairment of $30,000. b. credit to patent of $30,000. c. debit to goodwill of $30,000. d. both A and B are correct

5. Danah Corp. has three intangible assets (two patents and goodwill) on December 31, 2018. There is no impairment of any of the three intangible assets/ One patent has a carrying value of $20,000, one patent has a carrying value of $30,000, and the goodwill amount is $10,000. How should the three intangible assets be presented on the statement of financial position?

a. each intangible asset should be listed separately. b. all intangible assets should be grouped together in one intangible assets account. c. the two patents should be grouped together in one intangible assets account and goodwill should be listed separately. d. the threee intangible assets do NOT belong on the statement of financial position.

Answer 1

Answer to Q.1 Option(D) IASB

Compliance with the IFRS is enforced by IASB

Answer to Q.2 Option.( B). net income; other comprehensive income

Reason:

• Not Helding For Trading: includes all equity investments other than those in held for trading and fair value through profit and loss categories. Unrealized gains or losses is recognized in other comprehensive income. Realized gains and losses and dividends are recognized in profit and loss.
• Held for trading: accounts for equity investments held for sale in short-term, say 3 months, carried at fair value. Dividend income is recognized in profit and loss.

Answer to Q3 Option(C) Goodwill

Reason:

In these cases the goodwill of the acquired company may be a negative figure, which is what we call a bargain purchase, or negative goodwill.

Answer to Q.4 Option (D). both A and B are correct

Reason:

Impairment loss is the amount by which the carrying amount of an asset exceeds its recoverable amount. Debit Impairment loss account and credit asset account.

Answer to Q.5 Option(C) the two patents should be grouped together in one intangible assets account and goodwill should be listed separately

Reason.

While presenting financial statements Goodwill and other intangible asset grouping fall separately.