Deck 14: Special Reporting Issues

Question 1

Historically internally generated intangible assets have not been recognised in the financial statements for what reason?

A) The difficulty in measuring the associated costs
B) Failure to meet the old asset definition
C) The perceived lack of usefulness in assessing future earnings capacity.
D) They did not exist as a concept until recently

Answer 1

C

Question 2

Which objective of financial accounting most closely aligns with the concept of Heritage Assets?

A) Stewardship
B) Corporate governance
C) Decision usefulness
D) Financial valuation

Answer 2

A

Question 3

Which part of the Conceptual Framework definition of an asset makes recognition of Heritage Assets difficult?

A) Future economic benefit
B) Control
C) Past transaction or event
D) Both future economic benefit and control

Answer 3

D

Question 4

Which of following methods have NOT been proposed to measure the value of Heritage Assets?

A) Valuation at nominal amounts
B) Travel cost method
C) Contingent valuation
D) None of the above, i.e. they are all proposed measurement approaches

Question 5

Which of the following attributes are important in determining whether an asset exists?

A) Tangibility
B) Ownership
C) Existence of a market for the asset
D) None of the above

Question 6

Which of the following is NOT an example of a heritage asset?

A) Stonehenge
B) Aboriginal oral history
C) The Great Barrier Reef
D) None of the above, i.e. they are all heritage assets

Question 7

Internally generated goodwill is not accounted for because it is difficult to:

A) Identify
B) Measure
C) Isolate
D) All of the above

Question 8

Which of the following is NOT a feature of intangibles that differentiates them from other assets?

A) They are largely knowledge based assets
B) Many are not separable items
C) They often do not have well-defined property rights
D) None of the above, i.e. they are all features of intangible assets

Question 9

Which part of the Conceptual Framework definition of a liability makes it unlikely that Heritage Assets should be recognised as liabilities?

A) Future economic sacrifice
B) Present obligation
C) Past transaction or event
D) Measurability

Question 10

One important question regarding the recognition of Heritage Assets is whether they fall within SAC 2. Which of the following questions would address this concern?

A) Are the entities holding the assets reporting entities?
B) Do the assets meet the formal definition of an asset?
C) Are there identifiable users who require financial information about the assets?
D) Can the value of the assets be accurately measured?

Question 11

It has been argued that when it comes to intangible assets capital markets would be better served by:

A) Requiring all intangibles, internally generated or purchased, to be expensed
B) Only allowing purchased intangibles to be capitalised
C) Giving discretion to management on when to capitalise intangible assets
D) Requiring all intangibles, internally generated or purchased, to be capitalised

Question 12

Differential treatment of purchased versus internally generated intangible assets is said to not make economic sense because:

A) It violates the efficient market hypothesis
B) It isn't economically rational
C) It creates information asymmetry
D) All of the above

Question 13

Which of the following in NOT part of the AASB 138 definition of an intangible asset?

A) Non-monetary
B) Unidentifiable
C) Controlled
D) None of the above, i.e. they are all part of the definition

Question 14

How is purchased goodwill valued?

A) At fair value
B) As the balancing item between the fair value of assets and their carrying amount
C) As the balancing item between purchase consideration and the fair value of identifiable net assets acquired
D) At historic cost

Question 15

Which of the following internally generated intangible assets can be recognised in accordance with AASB 138?

A) Mastheads
B) Customer lists
C) Registered brand names
D) None of the above

Question 16

Which of the following is NOT a criticism that has been levelled at the current definition of an asset under the Conceptual Framework?

A) It is too complex to operationalise
B) It is too vague to be used to solve problems
C) It excludes too many potential assets
D) None of the above, i.e. they have all been identified as problems

Question 17

Which of the following is NOT part of the Conceptual Framework definition of an asset?

A) Control
B) Seperability
C) Future economic benefit
D) None of the above, i.e. they are all part of the definition

Question 18

Which of the following is NOT part of the definition of a heritage asset?

A) Intangible
B) Of historic, artistic, scientific etc. value
C) Held and maintained for its contribution to knowledge and culture
D) None of the above, i.e. they are all part of the definition

Question 19

Lev has suggested that by not including internally generated intangible assets companies' book values may be understated by as much as:

A) 100%
B) 75%
C) 50%
D) 25%

Question 20

The market value of a company often:

A) Exceeds its book value because certain assets are not recognised under accounting rules
B) Appears to be random distributed with regards to book value
C) Is less than its book value because certain assets are not recognised under accounting rules
D) None of the above