Test Bank For Intermediate Accounting Volume 2 Canadian 7th Edition By Beechy

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

1. 1) Conceptually, liabilities constitute a present obligation as a result of a past event and entail an

   expected future sacrifice of assets or services.

   A) True B) False

   Answer: B

2. 2) Under ASPE, only legal obligations are recognized. A) True

   B) False Answer: B

3. 3) A reasonable expectation on the part of a company’s stakeholders arising from a company’s past

   practices or behaviour may constitute a constructive obligation in certain instances.

   A) True B) False

   Answer: B

4. 4) A contingency may become a provision if the likelihood of the contingent event greatly increases. A) True

   B) False Answer: B

5. 5) Under IFRS, most financial liabilities are valued at Fair Value. A) True

   B) False Answer: B

6. 6) An improvement to a company’s credit rating under IFRS will lead to a reduction in the carrying

   amount of any financial liabilities and a gain being reported in OCI.

   A) True B) False

   Answer: B

7. 7) Loan guarantees are only recorded if they are likely to be paid. A) True

   B) False Answer: B

8. 8) Accrued liabilities made due to routine operating expenses are not normally discounted. A) True

   B) False Answer: B

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9) For a small population, the best estimate for the amount of a provision that must be recognized is

the expected value of the possible outcomes.

A) True B) False

Answer: B

10) Under IFRS, provisions are always recorded at their expected value. A) True

B) False Answer: B