Question 1

Current value measurement bases
Identify three current value measurement bases in the IFRS conceptual framework.

Accepted Answer

The answer of Current value measurement bases
Identify three current value...

Question 2

New 1 Uncertainty trade-off
Explain the trade-off related to uncertainty.

Accepted Answer

The answer of  New 1 Uncertainty trade-off
Explain the trade-off...

Question 3

Matching concept
A concept is a group of related ideas. Matching could be considered a concept because it includes ideas related to both revenue recognition and expense recognition. Briefly explain the theory behind
a) revenue recognition and
b) expense recognition.

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The answer of Matching concept
A concept is a group of...

Question 4

Financial engineering
Explain the practice of financial engineering and how it relates to fraudulent financial reporting.

Accepted Answer

The answer of  Financial engineering
Explain the practice of financial...

Question 5

Measurement, existence, and outcome uncertainties
Explain the difference between measurement uncertainty, existence uncertainty, and outcome uncertainty.

Accepted Answer

The answer of Measurement, existence, and outcome uncertainties
Explain the difference...

Question 6

Control and the economic entity assumption
Consolidated financial statements are prepared from the perspective of the economic entity. Determination of which business units, or subsidiaries, are to be included in the entity is rooted in the definition of control. Describe how this concept is interpreted under IFRS and ASPE, respectively. Discuss the significance of this difference in interpretation.

Accepted Answer

The answer of  Control and the economic entity assumption
Consolidated...

Question 7

Principles- vs. rules-based GAAP
There has been much discussion about principles-based standards versus rules-based standards. Discuss the advantages and disadvantages of a principles-based approach.

Accepted Answer

The answer of Principles- vs. rules-based GAAP
There has been much...

Question 8

Forms of business organization
Identify at least two (2) common forms of business organization. For each business structure name an associated pro and con.

Accepted Answer

The answer of Forms of business organization
Identify at least two...

Question 9

Fraudulent financial reporting
Identify several factors that contribute to fraudulent financial reporting.

Accepted Answer

The answer of  Fraudulent financial reporting
Identify several factors that...

Question 10

Foundational principles
Briefly explain the foundational principles of recognition, measurement, and presentation and disclosure that underlie financial accounting.

Accepted Answer

The answer of Foundational principles
Briefly explain the foundational principles of...

Question 11

Fraudulent financial reporting and the accountant's role
Explain what the accountant's responsibility is in preparation of a company's financial records.

Accepted Answer

The answer of Fraudulent financial reporting and the accountant's role
Explain...

Question 12

Equitable obligations
Due to the current poor economic conditions, Inferno Corp., a medium-size manufacturer in Burnaby, is downsizing its shipping department and has to let go two of the employees, Chevron and Shell. Both are excellent workers and have been with the company for several years. The department's supervisor, Jo-Ann Roberts, goes to the company CEO to see if there is another alternative for these employees (other than termination of their employment). Jo-Ann suggests that Chevron could be retrained to learn how to operate a forklift and Shell would like to learn how to be a first aid attendant. Since Inferno always needs employees with these skills, the CEO agrees to try this. Inferno's workforce is not unionized. What type of obligation is this? Discuss.

Accepted Answer

The answer of Equitable obligations
Due to the current poor economic...

Question 13

Identification of foundational accounting principles and qualitative characteristics Presented below are a number of accounting procedures and practices followed by January Corp. For each of these items, list the assumption, principle, or qualitative characteristic that is NOT being followed.
1. Because the company's income is low this year, January switched from accelerated depreciation to straight-line depreciation.
2. The president of January believes it is foolish to report financial information on a yearly basis. She believes that financial information should be disclosed only when significant new information is available related to the company's operations.
3. January decides to establish a large loss and related liability this year because of the possibility that it may lose a pending lawsuit. The possibility of loss is considered remote by the corporation's lawyers.
4. One of the corporation's executives purchased a new home computer for personal use with company money, charging Miscellaneous Expense.
5. The corporation has not established an Allowance for Doubtful Accounts, even though there are a significant number of their accounts that are either slow paying or may not pay their debts in full.

Accepted Answer

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Question 14

Constructive obligations
It was recently found that a fleet of vehicles produced by Agrarium Automotive Corp. possess a manufacturing defect relating to emissions compliance. In the past, Agrarium has issued recalls to owners of such vehicles, and paid for the associated repair cost. Agrarium has announced that they will continue to stand behind their products. Owners of the vehicle thus expect that Agrarium with replace or repair their vehicles. What type of obligation is this? Discuss.

Accepted Answer

The answer of Constructive obligations
It was recently found that a...

Question 15

Market-based measure versus entity-specific measure
Fair value is a market-based measure, as opposed to an entity-specific measure. Explain the difference between an entity-specific value and a market-based value.

Accepted Answer

The answer of Market-based measure versus entity-specific measure
Fair value is...

Question 16

Comprehensive income
Describe the income concept of comprehensive income and what is included in this notion of income under IFRS? What is included in it under ASPE?

Accepted Answer

The answer of Comprehensive income
Describe the income concept of comprehensive...

Question 17

Fair value measurement
The ongoing trend toward using fair value has both its supporters and its critics. Briefly explain arguments in favour of and against the use of fair value.

Accepted Answer

The answer of Fair value measurement
The ongoing trend toward using...

Question 18

Financial reporting pressures caused by budgets
Explain why budgets might exert negative influence into accounting decisions. Offer some examples to illustrate where this might be the case.

Accepted Answer

The answer of Financial reporting pressures caused by budgets
Explain why...

Question 19

Going concern assumption
The going concern assumption applies in most, but not all, business situations. When would it not apply?

Accepted Answer

The answer of Going concern assumption
The going concern assumption applies...

Question 20

Identification of foundational accounting principles
State the accounting principle or assumption that is most applicable in the following situations:
1. A company prepares consolidated financial statements for a subsidiary that it owns.
2. The decision to remove an asset from the balance sheet
3. A large sale on account is not recognized as revenue because collectibility is an issue.
4. Disclosure of the liability from a lawsuit in the financial statements
5. Preparation of monthly financial statements
6. Using the Canadian dollar in financial statements
7. An energy company includes detailed information about its reserves in its notes to the financial statements.

Accepted Answer

The answer of Identification of foundational accounting principles
State the accounting...

Quiz 2: Conceptual Framework Underlying Financial Reporting

Current value measurement bases Identify three current value measurement bases in the IFRS conceptual framework.

New 1 Uncertainty trade-off Explain the trade-off related to uncertainty.

Matching concept A concept is a group of related ideas. Matching could be considered a concept because it includes ideas related to both revenue recognition and expense recognition. Briefly explain the theory behind a) revenue recognition and b) expense recognition.

Financial engineering Explain the practice of financial engineering and how it relates to fraudulent financial reporting.

Measurement, existence, and outcome uncertainties Explain the difference between measurement uncertainty, existence uncertainty, and outcome uncertainty.

Principles- vs. rules-based GAAP There has been much discussion about principles-based standards versus rules-based standards. Discuss the advantages and disadvantages of a principles-based approach.

Forms of business organization Identify at least two (2) common forms of business organization. For each business structure name an associated pro and con.

Fraudulent financial reporting Identify several factors that contribute to fraudulent financial reporting.

Foundational principles Briefly explain the foundational principles of recognition, measurement, and presentation and disclosure that underlie financial accounting.

Fraudulent financial reporting and the accountant's role Explain what the accountant's responsibility is in preparation of a company's financial records.

Market-based measure versus entity-specific measure Fair value is a market-based measure, as opposed to an entity-specific measure. Explain the difference between an entity-specific value and a market-based value.

Comprehensive income Describe the income concept of comprehensive income and what is included in this notion of income under IFRS? What is included in it under ASPE?

Fair value measurement The ongoing trend toward using fair value has both its supporters and its critics. Briefly explain arguments in favour of and against the use of fair value.

Financial reporting pressures caused by budgets Explain why budgets might exert negative influence into accounting decisions. Offer some examples to illustrate where this might be the case.

Going concern assumption The going concern assumption applies in most, but not all, business situations. When would it not apply?