1) For a non-current asset to be classified as held-for-sale the asset must be:
ID: 2335896 • Letter: 1
Question
1) For a non-current asset to be classified as held-for-sale the asset must be:
In saleable condition
Converted to cash through use
Highly possible to be sold
Planned to be sold within two years
2) Under the IFRS, consistency:
Excludes the use of the fair value option
Replaces faithfully representation in the accounting concepts
Requires an entity to use the same accounting policies at interim and year-end
Requires convergence to US GAAP when in doubt of principle
3) In regard to employee benefits, on October 20, 2X13, the CFO of Scare Crow PLC in London is committed to terminating Aunt Emma on December 31, 2X13 and will be offering her a benefit package of 100,000 British Pounds Sterling. Aunt Emma is qualified to retired from Scare Crow on December 31, 2X16. The proper treatment of this decision is
October 31, 2X13 statement: Debit termination expense for 100,000 British Pounds Sterling, Credit termination payable 100,000 British Pounds Sterling
December 31, 2X13 statement: Debit termination expense for 100,000 British Pounds Sterling, Credit termination payable 100,000 British Pounds Sterling
December 31, 2X16 statement: Debit termination expense for 100,000 British Pounds Sterling, Credit termination payable 100,000 British Pounds Sterling
No journal entry is required until Aunt Emma takes the termination cash out
4) Under IFRS, a lease is not an operating lease and is classified as capital lease when:
50% or more of its economic life transfers to the lessee
The present value of lease payments is 50% more than its asset value
Risks and rewards of ownership remain with leaser and transferred to lessee
Under the IFRS, there is no distinction between operating and capital lease
5) During the first half of 2X13, the French corporate tax rate was 26%. At the end of 2013, the French Parliament announced a changed in the corporate tax rate from 25% (July 2X13 onward) to an expected 20%. The earnings before taxes (EBT) for Kansas Ltd (Fr) are 80 million Euros first half; 90 million Euros second half of 2X13. The CFO decides to use the 20% tax rate in 2X13, prior to the passing of legislation. He is:
Not compliant with the IFRS
In compliance with the IFRS
Committing fraud
Manipulating data
Explanation / Answer
1. In saleable condition
2. Requires an entity to use the same accounting policies at interim and year-end
3. October 31, 2X13 statement: Debit termination expense for 100,000 British Pounds Sterling, Credit termination payable 100,000 British Pounds Sterling
4. Risks and rewards of ownership remain with leaser and transferred to lessee
5. Manipulating data
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