1. Which is not within the definition of an intangible asset?

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

NOT OK 2. An asset meets the identifiability criterion in the definition of an intangible when

I. It is separable, meaning, the asset is capable of being separated from the entity and sold transferred,
licensed, rented or exchanged regardless of whether the entity intends to do so.

II. It arises from contractual or other legal rights, regardless of whether those rights, are transferable or
separable from the entity or from other rights and obligations.

A. I only
B. II only
C. Both I and II
D. Neither I nor II

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

NOT OK 4. After initial recognition, an intangible asset shall be carried using the

I. Cost model, meaning, at cost less any accumulated amortization and any accumulated impairment
losses.

II. Revaluation model, meaning at revaluated amount, being the fair value on the date of revaluation,
less any subsequent accumulated amortization and any subsequent accumulated impairment losses.

A. I only
B. II only
C. Either I or II
D. Neither I nor II

5. Which is incorrect concerning acquisition of an intangible asset as part of a business combination?

 A. The cost of the intangible asset is based on its fair value at the date of acquisition.

B. If there is an active market from the intangible asset, the fair value is equal to the quoted market
price which is usually the current bid price.

C. If there is no active market for the intangible asset, the fair value is equal to the amount that would
be paid by the entity in an arm’s length transaction between knowledgeable and willing parties.

D. The fair value of an intangible asset acquired in the business combination cannot be measured with
sufficient reliability separately from goodwill.

6. A trademark is an example of which general category of intangible asset that should be recognized
separately according to current generally accepted accounting principles?

A. Marketing-related

B. Customer-related

C. Artistic-related

D. Contract-based

7. A copyright is an example of which general category of intangible asset that should be recognized
separately according to current generally accepted accounting principles?

A. Marketing-related

B. Customer-related

C. Artistic-related

D. Contract-related

8. Broadcast rights and franchises are an example of which general category of intangible asset that
should be recognized separately according to current generally accepted accounting principles?

A. Marketing-related

B. Customer related

C. Artistic-related

D. Contract-based

9. Under PAS 38, which statement is true? NOT OK

I. Expenditure during the “research phase” of a project may sometimes be capitalized as an intangible
asset.
II. Expenditure during “development phase” of a project may sometimes be capitalized as an intangible
asset.

A. I only
B. II only
C. Both I and II
D. Neither I nor II

9. Grants in recognition of specific costs are recognized as income

A. Over the same period as the relevant expense on a systematic and rational basis
B. Immediately
C. Over 5 years using straight line method
D. Over 5 years using SYD method

10. Grants related to depreciable assets are usually recognized as income

A. Immediately
B. Over the useful life of the asset using straight line method
C. Over the useful life of the asset using the sum of the years’ digits method
D. Over the useful life of the asset and in proportion to the depreciation of the asset

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

13. Which of these disclosures is not required by PAS 20?

A. The accounting policy adopted for government grants, including methods of presentation
adopted in the financial statements
B. Unfulfilled conditions and other contingencies attaching to government assistance
C. The names of the government agencies that gave the grants along with the dates of
sanction of the grants by these government agencies and the dates when cash was
received in case of monetary grants
 D. The nature and extent of government grants recognized in the financial statements and an
indication of other forms of government assistance from which the entity has directly
benefited

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.

15.
16.

17. Which is not a disclosure requirement in relation to be borrowing cost?

a. Accounting policy adopted for borrowing cost
b. Amount of borrowing cost capitalized during the period
c. Segregation of qualifying asset from other assets
d. Capitalization rate used to determine the amount of borrowing cost eligible for capitalization

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.

19. Capitalization of borrowing cost

a. Shall be suspended during temporary period of delay.
b. May be suspended only during extended period of delay in which active development is delayed.
c. Shall never be suspended
d. Shall be suspended only during extended period of delay in which active development is delayed.

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.

21. If the qualifying asset is financed by general borrowing the capitalizable borrowing cost is equal to
a. Actual borrowing cost incurred
b. Total expenditures on the asset multiplied by a capitalization rate.
c. Average expenditures on the asset multiplied by a capitalization rate or actual borrowing cost
incurred, whichever is lower
 d. Average expenditures on the asset multiplied by a capitalization rate or actual borrowing cost
incurred, whichever is higher

22. Which of the following assets could be treated as qualifying asset for the purpose of capitalizing
borrowing costs?
a. Investment property
b. Investment in financial instrument
c. Inventory that is manufactured or produced in large quantity on a repetitive basis and takes a
substantial period of time to get ready for use or sale
d. Biological asset

23.
24.

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.

26. When the investment ceases to be an associate and is accounted for in accordance with IFRS 9, the
fair value of investment at the date when it ceases to be an associate.
a. Is regarded as its cost on initial recognition as a financial asset.
b. Is regarded as its fair value on initial recognition as a financial asset.
c. Is regarded as its fair value on initial recognition as a financial liability.
d. Is regarded as its amortized cost on initial recognition as an investment.

27. An investor shall discontinue the equity method when

a. The investor ceases to have significant influence over the associate.
b. The associate operates under severe long – term restrictions.
c. The investor ceases to have control over the associate.
d. the business activities of the investor and associate are dissimilar.

28. If an associate has outstanding cumulative preference shares held by outside interests, the investor
Computes share of profit or loss.
a. After adjusting for preference dividends which were actually paid during the year.
b. Without regard for preference dividends.
c. After adjusting for the preference dividends only when declared.
d. After adjusting for the preference dividends, whether or not the dividends have been declared.
29. Which statement is incorrect concerning the equity method?
 a. The investment is initially recorded at cost.
b. The investment in associate is increased or decreased by the investor’s share of the profit or loss
of the investee after the date of acquisition
c. The investor share of the profit or loss of the investee is recognized in the investor’s profit or
loss.
d. Distribution received from the investee are accounted for as dividend income.

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.

31.
32.

33. Which statement best describes “impairment loss”

a. The removal of an asset from the statement of financial position
b. The amount by which the carrying amount of an asset exceeds the recoverable amount
c. The systematic allocation of cost of an asset less residual value over the useful life
d. The amount by which the recoverable amount of an asset exceeds the carrying amount

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

36. What is the recoverable amount of an asset?

a. Fair value less cost of disposal
b. Value in use
c. Fair value less cost of disposal or value in use, whichever is higher
d. Fair value less cost of disposal or value in use, whichever is lower
37. What is fair value of an asset?
a. The price that would be received to sell an asset in an orderly transaction between market
participants at the measurement date.
b. The price that would be paid to transfer a liability in an orderly transaction between market
participants at the measurement date.
c. The discounted value of future cash flows expected to be derived from an asset
d. The undiscounted value of future cash flows expected to be derived from an asset

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.
Goodwill should be retested at the entity level.

39. Which statement best describes “value in use”?

a. The present value of estimated future cash flows expected to arise from the continuing use of an
asset and from the ultimate disposal.
b. The amount of cash that could currently be obtained by selling an asset in an orderly disposal
c. The amount which an entity expects to obtain for an asset at the end of the useful life
d. Undiscounted future net cash flows

40. What is the best evidence of fair value?

a. Quoted price in an active market for identical asset.
b. Quoted price in an active market for similar asset
c. Quoted price in an inactive market for identical asset
d. Quoted price in an inactive market for similar asset

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.

43. Subsequent to initial recognition, the investment property shall be measured using
a. Fair value model or revaluation model c. Cost model or fair value model
b. Fair value through profit or loss model d. Cost model or revaluation model

44. Which of the following is not an investment property?

A. Land which the entity has not determined whether it is to be used as owner-occupied
property or to be held for sale
B. Property that is being constructed and developed as investment property
C. Building that is vacant but is held to be leased out to operating lessee
D. Property being constructed or developed on behalf of third parties

45. Which statement is incorrect in determining the fair value of an investment property?
a. An entity shall determine the fair value of investment property by deducting transaction cost
that may be incurred upon disposal.
b. The fair value of investment property shall reflect market conditions at the end of the reporting
period.
c. If an office is leased on a furnished basis, the fair value of the office generally includes the fair
value of the furniture because the rental income relates to the furnished office.
d. The fair value of investment property excludes prepaid or accrued operating lease income.

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.

NOT OK 47. Which statement is true concerning property leased to an affiliate?

I. From the perspective of the individual entity that owns it, the property leased to an affiliate is
considered an investment property.

II. From the perspective of the affiliates as a group and for purposes of consolidated financial
statements, the property is treated as owner- occupied property.

a. Both I and II b. Neither I nor II c. I only d. II only

48. An investment property should be measured initially at
A. Cost
B. Cost less accumulated impairment losses
C. Depreciable cost less accumulated impairment losses
D. Fair value less accumulated impairment losses

49. Directly attributable expenditures related to investment property include

a. Professional fees for legal services, property transfer taxes and other transaction cost.
b. Start costs
c. Initial operating losses incurred before the investment property achieves the planned level of
occupancy.
d. Abnormal amount of wasted material, labor and other resources incurred in constructing or
developing the 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.
Changes in fair value are reported as deferred revenue for the period.