Question 1

Amounts reclassified to profit or loss in the current period that were recognised in 'other comprehensive income' in the current or previous periods are known as a:
A) disposal of revenue or expenses
B) de-recognition of transactions
C) reclassification adjustment
D) reprocessed transaction

Accepted Answer

Reclassification adjustments refer to the amounts that are transferred from other comprehensive income to profit or loss in the current period. This transfer happens when the items that were previously recognised in other comprehensive income are reclassified as a result of changes in accounting policies, reclassifications, or corrections of errors. Therefore, option C is the correct answer. The other options are not relevant to the concept of reclassification adjustments.

Question 2

When initial application of an Australian Accounting Standard has an effect on the current period or any prior period,would have such an effect except that it is impracticable to determine the amount of the adjustment,or might have an effect on future periods,an entity shall disclose:
A) the title of the Australian Accounting Standard.
B) the nature of the change in accounting policy.
C) when applicable, a description of the transitional provisions.
D) all of the given answers.

Accepted Answer

According to the given information, when there is an initial application of an Australian Accounting Standard that has an effect on the current or prior period, or might affect future periods, an entity must disclose the title of the standard, the nature of the change in accounting policy, and a description of the transitional provisions (if applicable). Therefore, option D is the correct choice as it includes all the three required disclosures.

Question 3

Which of the following items is not an example of items reportable under other comprehensive income?
A) changes in revaluation surplus
B) actuarial gains and losses on defined contribution plans
C) gains and losses arising from translating the financial statements of a foreign operation
D) the effective portion of gains and losses on hedging instruments in a cash flow hedge

Accepted Answer

Actuarial gains and losses on defined contribution plans are recognized in the income statement as a component of employee benefits expense rather than being reported under other comprehensive income.

Question 4

Discuss the impact changes in accounting policies can have on users of the financial statements.

Accepted Answer

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Question 5

Changes in an entity's equity between the beginning and the end of the reporting period reflect the increase or decrease in its:
A) liabilities during the period.
B) net profit for the period.
C) assets during the period.
D) net assets during the period.

Accepted Answer

Changes in an entity's equity between the beginning and the end of the reporting period reflect the increase or decrease in its net assets during the period. This includes any changes in equity from net profits or losses, as well as changes in equity from investments, dividends, and other transactions. Liabilities and assets may also impact equity, but they do not directly reflect changes in equity.

Question 6

What is comprehensive income and how would users of financial statements get an indication of what the figure for comprehensive income might be?

Accepted Answer

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Question 7

Discuss three items that are permitted in AASB 101 Presentation of Financial Statements to be presented in other comprehensive income and explain how each item arises.

Accepted Answer

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Question 8

Which of the following items does not give rise to a reclassification adjustment from components of other comprehensive income to profit and loss?
A) disposal of a foreign operation
B) de-recognition of revalued assets
C) sale of a foreign subsidiary
D) de-recognition of available-for-sale financial assets

Accepted Answer

De-recognition of revalued assets does not give rise to a reclassification adjustment from components of other comprehensive income to profit and loss because the revaluation surplus related to a revalued asset is directly transferred to retained earnings upon disposal or de-recognition of the asset, not through profit or loss.

Question 9

Discuss the components required to be disclosed in the statement of changes in equity as prescribed in AASB 101 Presentation of Financial Statements.

Accepted Answer

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Question 10

'If we were to look only at the expenses and income … recorded in the income statement we would not get a full picture of all expenses and income that were recognised in the current period'.Explain what this statement means,and other items that need to be 'looked at'?

Accepted Answer

The answer of 'If we were to look only at...

Question 11

Following are the items of income and expense recognised during the period by Gordon Field Ltd:
$$\begin{array} { | l | l | } 
\hline \text { I }&\text { Gains and losses arising from translating the financial statements of a foreign } \
&\text { operation}\
\hline \text { II } & \text { Gains and losses on re-measuring available-for-sale financial assets } \
\hline \text { III } & \text { Gain on sale of property, plant and equipment } \
\hline IV & \text { Actuarial losses on defined benefit pension plans } \
\hline V & \text { Prior period errors discovered } \
\hline VI & \text { Prospective adjustment resulting from a change in accounting estimates } \
\hline
\end{array}$$
Which of the following combinations identify all items permitted in AASB 101 Presentation of Financial Statements to be presented under other comprehensive income?
A) I, II, IV, V and VI
B) I, II, IV, and V
C) II, III, V and VI
D) II, V and VI

Accepted Answer

Items I (gains and losses from translating financial statements of a foreign operation), II (gains and losses on re-measuring available-for-sale financial assets), and IV (actuarial losses on defined benefit pension plans) are typically recognized in other comprehensive income according to AASB 101. Item V (prior period errors discovered) is corrected retrospectively and does not appear in other comprehensive income.

Question 12

Changes in accounting estimates include:
A) changes in expected warranty costs on goods sold under guarantee.
B) changes in the expected pattern of consumption of economic benefits of depreciable assets.
C) changes in the provision for inventory obsolescence.
D) all of the given answers.

Accepted Answer

Changes in accounting estimates include all of the given options, as they all involve revisions to accounting estimates that are necessary due to changes in circumstances or new information becoming available. These changes are accounted for prospectively, meaning that they are applied to future accounting periods rather than being restated for past periods.

Question 13

'Profit is a measure of financial performance'.How might it be deficient as a measure of an entity's overall performance?
 What is typically excluded from newspaper reports discussing an entity's performance?

Accepted Answer

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Question 14

Discuss the accounting treatment prescribed by AASB 101 Presentation of Financial Statements for reclassification adjustments from components of other comprehensive income to profit and loss.

Accepted Answer

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Question 15

What is a prior period error?
 How has the treatment of prior period errors changed from the former AASB 1018 to the current AASB 108?
 What is the major implication of this change?

Accepted Answer

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 How...

Question 16

How does AASB 101 define 'extraordinary items'? Discuss the current arrangements for accounting for such items.

Accepted Answer

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Question 17

Following are the items of income and expense recognised during the period by Murray Ltd:
$\begin{array}{|l|l|}
\hline \text { I }& \text { Foreign exchange differences } \
\hline \text { II } & \text { Losses on ineffective cash flow hedges } \
\hline \text { III } & \text { Retrospective adjustment from a change in accounting policy } \
\hline \mathrm{V} & \text { Actuarial losses on defined benefit pension plans } \
\hline IV & \text { Prior period error discovered } \
\hline VI & \text { Prospective adjustment resulting from a change in accounting estimates }\
\hline
\end{array}$
Which of the following combinations identify all items permitted in AASB 101 'Presentation of Financial Statements to be presented under other comprehensive income?
A) I, II, V and VI
B) II, III, VI and V
C) I, III, and VI
D) III, IV and V

Accepted Answer

The answer of Following are the items of income and...

Quiz 16: The Statement of Comprehensive Income and Statement of Changes in Equity

Amounts reclassified to profit or loss in the current period that were recognised in 'other comprehensive income' in the current or previous periods are known as a:

When initial application of an Australian Accounting Standard has an effect on the current period or any prior period,would have such an effect except that it is impracticable to determine the amount of the adjustment,or might have an effect on future periods,an entity shall disclose:

Which of the following items is not an example of items reportable under other comprehensive income?

Discuss the impact changes in accounting policies can have on users of the financial statements.

Changes in an entity's equity between the beginning and the end of the reporting period reflect the increase or decrease in its:

What is comprehensive income and how would users of financial statements get an indication of what the figure for comprehensive income might be?

Discuss three items that are permitted in AASB 101 Presentation of Financial Statements to be presented in other comprehensive income and explain how each item arises.

Which of the following items does not give rise to a reclassification adjustment from components of other comprehensive income to profit and loss?

Discuss the components required to be disclosed in the statement of changes in equity as prescribed in AASB 101 Presentation of Financial Statements.

'If we were to look only at the expenses and income … recorded in the income statement we would not get a full picture of all expenses and income that were recognised in the current period'.Explain what this statement means,and other items that need to be 'looked at'?

Changes in accounting estimates include:

'Profit is a measure of financial performance'.How might it be deficient as a measure of an entity's overall performance? What is typically excluded from newspaper reports discussing an entity's performance?

Discuss the accounting treatment prescribed by AASB 101 Presentation of Financial Statements for reclassification adjustments from components of other comprehensive income to profit and loss.

What is a prior period error? How has the treatment of prior period errors changed from the former AASB 1018 to the current AASB 108? What is the major implication of this change?

How does AASB 101 define 'extraordinary items'? Discuss the current arrangements for accounting for such items.