Pas 23 Pas 27
Pas 23 Pas 27
Pas 23 Pas 27
1. According to PAS 23, borrowing costs that do not directly relate to acquisition, construction or
production of a qualifying asset are expensed
4. In which of the following instances is the capitalization of borrowing costs under PAS 23 would most
likely be suspended?
b. Active development is stopped to give time for the engineers to reevaluate a design flaw
6-7. On Jan 1, 20x1, Concepti had the following general borrowings. A part of the proceeds was used to
finance the construction of a qualifying asset:
Jan 1 - P5,000,000
March 1 - P4,000,000
August 31 - P3,000,000
December 1 - P2,000,000
6. How much borrowings costs are capitalized to the cost of the constructed qualifying asset?
a. 1,045,000
b. 920,000 (12%x1M)+(10%x8M)
c. 1,026,667
d. 970,900
7. How much is the cost of the qualifying asset on the initial recognition?
a. 15,045,000
b. 14,970,900
c. 14,920,000 (5M+4M+3M+2M+920)
d. 13,010,000
PAS 24-Related Party Disclosures
3. It refers to persons having authority and responsibility for planning, directing and controlling the
activities of the entity, directly or indirectly, including any director of that entity. Key management
personnel
4. Control, having more than 50% ownership of the company, has the power to govern the
financial and operating policies of an entity so as to obtain benefits from its activities. The best example
of it is the parent-associate relationship. Is it true or not? False
5. Ms. Maria and Mr. Nathan share joint control over TGWEB, Inc. Which of the following are
related parties?
C. Both A and B
1.) What is presumed to exist of investor holds, directly or indirectly 20% or more of voting power?
Significant influence
4.) Is less than 20% ownership interest has control over the investee? True or False.
5.) Some cases, an investor didn't even reach the 20% above requirement in ownership interest,
therefore, is it automatic that the significant influence is not present at all?
Yes or no and why? No, it is presumed that the investor does not have significant influence, unless such
influence can be clearly demonstrated. The presence of one or more of the indicators set out in the
earlier paragraph may indicate that an investor exercises significant influence over a less than 20 per
cent-owned corporate investee. Decisions regarding the appropriateness of applying the equity method
for a less than 20 per cent-owned corporate investee require careful evaluation of voting rights and their
impact on the investor's ability to exercise significant influence.
6-7) On August 12, 2022, Family Mart Company acquires 30% interest in Molly Ventures Corp. for
P550,000. Molly Ventures Corp. reports profit of P150,000 and declares dividends of 65,000.
2. Such Hybrid plans are considered defined benefit plans for the purposes of this this standard the PAS
26.
3. Funding refers to transfer of assets to an entity separate from the employer’s entity to meet
4. Hybrid plans have characteristics of both defined contribution plan and defined benefit plan
A statement of net assets available for benefits and a description of the funding policy.
6. Retirement benefit plans are arrangements whereby an entity provides benefits for employees on or
after termination of service.
7. Plan assets are measured at fair value or market value. (TRUE OR FALSE)
PAS 27
1. PAS 27 does not mandate which entities should produce consolidated financial statement. True or
False
Accounting for investments in subsidiaries, jointly ventures, and associates when an entity elects, or is
required by local regulations, to present separate (non-consolidated) financial statements.
4. In preparation of Separate Financial statements in accordance with all applicable PFRS, investment in
subsidiaries, associates or joint venture are accounted for either, what?
At cost or in accordance with PAS 39 Financial Instruments: Recognition and Measurement or PFRS 9
Financial Instruments.
5. It is a business arrangement in which two or more parties agree to pool their resources for the
purpose of accomplishing a specific task.
Joint Venture
6. PAS 27 is applied by investor entities if they are exempted from consolidation requirements provided
by which PFRS? PFRS 10
Consolidated financial statements or in addition to the financial statements of an investor that does not
have controlled entities but has investments in associates or joint ventures in which the investments in
associates or joint ventures are required by IPSAS 36 to be accounted for using the equity method
1. Interest expense, lease liabilities and exchange differences are examples of ____?
- borrowing costs
- Borrowing costs that are attributable to the acquisition, construction or production of qualifying asset
from part of the cost of that asset. Other borrowing costs are expensed when incurred.
3. What formula will be used when computing for the qualifying asset financed through specific
borrowings?
- Interest expense on specific borrowing less investment income earned on specific borrowing =
borrowing cost eligible for capitalization.
4. In preparation of financial statements, qualifying assets are being segregated from the other assets.
True or false?
- False
5. Commencement of capitalization happens when all of the conditions are being met. The following
conditions states that;
c. It undertakes activities that are necessary to prepare the asset for its intended use or sale.
PAS 24 Related Party Disclosure
1. Trulaloo or Eclavoo- RPD 24 is required for the Financial Statements to make sure that it complies
with the standard and reasonable assurance of compliance to protect the public.
Answer: Truelaloo
2. Truelaloo or Eclavoo- Necessary disclosure of PAS 24 does not prescribe a form of paragraph, it only
prescribes the necessary amounts.
Answer: Eclavoo, due because that even a paragraph form is prescribe by PAS 24 to be disclosed, the
nature and form of it should be.
3. Scenario: What if you only have 19% and below investment, is it possible for you to have a significant
influence? Yes or No, justify your answer.
Yes, because there are indications to be considered in this significant influence like; representations in
the board of directors, Participation in policy making, Materials transactions between investor and
investee, Interchange of managerial personnel, and Provision of essential technical information.
5. Which of the following best indicates that two parties are related for purposes of PAS24?
c. One party has the ability to affect the financial and operating decisions of the other party through
control, significant influence or joint control.
d. One party is in the private sector and the other is a government regulatory body.
1. It is the assets of a pension plan or long-term employee benefit funds for the purpose of paying
benefits to employees.
- Plan Assets
2. The financial statement of a retirement benefit plan, whether defined contribution plan or defined
benefit plan, does not include which of the following?
- PAS 19
4. What is the main difference between the financial statements of a defined contribution plan and a
defined benefit plan?
a. The financial statement of a defined contribution plan include a statement of net asset available for
benefits
b. The financial statement of defined benefit plan shows information on the actuarial present value of
promised retirement benefit
c. The financial statement of defined contribution plan include a statement of changes in net assets
available for benefits
5. The actuarial present value of retirement benefits is the present value of expected payments by a
retirement benefit plan existing to past employees, attributable to service already rendered.
1. Pas 27 prescribes the accounting and disclosure requirements for investments in ____, _____, and
_____ when an entity prepares separate financial statements.
2. True or False. PAS 27 mandates which entities should produce separate financial statements.
3. What are the two instances when will the entity shall apply PAS 27?
4. According to PAS 27, investments in subsidiaries, associates or joint venture are accounted for in the
separate financial statements
a. at cost
c. using the equity method under PAS 28 Investments in Associates and Joint Ventures.
4. Dividends from a subsidiary, associate or joint venture are recognized in ________ when the entity’s
right to receive the dividends is established.
Answer:
5. profit or loss
PAS 28 Questions and Answers.
1. If cost is greater than fair value of the interest acquired, excess is _______________.
Goodwill
2. Give at least three proofs that an investor has significant influence over the investee.
• Any of the following may provide evidence of the existence of significant
influence:
a. Representation on the board of directors or equivalent governing body of the
investee;
b. participation in policy-making processes, including participation in decisions
about dividends or other distributions;
c. Material transactions between the entity and its investee;
d. Interchange of managerial personnel; or
e. Provision of essential technical information
5. Does preference shareholders have significant influence over the investee? Explain.
No, because only ordinary shareholders have voting rights. If the investor
doesn’t have voting power, it doesn’t have significant influence.
6. If an investor has more than 50% ownership interest, what accounting treatment shall
the investor use?
Acquisition Method
7. If the investee has an outstanding cumulative preference share, the investor computes
its share of profits or losses after ______________________________________.
Deducting one-year dividends on those shares.