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Toaz - Info Smes Toa Valix 2018pdf PR
Toaz - Info Smes Toa Valix 2018pdf PR
Toaz - Info Smes Toa Valix 2018pdf PR
Multiple choice
QUESTION 66-1Multiple choice (IFRS)
ANSWER 66-1
1. d
2. d
3. d
4. Entities with total assets or total liabilities below the floor threshold of P3,000,000 are known as
a. Micro-business entities
b. Macro-business entities
c. Mediums-sized entities
d. Small entities
6.Which of the following SMEs is not exempted from the mandatory adoption of the PFRS for SMEs?
a. Subsidiary of a parent reporting under full PFRS
b. Part of a group reporting under full PFRS
c. Subsidiary that is mandated to report under full PFRS
d. An entity with concrete plans to conduct an initial public offering within the next five years
7. If an SME that uses the PFRS for SMEs in the current year breaches the ceiling of the size criteria at the end of
the current year, the entity is
a. Required to transition to full PFRS at the current year-end.
b. Required to transition to full PFRS at the current year-end if the event that caused the change is significant and
continuing.
c. Required to transition to full PFRS in the next year if the event that caused the change is significant and
continuing.
d. Not required to transition to full PFRS.
8.What is considered "significant" change in the size criteria that requires transition from the PFRS for SMEs to full
PFRS?
a. 20% or more of the total assets or total liabilities
b. 50% or more of the total assets or total liabilities
c. 10% or more of the total assets or total liabilities
d. No quantitative threshold can be made.
ANSWER 66-2
1. d 5. d
2. d 6. d
3. d 7. c
4. a 8. a
2. An SME that presents first financial statements that conform with IFRS for SMEs is known as
a. An originating entity
b. A provisional presenter
c. A first-time adopter
d. An initial reporter
4. The statement of financial position at the date of transition to IFRS for SMEs is best described as
a. Provisional statement of financial position
b. Closing statement of financial position
c. Opening statement of financial position
d. Originating statement of financial position
5. In the opening statement of financial position, which cannot be done by the first-time adopter of IFRS for SMEs?
a. Recognize all assets and liabilities whose recognition is required by IFRS for SMEs.
b. Recognize assets and liabilities required by full PFRS but IFRS for SMEs does not require such recognition.
c. Reclassify an item as one type of asset, liability or equity under the previous accounting framework but a different
type of asset, liability or equity under IFRS for SMEs.
d. Apply IFRS for SMEs in measuring all recognized assets and liabilities.
6. IFRS for SMEs contains exemptions for the restatement of the opening statement of financial position. What is
the basis for such exemptions?
a. Cost
b. Impracticability
c. Materiality
d. Relevance
7.The reconciliation of equity under the previous reporting framework to the equity under I FRS for SMEs is made
at
a. The date of transition to IFRS for SMEs
b. The end of current reporting period
c. The date of transition to IFRS for SMEs and at the end of current reporting period
d. The end of the preceding comparative period
8. The reconciliation of profit or loss under the previous reporting framework to the profit or loss under P FRS for
SMEs is made at
a. The date of transition to P FRS for SMEs
b. The end of current reporting period
c. The end of the preceding comparative period
d. No reconciliation of profit or loss is made
ANSWER 66-3
1.b 5.b
2.c 6.b
3.c 7.c
4.c 8.b
2. An entity that is not publicly accountable must make an explicit and unreserved statement of compliance with the
IFRS for SMEs
a. If the entity complies with all the requirements of IFRS for SMEs.
b. If the entity complies with the vast majority of the requirements of IFRS for SMEs.
c. If the entity complies with the USA GAAP.
d. If the entity complies with full IFRS.
3.Financial statements prepared by an SME must comply with the IFRS for SMEs. Which of the following
statements suitably describes the nature of the compliance with the Standard?
a. The accounting practices used are a mix of full IFRS and IFRS for SMEs
b. The accounting practices used are a mix of local GAAP and IFRS for SMEs
c. The accounting practices used are a mix of full IFRS and local GAAP
d. The SME has followed IFRS for SMEs in its entirety
ANSWER 66-4
1.d
2.a
3.d
2. In accordance with IFRS for SMEs, an entity must present additional line items in a statement of financial
position when
a. Such presentation is relevant to an understanding of the entity's financial position.
b. Such presentation is a generally accepted practice in the sector in which the entity operates.
c. Such presentation is required by the tax authorities of the jurisdiction in which the entity operates.
d. Such presentation is relevant to an understanding of the entity's financial position and financial performance.
3. In accordance with IFRS for SMEs, the financial statement that presents the assets, liabilities and equity at a point
in time
a. Must be titled the statement of financial position
b. Must be titled the balance sheet
c. Could be titled the statement of financial position or the balance sheet
d. Could be titled the statement of financial position, the balance sheet or any other title that is not misleading
ANSWER 66-5
1.c
2.a
3.d
2. Which of the following must not be included in the statement of financial position of an SME?
a. Contingent asset
b. Property, plant and equipment
c. Intangible assets
d. Investment property at fair value through profit or loss
3. Which of the following is required to be shown as line item for an SME but not under full IFRS?
a. Inventory
b. Property, plant and equipment
c. Financial asset
d. Investment in joint venture
4. All of the following are considered line items in the statement of financial position of an SME, except
a. Provisions
b. Non-controlling interest
c. Equity attributable to the owners of parent.
d. Revaluation surplus related to intangible assets
ANSWER 66-6
1.d
2.a
3.d
4.d
2. The PFRS for SMEs mentions the following components of other comprehensive income, except
a. Gain and loss on hedging instrument
b. Revaluation surplus of property, plant and equipment
c. Actuarial gain and loss of defined benefit plan
d. All of these are SME component of OCI
3. Which of the following can an SME elect as an accounting policy choice to recognize in other comprehensive
income or in profit or loss?
a. Revaluation surplus of property, plant and equipment
b. Gain and loss from translation a foreign operation
c. Actuarial gain and loss of defined benefit plan de Gain and loss on hedging instrument
ANSWER 66-7
1.b
2.d
3.c
4.a
ANSWER 66-8
1.b
2.b
3.c
4.b
3. Under PFRS for SMEs, if the estimated selling price less cost to complete and sell is lower than cost of inventory,
the write-down is recognized
a. As an impairment loss
b. As component of cost of goods sold
c. Either as an impairment loss or a component of cost of goods sold
d. Directly in retained earnings
5. A retailer of perishable produce seeks to avoid obsolescence by arranging the produce in such a way that
customers are most likely to purchase the oldest inventory first. The cost formula that is more appropriate
for the entity is
a. FIFO
b. LIFO
c. Weighted average
d. Specific identification
6. A property developer must classify properties that it holds for sale in the ordinary course of business as
a. Inventory
b. Property, plant and equipment
c. Financial asset
d. Investment property
7. An SME may use techniques for measuring cost of inventories if the results approximate cost. Accepted
techniques include all of the following, except
a. Standard cost
b. Retail method
c. Most recent purchase price
d. Gross profit method
ANSWER 66-9
1.a 5.a
2.b 6.a
3.a 7.d
4.a 7.b
3. For a basic financial instrument measured at cost less impairment, the impairment loss is
a. The difference between the carrying amount of the asset and the best estimate of the amount that would be
received if the asset were sold.
b. The difference between the carrying amount of the asset and the present value of estimated future cash flows at
market rate.
c. The difference between the carrying amount and fair value of the asset.
d. The decline in fair value of the asset.
4. It is a financial instrument that gives the holder the right to sell the instrument back to the issuer or is
automatically redeemed or purchased by the issuer on the occurrence of a future uncertain event.
a. Puttable instrument
b. Commercial paper
c. Commitment to receive a loan
d. Debt instrument
5. Which of the following statements is true in relation to the subsequent measurement of basic financial
instruments?
a. Basic debt instruments shall be measured at amortized cost using the effective interest method.
b. Investments in nonconvertible nonputtable preference shares that are publicly traded shall be measured at fair
value through profit or loss.
c. Investments in nonputtable ordinary shares that are not publicly traded or whose fair value cannot be measured
reliably without undue cost or effort shall be measured at cost less impairment.
d. All of these statements are true in relation to subsequent measurement of basic financial instruments.
6. Which of the following in an SME's statement of financial position is a financial asset or financial liability?
a. A liability for an amount due to a supplier for a past receipt of goods
b. An asset for a prepayment made to a supplier for the rent of a machine for two months
c. A liability for a fine for the late payment of income tax by the entity
d. All of these are financial instruments
7. All of the following financial assets are basic financial instruments of an SME, except
a. Cash
b. Trade receivables
c. A five percent holding in nonputtable ordinary shares of another entity.
d. A thirty percent holding in nonputtable ordinary shares of another entity where the investee is classified as an
associate of the entity.
8. All of the following financial instruments are basic financial instruments of an SME, except
a. Investments in nonconvertible nonputtable preference shares
b. Financial instruments that meet the definition of an entity's own equity
c. A fixed-interest fixed-term loan from a bank
d. Investments in nonputtable ordinary shares
9. All of the following are considered basic financial instruments of an SME, except
a. Accounts payable in foreign currency
b. Loan from associate due on demand
c. Investment in convertible debt
d. A debt instrument with a fixed rate of return
10. Which of the following statements reflects the accounting for financial instruments under IFRS for SMEs?
a. All financial instruments must be measured at fair value
b. Reversal of an impairment loss is not allowed
c. All amortized cost instruments must be tested for impairment
d. All financial instruments must be measured at amortized cost
ANSWER 66-10
1.d 6.a
2.b 7.d
3.a 8.b
4.a 9.c
5.d 10.c
5. Under the fair value model, the investment in associate is subsequently measured at
a. Cost less accumulated impairment loss
b. Equity
c. Fair value less cost of disposal
d. Fair value
7. An SME owns 30% of the ordinary shares that carry voting rights at a general meeting of shareholders. In the
absence of evidence to the contrary, the SME
a. Has significant influence over the investee.
b. Has significant influence over the investee, provided that it does not have joint control over the investee.
c. Has significant influence over the investee, provided that it does not have control over the investee.
d. Has significant influence over the investee, provided that it does not have control or joint control over the
investee.
8. Which of the scenarios would not lead to the presumption that an entity has significant influence?
a. Holding directly 20% or more of the voting power of the investee.
b. Holding indirectly, through a subsidiary, 20% or more of the voting power of the investee.
c. Holding indirectly, through a joint venture, 20% or more of the voting power of the investee.
d. Holding directly 10% of voting power of the investee and holding indirectly, through a subsidiary, 10% of the
voting power of the investee.
ANSWER 66-11
1.d 5.d
2.d 6.b
3.d 7.d
4.b 8.c
QUESTION 66-12 Multiple choice (IFRS)
1. Investment property is defined as
a. Land or a building, or part of a building, or both held for sale in the ordinary course of business.
b. Land or a building, or part of a building, or both held to earn rentals only.
c. Land or a building, or part of a building, or both held for capital appreciation only.
d. Land or a building, or part of a building, or both held to earn rentals or for capital appreciation or both.
2. An SME operates a bed and breakfast from a building it owns. The SME also provides the guests with other
services including housekeeping, satellite television and broadband internet access. The daily room rental is
inclusive of these services. Furthermore, upon request, the entity conducts tours of the surrounding area for the
guests. Tour services are charged for a fee separately. The SME should account for the building as
a. Inventory
b. Investment property
c. Property, plant and equipment
d. Basic financial instrument
4. A building is held by a subsidiary to earn rentals under an operating lease from the parent. The Parent
manufactures products in the rented building. The fair value of the building can be measured reliably without undue
cost or effort on an ongoing basis. What is the accounting treatment of the building?
a. Accounted for as property, plant and equipment by the subsidiary and an investment property by the group
b. Accounted for as property, plant and equipment
c. Accounted for as investment property
d. Accounted for as an investment property by the subsidiary and property, plant and equipment by the group
5. What is the presentation of investment property accounted for using the cost model?
a. Property, plant and equipment
b. Separate class of property, plant and equipment
c. Investment property with no distinction
d. Separate line item as investment property at cost less accumulated depreciation and impairment
ANSWER 66-12
1.d
2.c
3.d
4.d
5.d
2. An SME shall measure property, plant and equipment after initial recognition using
a. Cost model
b. Revaluation model
c. Cost model and fair value model
d. Cost model and revaluation model
3. What depreciation method is most appropriate for the significant part of an aircraft?
a. Straight line method for all parts of the aircraft.
b. Production method based on air miles flown for the jet engine and straight line method for all other parts of the
aircrafts
c. Production method based on air miles flown for all parts of the aircraft.
d. Diminishing balance method for all parts of the aircraft.
ANSWER 66-13
1.d
2.d
3.b
2. An SME must recognize a government grant that does not impose specified future performance conditions
a. In income when the grant proceeds are receivable.
b. In income over the periods necessary to match it with the related costs.
c. By applying an approach depending upon the accounting policy adopted by the entity.
d. In retained earnings.
3. An SME must recognize a government grant that imposes specified future performance conditions
a. In income when the grant proceeds are receivable.
b. In income over the periods necessary to match it with the. related costs.
c. In income only when the performance conditions are met.
d. In other comprehensive income.
4. An SME must recognize government grant received before the income recognition criteria are satisfied
a. In income when the grant proceeds are received
b. In equity
c. As a liability
d. As component of other comprehensive income
ANSWER 66-14
1.c
2.a
3.c
4.c
3. An SME shall capitalize all of the following as cost of property, plant and equipment, except
a. Transport cost
b. Loan raising cost
c. Installation cost
d. Nonrefundable purchase tax
4. Which of the following is a disclosure requirement in relation to borrowing cost under PFRS for SMEs?
a. Borrowing cost capitalized during the period
b. Segregation of qualifying assets
c. Capitalization rate used
d. Total finance costs recognized as expense
ANSWER 66-15
1.d
2.a
3.b
4.d
3. An SME acquired a trademark that has a remaining legal life of five years but is renewable every ten years at
little cost. The useful life of the trademark is
a. Five years
b. Based on the best estimate of management but not exceeding 10 years
c. Fifteen years
d. Indefinite
4.Under PFRS for SMEs, the cost of an intangible asset at initial recognition is measured at fair value when
a. It is internally generated.
b. It is acquired as part of business combination.
c. It is acquired by way of government grant.
d. It is acquired as part of business combination or acquired by way of government grant.
6. On January 1, 2010, an SME (a publisher) acquired a competitor's publishing title at certain amount. On January
1, 2013, the entity commenced publishing using the new title. On December 31, 2017, the entity decided to sell the
publishing title and took actions that make the sale within 12 months highly probable. The publishing title was sold
on December 31, 2018. The entity should account for the publishing title as
a. An intangible asset from January 1, 2010 to December 31, 2017 and as an inventory from December 31, 2017 to
the date of disposal on December 31, 2018.
b. An item of inventory from January 1, 2010 to the date of disposal on December 31, 2018.
c. An intangible asset from January 1, 2010 to the date of disposal on December 31, 2018.
d. An intangible asset from January 1, 2010 to December 31, 2017 and as noncurrent asset held for sale from
December 31, 2017 to December 31, 2018.
ANSWER 66-16
1.d 4.d
2.b 5.b
3.d 6.c
2. An SME entered, as lessee, into a five-day non-cancelable lease of a motor vehicle that has an economic life of
five years and nil residual value. Lease payments are on a daily basis. At the end of the lease term, the lessee returns
the motor vehicle to the lessor. The lease is accounted for
a. As a finance lease
b. As an operating lease
c. Either as a finance lease or an operating lease
d. Neither as a finance lease nor an operating lease
4. A lessee that paid a certain amount to a broker for arranging a finance lease must
a. Account for the fee as an expense in the period in which the fee was incurred.
b. Include the fee in the cost of the leased asset,
c. Defer recognition of the expense and recognize the fee on the straight line method over the lease term.
d. Include the fee in the principal lease liability.
5. An SME enters as lessee into a two-year lease in respect of a machine that has an economic life of four years with
nil residual value. Rent per year is payable yearly in advance. The lessee holds an option to acquire the machine for
a nominal amount. The option is exercisable at the end of the lease term when the fair value of the machine is
expected to be very much higher than the nominal amount. At the commencement of the lease term, the lessor
should
I. Derecognize the machine and recognize a lease receivable.
Il. Continue to recognize the carrying amount of the machine subject to the lease as an item of property, plant and
equipment.
a. I only
b. Il only
c. Both I and II
d. Neither I nor II
ANSWER 66-17
1.b
2.b
3.c
4.b
5.a
2. If share options granted to employees under a share-based payment transaction vest immediately
a. The entity should defer recognition of the services rendered by the employees.
b. The entity should record a liability.
c. The employees are unconditionally entitled to the share-based payments.
d. The entity should account for the services when these are rendered by the employees during the vesting period.
3. For equity-settled share-based payment transactions, an entity shall measure the goods or services received
a. Always at the fair value of goods and services received.
b. Always at the fair value of the equity instruments issued.
c. At the cost of goods and services provided by employees.
d. At the fair value of the goods or services received unless the fair value cannot be estimated reliably.
4. In measuring the fair value of shares and the related goods or services received, an entity
a. Must always use observable market price of the entity's own share.
b. Uses observable market price but only for nonemployee share-based transaction.
c. Uses price established by the entity's directors for that type of share-based transaction.
d. Uses observable market price and other measures according to a measurement hierarchy.
5. For a cash-settled share-based payment transaction for employee services, the entity should
a. Recognize in profit or loss the cash paid out to the employees in the final year.
b. Recognize in profit or loss the cash paid out to the employees over the vesting period.
c. Recognize in profit or loss the estimate of the cash to be paid out to the employees over the vesting period.
d. Recognize in profit or loss the grant date fair value of the liability over the vesting period.
6. For share-based payment transaction offering a choice of settling the transaction in cash or by transfer of equity
instrument, the entity should account for the transaction as
a. Cash-settled share-based payment transaction.
b. Cash-settled share-based payment transaction unless the entity has a past practice of settling by issuing equity
instrument.
c. Cash-settled share-based payment transaction unless the option to settle in cash has no commercial substance.
d. Cash-settled share-based payment transaction unless the entity has a past practice of settling by issuing equity
instrument or the option to settle in cash has no commercial substance.
ANSWER 66-19
1.b
2.c
3.d
4.d
5.c
6.d
QUESTION 66-20 Multiple choice (IFRS)
1. Specialized activities of an SME include all, except
a. Agriculture
b. Service concession
c. Exploration and evaluation of mineral resources
d. Insurance
2. The exploration expenditure incurred by an SME in exploration and evaluation activities is classified as
a. Tangible asset as an item of property, plant and equipment
b. Intangible asset
c. Either tangible asset or intangible asset
d. Neither tangible asset nor intangible asset
3. An SME shall measure subsequently the intangible exploration and evaluation asset using
a. Cost model
b. Fair value model
c. Either cost model or fair value model
d. Revaluation model
4. On the part of the private operator, the infrastructure asset shall be recognized as
a. Property, Plant and Equipment
b. Financial Asset
c. Intangible asset
d. Either financial asset or intangible asset
5. The infrastructure asset in a service concession recognized as financial asset shall be measured at
a. Amortized cost
b. Fair value through profit or loss
c. Fair value through other comprehensive income
d. Amortized cost, fair value through profit or loss, or fair value through other comprehensive income
7. Which accounting treatment is not allowed under the IFRS for SMEs?
a. Weighted average method for inventory
b. Equity method for associates
c. Revaluation model for intangible assets
d. Temporary difference approach for deferred taxation
8. Which of the following is not simplification of an accounting practice allowed by the IFRS for SMEs?
a. Goodwill and other indefinite life intangible asset are amortized over the useful life.
b. SMEs do not have to derecognize a financial asset when the entity transfers to another party substantially all of
the risks and rewards of the asset.
c. A simplified calculation is allowed if measurement of defined benefit obligation involves undue cost or effort.
d. The cost model is permitted for investment in associate.
ANSWER 66-20
1.d
2.c
3.a
4.d
5.d
6.a
7.c
8.b