NATIONAL MOCK BOARD EXAMINATION 2017

FINANCIAL ACCOUNTING AND REPORTING

1. When presenting discontinued operations, the single amount on the face of the statement of comprehensive income
that an entity presents consists of which of the following?
a. The total of the post-tax profit or loss of discontinued operations
b. The post-tax gain or loss from the measurement to fair value less costs to sell, or on disposal, the assets or
disposal group constituting the discontinued operation
c. The prior year pre-tax amount related to the discontinued operations
d. A and B
e. A and C

2. Which of the following is an example of an element of financial statements as per the Conceptual Framework?
a. Inventories
b. Risk management policy
c. Sustainability reporting
d. Capital management
e. All of the above

3. Company X, Ltd. is planning to adopt IFRS in the future. Which of the following is the primary authority whose
resources and publications the company should track in order to adopt IFRS in the future and where could they find
this information?
a. Committee of European Securities Regulators; CESR web site
b. International Accounting Statements Board; IASB web site
c. European Financial Reporting Advisory Group; IFRS web site
d. International Accounting Standards Board; IASB web site

4. Company A prepares its financial statements under IFRS. It describes the difference between total assets and total
liabilities and net increase in income and expense as turnover under the IASB’s Conceptual Framework. The auditor
objects to this description. Do you agree with the auditor?

a. Yes, the auditor is correct in objecting. The difference should be described as equity.
b. No. The entity is correct in its classification of the difference as turnover.
c. The auditor is partly correct. The net increase in income and expense is described as turnover.
d. None of the above

5. Which of the following is not an example of required disclosure under IAS 1?

a. Entity A is a joint stock company registered under the laws of Luxembourg on 20 April 20X0.
b. Entity B had 50 and 60 employees as of 31 December 20X2 and 20X1, respectively.
c. Entity C and its subsidiaries are primarily engaged in the retail and distribution of consumer goods.
d. The amount of unrecognized cumulative preference dividends as at 31 December 20X2 and 20X1 comprised
30,000 and 20,000, respectively.

6. Which of the following statements is false about IAS 16’s and IAS 18’s treatment of derecognition?
a. The two rules from IAS 18 for determining the date of disposal are the entity has transferred to the buyer the
significant risks and rewards of ownership of the asset, and the costs incurred or to be incurred in respect of
the transaction can be measured reliably.
b. Gains and losses on derecognition are taken to the income statement, being the difference between the asset’s
carrying value and the net disposal proceeds, if any.
c. Assets should be eliminated from the balance sheet on disposal or when no future economic benefits are
expected from their use or disposal.
d. IAS 16 stresses that gains on disposal of assets should not be classified as revenue

7. Contrado Limited owns the Rothfels Building, an office block in Rotterdam. The group uses half of the block for its
own administrative departments and lets out the other half.
a. It is an investment property.
b. It is property, plant or equipment.
c. It is an item of inventory.
d. If the two halves could be disposed of separately -- by sale or leased out under a finance lease -- they should
be accounted for individually as an owner-occupied property and as an investment property. If not, the
property is an owner-occupied property because the part occupied is not insignificant.

8. Which of the following is/are true, about the consensus regarding IFRIC 1?
a. If the related asset is measured using the cost model, a change in the existing decommissioning, restoration or
similar liability related to cash flows or discount rate shall be added to or deducted from the cost of the related
asset in the current period.
b. The amount deducted from the cost of the asset shall not exceed its carrying amount. If a decrease in the
liability exceeds the carrying amount of the asset, the excess shall be recognized immediately in profit or loss.

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 c. The adjusted depreciable amount of the asset is depreciated over its useful life. Therefore, once the related
asset has reached the end of its useful life, all subsequent changes in the liability shall be recognized in profit or
loss as they occur. This applies under the cost model, but not the revaluation model.
d. A and B only
e. A, B and C

9. Which of the following makes the statement true about the accounting treatment of a revaluation?

The accounting treatment of revaluations follows the principle that _______________________.

a. any revaluation surplus is realized and forms part of earnings

b. any revaluation surplus is realized but does not form part of earnings
c. any revaluation surplus is not realized but does form part of earnings
d. any revaluation surplus is neither realized nor forms part of earnings

10. Applying IAS 12, what is the effective income tax rate applicable in determining the deferred income tax of entities
under OSD (optional standard deduction) position assuming the income tax position was properly established as of
the reporting date?

a. 30% b. 18% c. 12% d. 0%

11. Which of the following is/are considered common reconciling item in the preparation of the statutory income tax
amount (rate) to effective income tax amount (rate)?

I. Permanent differences
II. Temporary differences
III. Change in income tax rate
IV. Movement of unrecognized DTA

a. I and II only
b. I, II and III only
c. I, III and IV only
d. I, II, III and IV

12. Which of the following possible temporary differences will be recognized outside profit or loss?

I. PAS 17 adjustment where rent expense is deductible only upon actual payment.
II. Fair value changes related to the remeasuarement of investment in shares classified as FVPL under PFRS 9.
III. Actuarial gains related to the remeasurement of pension asset under PAS 19 – Employee Benefits.
IV. Fair value changes related to the remeasuarement of investment in shares classified as FVOCI under PFRS 9.

a. I, II, III and IV

b. II, III and IV only
c. III and IV only
d. IV only

13. When measuring fixed production overheads, if an entity has abnormally high production in excess of normal
capacity, it is necessary to:
a. Expense unallocated overheads in the period
b. Increase the amount of overheads allocated to each unit of production
c. Reduce the rate of overhead absorption in order to avoid carrying the inventory at more than actual cost
d. Do nothing.

CASE 2

Below are the account balances prepared by the bookkeeper for Jack & Jill Company as of December 31, 2015:

Cash P 1,465,000
Accts receivable, net 930,007
Inventories 750,000
Investments 763,000

Additional information:

 Included in the cash account are: Cash for the retirement of bonds payable of P600,000; Contingency fund of
P500,000; Three-months money market funds of P750,000 and short term operating funds of P50,000.

 The receivable includes, among others; Customers’ account with credit balance of P45,000; Share subscription
receivable of P100,000 collectible with in two years from initial recognition. Shares were originally subscribed on

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 January 2, 2015. Also, it included a P600,000 (which had been past due for 6 months) charged to the account of
customer Seven Seas which at the moment is experiencing financial difficulty but promised to pay in full with in a
period of three years. The delivery of the full amount will be as follows: P100,000 at the end of 2016; P200,000 at the
end of 2017 and P300,000 at the end of 2018. Jack Company agreed to the terms of payment and charges no interest
for the future recovery of recognized receivable. Implicit rate of interest for a similar financial asset at the time the
receivable was originally recognized is 9%.

 Inventories do not include goods costing P100,000 sent to a consignee, however, Jack Company charged the
consignee for the total sales value of the goods. The amount charge against the consignee was included in the
receivable. The goods are mark to sell at 25% on cost. The “account sales” (report from the consignee) revealed that
75% of the goods were already sold. Charges of the consignee are as follows: 8% commission on the sales value of
merchandise sold and a P10,000 delivery cost for merchandise received on consignment and a P3,000 delivery cost
for goods sold.

 The investment account included among others the following: Prepaid operating costs, P30,000; Investment in equity
to profit or loss, P150,000; Investment in equity at fair value to other comprehensive income, P200,000; Investment
in associate, P700,000. The fair value of the investment in equity to profit or loss is P170,000 while the investment in
equity at fair value to other comprehensive income has a fair value of P250,000. The other investments had no
determinable fair value at the end of year 2015.

14. How much of the above accounts should be reported as current assets for the year ended December 31, 2015?

a) P1,063,000 c) P1,757,500
b) P1,665,000 d) P1,765,000

15. How much of the above accounts should be reported as non-current assets for the year ended December 31, 2015?

a) P 633,000 c) P1,499,991
b) P1,733,000 d) P2,132,991

CASE 3

16. During 2016, the Company acquired shares of stocks classified as FVOCI investment for an acquisition cost of
P100,000. Any gain (difference between the acquisition cost and selling price) from sale is subject to 5% capital gains
tax for the first P100,000 gain and 10% for all the excess over P100,000. The fair market value of the related equity
investment as of December 31, 2016 amounted P120,000. Determine the amount to be recognized in profit or loss
in relation to the deferred income tax liability to be recognized on this investment.

a. P20,000 b. P6,000 c. P2,000 d. P1,000 e. P0

CASE 4

Resolve Company has an investment in financial equity instrument in Marcus Company acquired at a cost of P900,000 in
2014. This investment was designated at initial recognition as fair value to other comprehensive income. Resolve
Company’s investment in Marcus has a market value of P700,000, as a result, Resolve Company recognized the
impairment loss of its investment in the 2014 other comprehensive income.

During the year 2015, due to changes in financial climate, there has been a complete turn-around in Marcus Company’s
financial instrument. The market value of Resolve Company’s investment, market value at the close of 2015 was
established at P950,000. On April 30, 2016, Resolve Company sold all the equity investment in Marcus Company at the
prevailing market value of P1,000,000.

17. What amount of impairment reversal should Resolve Company recognize in its 2015 profit or loss?

a) none c) P200,000
b) P50,000 d) P250,000

CASE 5

On January 2, 2014, Power Company, a medium size entity, purchased 20% of Plant Corporation’s 200,000 ordinary
shares for P3,000,000 including a P50,000 transaction cost. This investment gives Power the ability to exercise significant
influence over Plant Corporation. During 2014, Plant reported net income of P1,750,000 and paid cash dividends of
P1,000,000 on its ordinary shares. As of December 31, 2014, the shares of Plant Corporation are traded and are
currently selling at P81.25 per share.

18. In the statement of comprehensive income of year 2014, what net amount that is reported in relation to the
investment?

a) P200,000 c) P400,000
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 b) P250,000 d) P450,000

CASE 5

On January 2, 2014, East Company acquired 40,000 shares representing 15% of the outstanding voting stock of West
Company for P3,000,000. On January 2, 2015, East Company gain significant influence over the financial and operating
control of West when the latter retired some shares but did not include the shares held by East Company . The
retirement of some shares increased East Company interest in West Company to 20%. For the years ended December
31, 2014 and 2015, West Company reported the following:

Net Income – P6,000,000 in 2014, P8,000,000 in 2015;

Dividends declared and paid – P4,000,000 in 2014, P5,000,000 in 2015.

West Company is a listed company and its shares are publicly traded. The market value of West Company are as follows:
P80 on December 31, 2014 and P88 on December 31, 2015.

19. In the statement of financial position dated December 31, 2015, at what amount should the investment be
reported??

a) P3,000,000 c) P3,800,000

b) P3,520,000 d) P3,900,000

20. What is the net effect in the 2015 profit or loss of East Company related to their investment in West Company?

a) None c) P1,320,000
b) P600,000 d) P1,600,000

CASE 6

On January 2, 2015, Super Company invested in a 5-year 10% debt instrument with a face value of P3,000,000 in which
interest is to be received every December 31. The debt instrument has an effective interest rate of 8% and was acquired
for P3,239,563. Super Company has a business model of collecting the contractual cash flows related to the instrument.
On December 31, 2015, the debt instrument has a prevailing market rate of 9%.

The following are relevant present value factors:

PV factor of 8% after 4 years 0.7350298
PV factor of annuity of 8% after 4 years 3.3121268
PV factor of 9% after 4 years .7084252
PV factor of annuity of 9% after 4 years 3.2397198

21. What amount of interest income should the company report in its December 31, 2015 statement of comprehensive
income?

a) P259,165 c) P300,000
b) P291,561 d) P323,956
Case 7

Lincoln Company provided the following account balances on December 31, 2014:

Accounts payable, P125,000; Accrued taxes, P50,000; Ordinary share capital, P2,000,000; Dividends payable–preference,
P150,000; Mortgage payable (P200,000 due in six months), P1,200,000; Notes payable–20%, due on January 2, 2015,
P1,500,000; Shares premium-Ordinary share, P250,000; Preference share capital (redeemable at the option of the
shareholders), P450,000; Accumulated profits–December 31, 2014, P550,000; Unearned rent income, P25,000; Dividends
payable–ordinary, P100,000 and Share dividends payable, P300,000.

22. How much should Lincoln Company report as Shareholders’ equity on December 31, 2014?

a) P2,450,000 c) P3,100,000
b) P2,800,000 d) P3,550,000

23. How much should Lincoln Company report as the total liability on the December 31, 2014 statement of financial
position?

a) P3,150,000 c) P3,600,000
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 b) P3,450,000 d) P3,900,000

Case 8

Princess Company is in the business of deer farming. A herd 50 3-year old deer with a total fair value less point of sale
costs of P400,000 were held as of January 1, 2015. On January 2, 2015, 50 one-year old deer were purchased at a price of
P2,000 each. On July 1, 2015, 50 one-year and 6 month-old deer were purchased at a price of P2,200 each.

The relevant data are as follows:

Fair value of a 1-year old deer at December 31, 2015 P 2,400
Fair value of a 1 ½ -year old deer at December 31, 2015 P 4,000
Fair value of a 2-year old deer at December 31, 2015 P 6,000
Fair value of a 3 -year old deer at December 31, 2015 P 9,000
Fair value of a 4 -year old deer at December 31, 2015 P12,000

24. How much of the increase in the fair value of the biological assets during 2015 due to physical change?

a) P160,000 c) P430,000
b) P220,000 d) P450,000

25. How much of the increase in the fair value of the biological assets during 2015 due to price change?

a) P160,000 c) P430,000
b) P220,000 d) P450,000

CASE 9

At the end of January 2015, the city government provided Hesington Company a zero interest P30,000,000 3-year loan
used by the Company in acquiring a building on the same date. The prevailing market rate of interest for this type of loan
is 8%. The government imposes that the building must be used for social housing for ten years. The Company estimated
that there is reasonable assurance that it will meet the terms of the grant. The Company will classify the building as
owner occupied property after the socialized housing project. The Company opted to use the cost model of accounting
the building with a 15-year life from the date of acquisition. (Round PV factors to 4 decimal places)

26. Applying provisions of PAS 20 – Accounting for Government Grants and Disclosures of Government Assistance, what
is the amount recognized as income from the grant as of December 31, 2015?
a. P 618,600 b. P 567,050 c. P 1,746,360 d. P 1,905,120

27. Applying provisions of PAS 20 – Accounting for Government Grants and Disclosures of Government Assistance, what
is the net effect of the above transactions and events to the Company’s profit or loss for calendar year ended
December 31, 2018?
a. (P 2,000,000) b. (P 2,134,846) c. (P 3,438,930) d. (P 3,589,815)

CASE 11

Yin-Yang Company is involved in the exploration for and extraction of mineral resources. The Company’s accounting
policy for recognition purpose for these types of activities is the “successful effort” method. On January 1, 2016 Yin-Yang
Company acquired two quarrying rights. A schedule of the expenditures made with respect to the quarrying sites is
provided as follows:

Site O Site X
Quarrying rights 2,300,000 1,000,000
Topographical studies 1,200,000 200,000
Exploratory drilling 1,100,000 300,000
Trenching and sampling 1,600,000 400,000
Development costs (road construction to access site) 1,400,000 100,000
Depreciation of drilling rigs used for exploration 300,000 120,000

At the end of 2016 Yin-Yang Company had decided to continue exploration and extraction activities in site O (technically
and commercial viable). Unfortunately, further exploratory and development plans on site X would be abandoned (not
technically feasible and viable)

On January 1, 2017 Yin-Yang started extracting the mineral reserves from site O. It was expected that a total of
10,000,000 tons of mineral ore would be extracted from the site and it would be totally extracted within 8 years.

Yin-Yang Company acquired an extraction equipment for P600,000. The equipment which Yin-Yang Company intends to
use in another mining site was estimated to have a useful life of 12 years with salvage value of P5,000.

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Fixed installations were likewise completed at the start of 2017. The total cost incurred was P800,000. The installations
expected useful life is 10 years with no expected salvage value. Yin-Yang Company uses the straight-line method as its
depreciation policy for its long-lived assets.

Total tons extracted in 2017 and 2018 were 1,200,000 and 1,600,000 respectively.

28. The exploration and evaluation assets to be reported in the 2016 statement of financial position is

a. 6,500,000 b. 7,900,000 c. 8,520,000 d. 8,620,000

29. Depletion for 2017

a. 780,000 b. 948,000 c. 876,000 d. 1,044,000

30. Depreciation for 2017

a. 145,583 b. 129,583 c. 167,400 d. 174,375

CASE 12

31. Candice Company reported net income of P34,000 for the year ended December 31, 2016 which included
depreciation expense of P8,400 and a gain on sale of equipment of P1,700. The equipment had an historical cost of
P40,000 and accumulated depreciation of P24,000. Each of the following accounts increased during 2016 (Assume
that the increases in the following accounts are due to cash transactions only.):

Patent P9,800
Prepaid rent* 4,500
Available for sale investment 8,000
Bonds payable 5,000
*To be consumed within 12 months from the balance sheet date

What amount should be reported as net cash provided (used) by investing activities for the year ended December
31, 2016?

a. (P 100) b. (P 1,800) c. (P 17,800) d. P 16,000

CASE 13

On January 2016, the board of directors of KINGSMEN Corp. authorized the grant of 100 stock option per employee to
supplement the salaries of 500 employees. Each stock option permits the purchase of one share of KINGSMEN Corp.
ordinary share at a price of P25 per share (par value P20). The market price of the stock on January 1, 2016 is P40 per
share.

The options, which has a market value of P12 per option vest, or become exercisable, beginning on January 1, 2019, if
the employees stay with the Company for the entire three-year vesting period and provided that the average revenue
growth rate during the vesting period is at 20%. Additional 25 option per employee will vest if the average revenue
growth rate over the vesting period is at 30% or additional 50 option per employee will vest if the average revenue
growth rate over the vesting period is at 40%. The options expire on December 31, 2020.

By the end of 2016, none of the employees left the company and that the company estimates that none will leave until
the vesting period ends. Furthermore, the actual revenue growth rate in 2016 was at 25%, the company expects the rate
will be sustained over the next two years.

Requirements:

32. What is the amount recognized as expense in 2016?

a. P 300,000 b. P 250,000 c. P 200,000 d. P 175,000

33. Assuming that 5 employee left the company by the end of 2017, and it was estimated that another 10 employees
will leave by the end of 2018, furthermore, the actual revenue growth rate in 2017 was at 32.5% and that the
company expects that this rate will be sustained over the following year, what is the amount recognized as expense
in 2017?
a. P 185,000 b. P 188,000 c. P 235,000 d. P 285,000

34. Assuming that a total of 30 employees actually left the company in 2018, and the actual revenue growth rate in 2018
was at 62.5%, what is the amount recognized as expense in 2018?
a. P 212,500 b. P 255,000 c. P 499,000 d. P 352,000

CASE 14

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35. On January 1, 2016, Merl’s defined benefits pension plan showed a surplus of P75,000. The maximum future benefit
available to Merl in the form of future contribution reductions was P30,000. The 2015 service costs amounted to
P8,000 and the assumed discount rate at the beginning of the period amounted to 5%. During 2015, contributions of
P9,000 were made into the pension plan. If the maximum future benefit available to Merl is P30,000, what is the
amount of net pension asset or liability at December 31, 2016?
a. 27,250 [1 January 2016: 30,000 (asset) – 8,000 (service cost) – 3,750 (interest charge of 5% of 75,000) + 9,000
(contributions)]
b. 29,500 [1 January 2016: 30,000 (asset) – 8,000 (service cost) – 1,500 (interest charge of 5% of 30,000) + 9,000
(contributions)]
c. 30,000 [asset ceiling of 30,000]
d. 31,000 [1 January 2016: 30,000 (asset) – 8,000 (service cost) + 9,000 (contributions)]

CASE 16

36. When measuring the value of share options, what valuation models are allowed by IFRS 2?
a. Stockyard option formula
b. Lattice option-pricing or binomial (or monte carlo)
c. Closed-form or Black-Scholes-Merton formula
d. A and C are correct
e. B and C are correct

37. Finance Corp. is preparing to apply IFRS 13 for the first time. The financial reporting manager asks his team to
prepare the following information for disclosure in relation to each fair value measurement categorized within Level
2 and Level 3 of the fair value hierarchy:

A description of the valuation techniques used in the fair value measurement

A description of the inputs used in the fair value measurement

Quantitative information about significant unobservable inputs for Level 3

The assistant manager is of the opinion that Finance Corp. is not required to create quantitative information just to
comply with the Standard if this information was not already developed by Finance Corp., while the financial
reporting manager believes it is mandatory to create such quantitative information.

a. Finance Corp. is not required to develop quantitative information just to comply with IFRS 13, but cannot
ignore information that is reasonably available.
b. Finance Corp. is required to develop quantitative information, even if it has not already been developed.
c. Finance Corp. is not required to develop quantitative information for Level 3 inputs per IFRS 13.
d. Finance Corp. needs to use available data to develop quantitative information.

38. What Standard(s) would apply to a loan commitment that is not within the scope of IAS 39?
a. IAS 18
b. IAS 37
c. IAS 32
d. A and B are correct
e. A and C are correct

39. Which of these is a disclosure that the lessor must make for a finance lease?
a. Lease and sublease payments recognized as expenses in the period, showing separately minimum lease
payments, contingent rents, and sublease payments
b. Contingent rents recognized in P&L for the period
c. A general description of the lessee’s significant leasing arrangements, including restrictions imposed by leases,
such as those concerning dividends, additional debt, and further leasing
d. The net carrying amount at the balance sheet date (for each class of assets)

40. How does the lessor’s definition of “minimum lease payments” differ from the lessee’s definition?
a. For only the lessor, they include any residual value guaranteed by a party unrelated to the lessor or to the
lessee.
b. For only the lessee, they include any residual value guaranteed by a party unrelated to the lessor or to the lessee.
c. For only the lessor, they include payments over the lease term that the lessee is or can be required to make,
excluding contingent rent and taxes.
d. For only the lessee, they include payments over the lease term that the lessor is or can be required to make,
excluding contingent rent and taxes.

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41. Which of the following segments need to be disclosed separately?

I. Operating segments that contribute 10% or more of the entity's total sales
II. Operating segments that contribute 10% or more of the combined reported profit of all operating segments
III. Operating segments that contribute 10% or more of the entity's total cost of sales
IV. Operating segments that have 10% or more of the combined assets of all operating segments

a. I and II are true

b. II and IV are true
c. I, II and IV are true
d. II, III and IV are true

42. Which of the following statements is not true?

a. Related parties may enter into transactions that unrelated parties may not.
b. Transactions between related parties may not be made at the same amounts as between unrelated parties.
c. Related party transactions occur rarely in practice.
d. The profit or loss and financial position of an entity may be affected by a related party relationship, even if
related party transactions do not occur.
e. Knowledge of related party transactions, outstanding balances and relationships may affect assessment of the
operations by users of the financial statements.

43. Under IAS 24, which of the following is not a required disclosure?
a. The reporting entity must disclose the name of its parent and, if different, its ultimate controlling party.
b. If neither the parent nor the ultimate controlling party produces consolidated financial statements available for
public use, the name of the next most senior parent that does so must be disclosed.
c. The pricing policies between the reporting entity and other companies that are a part of the same group must
be disclosed.
d. Relationships between parents and subsidiaries must be disclosed, irrespective of whether there have been
transactions between them.

44. What is the definition of “constructive obligation?”

a. A contract in which the unavoidable costs of meeting the obligations under the contract exceed the economic
benefits expected to be received under it
b. A present obligation of an entity, arising from past events, the settlement of which is expected to result in an
outflow from the enterprise of resources embodying economic benefits
c. A program that is planned and controlled by management and materially changes either the scope of business
undertaken by an enterprise, or the manner in which that business is conducted
d. An obligation that derives from an entity’s actions when by an established pattern of past practice, published
policies, or a sufficiently specific current statement the entity has indicated to other parties that it will accept
certain responsibilities; as a result, the entity has created a valid expectation on the part of those other parties
that it will discharge those responsibilities.

45. Complete the definition of contingent asset by selecting the appropriate words to fill in the blanks.

A contingent asset is defined as a ________ asset that arises from ________ events and whose ________ will be
confirmed only by the occurrence or non-occurrence of one or more future events not wholly within the control of
the entity.
a. possible, current, existence
b. certain, current, maintenance
c. possible, past, existence
d. certain, past, maintenance
e. tangible, future, existence
46. What is the amount that should be disclosed in the maturity analysis required for liquidity risk disclosures under IFRS
7?
a. Contractual cash flows of finance lease obligations after deducting finance charges
b. Market value of forward agreements
c. Net loan commitments
d. Contractual amounts to be exchanged in a derivative financial instrument for which gross cash flows are
exchanged

47. Which of the following costs can be directly attributable to the cost of an internally generated intangible asset?
a. Legal and secretarial costs of establishing a new entity
b. Materials used and services consumed
c. Advertising and promotional costs relating to the introduction of a new product
d. Relocation or reorganization costs
e. Selling, administration and general overhead expenditure

48. The following statements are based on PAS 34 (Interim Financial Reporting):

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 Statement I: An interim financial report is prepared on a consolidated basis if the entity's most recent annual
financial statements were consolidated statements.

Statement II: If an entity publishes a complete set of financial statements in its interim financial report, the form and
content of those statements shall conform to the requirements of PAS 1 for a complete set of financial statements.

Statement III: An entity shall apply different accounting policies in its interim financial statements and in its annual
financial statements.

a. Only statement I is true

b. Only statement II is true
c. Only statement III is false
d. All of the statements are true

49. A change in the estimated useful life of an intangible asset, resulting from oversight of facts that are available on
initial recognition should be accounted for as a
a. Prior period error
b. Change in accounting policy
c. Change in accounting estimate
d. Initial adoption of an accounting policy

50. The effect of a change in accounting policy that is inseparable from the effect of a change in accounting estimate
should be reported
a. In the period of change and future periods of the change affects both
b. By restating the financial statements of all prior periods presented
c. By showing the pro forma effects of retrospective application
d. As a correction of error

* * * END OF EXAMINATION * * *

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