PFRS 1 First-time Adoption of PFRSs

QUIZ:

1. An entity that presents its first PFRS financial statements is referred to under PFRS
1 as a
a. first-timer.
b. first-time adopter.
c. PFRS novice.
d. first-time PFRSer.

2. PFRS 1 requires an entity to prepare and present an

a. opening PFRS financial statements.
b. opening PFRS statement of financial position.
c. opening PFRS statement of profit or loss and other comprehensive income.
d. opening notes to the financial statements.

3. The date to transition to PFRSs is

a. the beginning of the earliest period for which an entity presents full
comparative information under PFRSs in its first PFRS financial statements.
b. the end of the earliest period for which an entity presents full comparative
information under PFRSs in its first PFRS financial statements.
c. the beginning of the first PFRS reporting period.
d. the end of the first PFRS reporting period.

4. The statement of financial position of ABC Co. as of January 1, 20x4 included an

allowance for bad debts computed using the “aging of accounts receivable”
method. The “over 120 days” category in the aging schedule included a ₱200,000
receivable which was actually written off on January 5, 20x4 (the 20x3 financial
statements were authorized for issue on March 1, 20x4). ABC Co. could not have
foreseen this event on December 31, 20x3. Does ABC Co. need to revise its
previous estimate of bad debts as of January 1, 20x4 (date of transition) on
December 31, 20x5 (end of first PFRS reporting period)?

a. No. The receipt of the information on January 5, 20x4 is accounted for

prospectively as a non-adjusting event after the reporting period.
b. Yes. The receipt of the information on January 5, 20x4 is accounted for
retrospectively as an adjusting event after the reporting period.
c. No. The event should be ignored because it is within the scope of the previous
GAAP and not the PFRSs.
d. Yes. Although, PFRS 1 does not require the adjustment, other PFRSs do.

5. Under PFRS 1, the early application of PFRSs that have not yet become effective as
of the current reporting period
a. is required.
b. is permitted, but not required.
c. is required, but not permitted.
d. is prohibited.

6. PFRS 1 requires a first time adopter to do which of the following in the opening
PFRS statement of financial position?
a. Recognize all assets and liabilities whose recognition is required by PFRSs.
b. Not recognize items as assets or liabilities if PFRSs do not permit such
recognition.
c. Reclassify items that it recognized in accordance with previous GAAP as one
type of asset, liability or component of equity, but are a different type of asset,
liability or component of equity in accordance with PFRSs.
d. Apply PFRSs in measuring all recognized assets and liabilities.
e. All of these

7. Retrospective application of accounting policies means

a. as if PFRSs have been used all along.
b. as if PFRSs are used only in prior periods.
c. as if PFRSs are used only in the current period.
d. restating the financial statements in order to correct all errors

8. Which is the accounting standard-setting body in the Philippines at present ?

A. Accounting Standard Council
B. Accounting Standard Council
C. Philippine Accounting Standards Board
D. Financial Reporting Standard Council
9. Generally accepted accounting principles
A. Are accounting principles based on law
B. Derive their credibility and authority from law
C. Derive their authority and credibility from regulatory authority
D. Derive their credibility and authority from recognition and acceptance by the accountancy
profession.

10. Financial statements prepared in accordance with PFRSs are said to be the entity's "First PFRS
financial statements" if the previous financial statements
A. Were prepared in accordance with other reporting standards not consistent with the PFRSs.
B. Did not contain an explicit and unreserved statement of compliance with PFRSs.
C. Contained an explicit and unreserved statement of compliance with some, but not all, PFRSs.
D. Were prepared using some, but not all, applicable PFRSs.
E. Any of these.
11. Which of the following does IFRS 1 require an entity to do in the opening IFRS statement of financial
position that it prepares as a starting point for its accounting under IFRSs?

A) Recognise all assets and liabilities whose recognition is required by IFRSs

B) Not recognise items as assets or liabilities if IFRSs do not permit such recognition
C) Reclassify items that it recognised under previous GAAP as one type of asset, liability or component of
equity, but are a different type of asset, liability or component of equity under IFRSs
D) Apply IFRSs in measuring all recognized assets and liabilities
E) All of the above
F) A and C

12. An entity’s first IFRS financial statements shall include at least __________, __________, two
separate statements of profit or loss (if presented), two statements of cash flows, two statements of
changes in equity and ____________, including comparative information for all statements presented.

A. Three statements of profit or loss and other comprehensive income; two statements of financial
position; related notes
B. Two statements of financial position; two statements of profit or loss and other comprehensive
income; two sets of related notes
C. Three statements of financial position; two statements of profit or loss and other comprehensive
income; related notes
D. Three statements of financial position; three statements of profit or loss and other comprehensive
income; two sets of related notes

13. Which of the following statements is true regarding the requirements of IFRS 1?

A) An entity shall apply different versions of IFRSs that were effective at earlier dates
B) An entity shall not apply different versions of IFRSs that were effective at earlier dates
C) An entity may apply a new IFRS that is not yet mandatory if that IFRS permits early application
D) An entity may not apply a new IFRS that is not yet mandatory if that IFRS permits early application
E) B and D

14. the explicit and unreserved statement of compliance with PFRSs required under PFRS 1 is presented

A. On the face of the opening statement of financial statements

B. On the face of all of the financial statements
C. In the notes
D. All of these
15. The date to transition to PFRSs is
a. the beginning of the earliest period for which an entity presents full comparative
information under PFRSs in its first PFRS financial statements.
b. the end of the earliest period for which an entity presents full comparative information under
PFRSs in its first PFRS financial statements.
c. the beginning of the first PFRS reporting period.
 d. the end of the first PFRS reporting period.

16. which of the following statement is incorrect regarding provisions of PFRS 1?

A. The first time adopter shall select its accounting policies based on the latest version of PFRSs as at the
current reporting date
B. Accounting policies based on the latest version of PFRSs are applied to the current period financial
statement while those based on earlier versions of PFRSs are applied to the comparative financial
statement
C. The selected policies are applied to all financial statements presented together with the first PFRS
financial statements
D. Early application of PFRSs that have not yet become effective as of the current reporting period is
permitted not required

17. Which of the following statements is incorrect regarding the provisions of PAS 1?

A. An entity is required to present separate sections of profit or loss and other comprehensive income.
B. Presenting an income statement or statement of profit or loss in addition to a statement of other
comprehensive income is permitted when an entity elects to use the "two-statement presentation.
C. Presenting an income statement or statement of profit or loss alone without a statement of other
comprehensive income is allowed.
D. Presenting comprehensive income as a note disclosure only is prohibited.

18. Retrospective application under PFRS 1 requires restating assets and liabilities in the opening statement
of financial position in order to conform with PFRSs. The resulting adjustment are:

A. Recognized directly in retained earnings

B. Recognized in profit or loss
C. Recognized directly in other category of equity
D. A or C

PFRS 2 share based payment

QUIZ:
1. Many shares and most share options are not traded in an active market. Therefore,
it is often difficult to arrive at a fair value of the equity instruments being issued.
Which of the following option valuation techniques should not be used as a
measure of fair value in the first instance?
a. Black-Scholes model.
b. Binomial model.
c. Monte-Carlo model.
d. Intrinsic value.
(Adapted)

2. Elizabeth, a public limited company, has granted 100 share appreciation rights to
each of its 1,000 employees in January 20X4. The management feels that as of
December 31, 20X4, 90% of the awards will vest on December 31, 20X6. The fair
value of each share appreciation right on December 31, 20X4, is P10. What is the
fair value of the liability to be recorded in the financial statements for the year
ended December 31, 20X4?

a. P300,000
b. P10 million
c. P100,000
d. P90,000

DEC 31 20X4 = 1000 (100 000 X 90% ) x P10 x 1/3

DEC 31, 20X5= -
DEC 31, 20X6 = -

100 X 1000 = TOTAL SHARE OPTIONS GRANTED

3. On January 1, 20x1, JP CO. agreed to issue 5000 shares to Rock Company in exchange for
construction of a building. Ownership of the building was trasferred on November 30, 2021.
However, the contract price was settled on January 01, 20x2. At which date should JP Co recognize
the acquisition of building?
A. January 01, 20x1
B. November 30, 20x1
C. January 01, 20x2
D. November 30, 20x2
4. On January 01, 20x1, Gen Co. grants 10,000 share option to its employees. The share option entitles
the employees to purchase Gen Co.'s shares at PHP 110 per share. Gen Co.'s shares have a par
value of PHP 100 per share and a fair value of PHP 120 per share. The share options have fair value
of PHP 15 per share. If the Shares vest immediately, what amount should be debited as Salaries
Expense on January 01, 20x1?
A. 150,000
B. 1,000,000
C. 1,200,000
D. 1,500,000
5. On January 01, 20x1, Gen Co. grants 10,000 share option to its employees. The share option entitles
the employees to purchase Gen Co.'s shares at PHP 110 per share. Gen Co.'s shares have a par
value of PHP 100 per share and a fair value of PHP 120 per share. The share options have fair value
of PHP 15 per share. The shares vest immidiately and the employees exercised the share option at
July 01, 20x1. Which of the following is the correct journal entry at July 01, 20x1
A. Debit to cash of 1,100,000
B. Credit to cash of 1,100,000
C. Debit to share premium of 150,000
D. Credit to share capital of 150,000

6. Which of the following statements is incorrect?

A. When share option vests immediately, total compensation expense is recognized in full
B. When share option do not vest immediately, total compensation expense is recognized in full
C. When share option vests immediately, there is no vesting period to complete
D. When share option do not vest immediately, there is a required vesting period to complete.

7. Which of the following is true about the Fair Value Method?

A. It is only computed annually

B. It is mandated by IFRS 2
C. measures the fair value of options at the date of purchase
D. None of these
8. What are the two measurement methods of share options?
A. Fair value and Initial value
B. Fair value and Appraisal value
C. Fair value and Intrinsic value

9. On January 1, 20x1, ABC Inc. granted 400 share options to all its employees (200 employees),
conditional upon the remaining employees in the entity upon a 3-year vesting period. On the grant
date. Each share option has a fair value of P35, an option price of P30 and a par value of P25. By
December 31, 20x1, 10 employees have left the entity and according to a weighted average
probability, 10 more employees will most likely leave during the in 20x2. How much compensation
expense should the entity recognize on December 31, 20x1?
A. 886,666.67
B. 720,000
C. 840,000
Dec 31, 20x1
D. 2,520,000
200- 10= 180 x 400 = 72 000 granted
Solution : shares

(72 000 x P35 x 1 / 3) = 840 000

January 1, 20x1 = -
Dec 31 20x1 = 10 employees
Dec 31 20x2 = 0

10. On January 1, 20x1, ABC Inc. granted 400 share options to all its employees (200 employees),
conditional upon the remaining employees in the entity upon a 3-year vesting period. On the grant
date. Each share option has a fair value of P35, an option price of P30 and a par value of P25. By
December 31, 20x2, the entity decided to award them early and settled with a cash payment of
4,000,000. No employees left the entity during the year 20x1 and 20x2. How much compensation
expense should the entity recognize?
A. 1,200,000
B. 2,133,333.33 400 x 200 x 35 = 2 800 000
C. 1,480,000
D. 1,600,000 2 800 000 – 4 000 000 = 1 200 000
11. An accounting standard that governs Share-based payments
A. IFRS 3
B. IFRS 2
C. IFRS 6
D. None of these
12. It is a transaction in which the entity acquires goods or services and pays for them by issuing its
own equity instruments or cash based on the value of its equity instruments.

A. Share-based payment transaction

B. Cash-settled share based transaction
C. both are correct
D. none are correct

13. A share based payment transaction is one which an entity receives goods or services and pays for
them
A. By issuing its own equity instruments
B. Through cash but the amount is based on the FV of the entity or the supplier of the goods or
services
C. A share-based payment is a transaction in which the entity receives goods or services either
as consideration for its equity instruments or by incurring liabilities for amounts based on the
price of the entity's shares or other equity instruments of the entity.
D. Any of these

14. Which of the following is excluded from the scope of PFRS 2?

A. Employee share option plans
B. Employee share appreciation rights
C. Purchase of goods from an unrelated party in exchange for an entity’s own shares of stock
D. Transfer of equity instrument as consideration for business combination
PFRS 3 – BUSINESS COMBINATION

1. The “excess of the acquirer’s interest in the net fair value of acquiree’s identifiable assets,
liabilities, and contingent liabilities over cost” (formerly known as negative goodwill) should be

a. Amortized over the life of the assets acquired.

b. Reassessed as to the accuracy of its measurement and then recognized immediately in profit or loss.
c. Reassessed as to the accuracy of its measurement and then recognized in retained earnings.
d. Carried as a capital reserve indefinitely.

2. The acquisition date is

a. the date on which the acquirer obtains control of the acquiree.
b. the opening date.
c. the date the acquirer transfers to the acquiree the consideration in a business combination.
d. any of these

3. On January 1, 20x1, ABC Co. acquired 60% interest in XYZ, Inc. for ₱2,000,000cash. ABC Co. incurred
transaction costs of ₱100,000 in the business combination.ABC Co. elected to measure NCI at the NCI’s
proportionate share in XYZ, Inc.’sidentifiable net assets. The fair values of XYZ’s identifiable assets and
liabilities atthe acquisition date were ₱6,000,000 and ₱3,500,000, respectively. How much isthe goodwill
(gain on a bargain purchase)?
ASSETS 6 000 000
LIAB (3 500 000)
a. 500,000 FVINA 2 500 000
b. 478,000
FVINA 2 500 00
c. (500,000)
MULTI NCI (60%-100%) 40%
d. (478,000) NCI 1 000 000

CT 2 000 000
NCI 1 000 000
PHI -

4. Which of the following areas does IFRS 3 apply to?

TOTAL 3 000 000
LESS FVINA (2 500 000)
GOODWILL 500 000
A) The accounting for the formation of a joint arrangement in the financial statements of the joint
arrangement itself
B) The acquisition of an asset or a group of assets that does not constitute a business
C) A combination of entities or businesses under common control
D) None of the above
E) A and B

5. If the assets acquired are not a business, the reporting entity shall account for the transaction or other
event as __________.
A. A non-controlling interest
B. An asset acquisition
C. An adjusting event
D. A business combination

6. For each business combination, one of the combining entities shall be identified as the __________.
A. Entity that has joint control
 B. Controlling entity
C. Acquirer
D. Combined entity

7. Which of the following agrees with PFRS 3 regarding the recognition of costs that the acquirer expects but is
not obliged to incur in the future to effect its plan to exit an activity of an acquiree?
A. The acquirer shall recognise these costs as part of applying the acquisition method
B. The acquirer shall not recognises these costs in its post-combination financial statements in
accordance with other IFRSs
C. The acquirer shall not recognise these costs as part of applying the acquisition method
D. The acquirer shall never recognises these costs

8. At the acquisition date, the acquirer shall __________ the identifiable assets acquired and liabilities
assumed as necessary to apply other IFRSs subsequently.
A. Revaluate or classify
B. Classify or designate
C. Dispose or transfer
D. Transfer or designate

9. Which of the following is not an example of classifications or designations that the acquirer shall make on
the basis of the pertinent conditions as they exist at the acquisition date?
A) Classification of a contract as an insurance contract in accordance with IFRS 4 Insurance Contracts
B) Designation of a derivative instrument as a hedging instrument in accordance with IFRS 9
C) Classification of a lease contract as either an operating lease or a finance lease in accordance with IAS 17
Leases
D) A and C
E) All of the above
10. The acquirer shall measure the identifiable assets acquired and the liabilities assumed at their:
A. Acquisition-date fair values
B. Acquisition-date historical cost
C. Reporting-date net book value
D. Reporting-date present value

11. Which of the ff method must be applied in accounting for business combination under PFRS 3?
A. Aquirer method
B. Acquisition method
C. Purchase method
D. Pooling method

12. The company that obtains control over another company in a business combination transaction is referred
to as the

A. Aquirer
B. Patent
C. Subsidiary
D. A and B
13. According to PFRS 3, Which of the following transaction costs would increase the amount of goodwill from a
business combination?

a. Legal fees, accounting fees, and similar cost

b. Issuance cost of equity securities
c. Issuance costs of debt instruments
d. None of these

14. t is a transaction or other event in which an acquirer obtains control of one or more businesses.
A. Business Combination
B. Merger
C. Consolidation
D. Controlling Interest
15. This is define as an integrated set of activities and assets capable of being conducted and managed for the
purpose of providing a return directly to investors or other owners, members or participant
A. Business
B. Transaction
C. Isolated event
D. Undertaking
16. An acquirer might obtain control of an acquiree in all of the following, except
A. By transferring cash, cash equivalents and other assets
B. By issuing equity interests
C. By contract alone, even without consideration
D. By acquiring interest in a joint venture

17. A business combination may be structed in all of the following, except

A. One or more businesses become subsidiaries of an acquirer
B. One entity transfers net assets to another entity
C. A group of former owners of one of the combining entities obtain control of the combined entity
D. An entity acquires assets that are not a business

18. It is a business combination in which all of the combining entities or businesses ultimately are controlled by
the same party or parties both before and after the combination and that control is not transitory.
A. Combination of entities or businesses under common control
B. True merger
C. Merger of equals
D. Consolidation

19. What is the term for the business combination where all combining entities transfer their net assets to a
newly formed entity?
A. True merger
B. Legal merger
C. Roll up transaction
D. Spin off

20. Which statement best describes the term control?

A. The mutual sharing of risks and benifits
 B. The power to participate in the financial and operating policy decisions of an entity
C. The holding of a significant proportion of the share capital in another entity
D. The power to govern the financial and operating policies of an entity so as to obtain benefits from the
activities

21. This is defined as the entity that obtains control of an acquiree.

A. Acquirer
B. Investor
C. Shareholder
D. Owner
22. This is defined as holders of equity interest of investor-owned entities, or members and participants in
mutual entities.
A. Shareholders
B. Investors
C. Owners
D. Participants
23. An entity shall account for all business combinations by applying
A. Acquisition method
B. Pooling method
C. Proportional consideration
D. Equity method

24.The acquisition method of accounting for a business combination requires all of the following, except
A. Identifying the acquirer
B. Determining the acquisition date
C. Recognizing and measuring the identifiable assets acquired, the liabilities assumed and the noncontrolling
interest in the acquiree at carrying amount
D. Recognizing goodwill or gain from bargain purchase.

25. Which statement is incorrect concerning an acquirer?

A. In a business combination effected by transferring cash or other assets, the acquirer is usually the entity
that transfers the cash or other assets
B. In a business combination effected by issuing equity interests, the acquirer is usually the entity that issues
the equity interests
C. The acquirer is usually the combing entity whose relative size is significantly greater than that of the other
combining entity or entities
D. If a new entity is formed to issue entity interests to effect a business combination, the new entity formed
is necessarily the acquirer

26. Which statement in relation to an acquisition date of a business combination is incorrect?

A. The acquisition date is the date on which an acquirer obtains control over the acquiree
B. The acquisition date is normally the closing date or the date on which the acquirer legally transfers the
consideration, acquires the assets and assumes the liabilities of the acquiree.
C. Where several dates are key to a business combination, the date on which control passes is the
acquisition date.
D. The acquisition date can never precede the closing date
27. What is the initial measurement of the identifiable assets and liabilities assumed in a business combination?
A. Acquisition date fair value
B. Acquisition date carrying amount
C. Acquisition date present value of cash flows
D. Acquisition date historical cost

28. In a business combination, goodwill is measured as the excess of

A. The consideration transferred over the identifiable net assets acquired.

B. The total of the consideration transferred and the amount of any noncontrolling interest in the acquiree
over the identifiable net assets acquired
C. The total of the consideration received and the fair value of the previously held interest in the acquiree
over the identifiable net assets acquired
D. The total of the consideration transferred, the amount of any noncontrolling interest in the acquiree and
the fair value of previously held interest in the acquire over the identifiable net assets acquired

29. Which statement is not true in relation to business combination?

A. The acquirer shall recognize the acquisition-date fair value of any contingent consideration as part of the
consideration transferred in a business combination
B. The acquirer shall recognize the acquiree's contingent liabilities if certain conditions are met
C. The acquirer shall recognize acquiree's contingent assets if certain conditions are met
D. All of the statements are not true.

30. When should an acquirer derecognize a contingent liability recognized as the result of an acquisition?
A. When it becomes more likely than not that the entity will not be liable
B. When the contingency is resolved
C. At the end of the year of acquisition
D. When it is reasonably possible that the liability will not require payment

31. Acquisition costs incurred and related to a business combination should be

A. Allocated on a prorata basis to the nonmonetary assets acquired
B. Capitalized as part of goodwill and tested annually for impairment
C. Capitalized as other asset and amortized over five years
D. Expensed as incurred in the current period
32. When an acquirer had 30% equity interest in an acquiree and subsequently purchased another 25% equity
interest in order to gain control, the transaction is known as
A. Business combination off entities under common control
B. Business combination achieved in stages
C. Business combination by installment
D. Step by step acquisition

33. Which statement is true in relation to business combination achieved in stages?

A. The pre-existing equity interest shall be remeasured at fair value with any resulting gain or loss included in
profit or loss
B. The pre-existing equity interest shall be remeasured at fair value with any resulting gain or loss included in
other comprehensive income
C. The pre-existing interest shall not be remeasured
D. The pre-existing interest shall be measured at fair value with any resulting gain or loss recognized in
retained earnings.

34. The noncontrolling interest should be recorded at what amount?

A. The fair value of the shares held by the acquirer
B. The fair value of the shares not held by the acquirer or the proportionate share of the fair value of net
identifiable assets of acquiree
C. The proportionate share of the carrying amount of net identifiable assets of acquiree
D. The fair value of the shares held by noncontrolling interest plus goodwill

35. Which of the following should be included in the consideration transferred in a business combination?
A. Cost of maintaining an acquisition department
B. Fees paid to accountants to effect the combination
C. Both cost of maintaining an acquisition department and fees paid to accountants to effect the combination
D. Neither cost of maintaining an acquisition department nor fees paid to accountants to effect the
combination
36. What is meant by full goodwill method?
A. The recognition of goodwill which relates to the parent company interest
B. The recognition of goodwill which relates to the noncontrolling interest and the controlling interest
C. The recognition of goodwill which relates to the noncontrolling interest
D. A bargain purchase

37. Which of the following would not contribute to the creation of negative goodwill?
A. Errors in measuring the fair value of the acquiree's net identifiable assets or the cost of the business
combination
B. A bargain purchase
C. A requirement in a standard to measure net assets acquired at a value other than fair value
D. Making acquisitions at the top of a bull market for shares

38. In a business combination accounted for as an acquisition, the fair value of the net identifiable assets
acquired exceeded the acquisition cost. How should the excess fair value be reported?
A. Negative goodwill
B. Share premium
C. Reduction of the values assigned to certain assets and gain for any unallocated portion
D. Gain from bargain purchase recognized in profit or loss

39. Goodwill acquired in a business combination shall be accounted for as which of the following?
A. Recognize as an intangible asset and amortize over the useful life
B. Write off against retained earnings
C. Recognize as an intangible asset and test for impairment when trigger event occurs
D. Recognize as an intangible asset and test for impairment annually or more frequently if impairment is
indicated

40. The contingent liability of the acquired entity shall be recognized at fair value. Recognition of such
contingent liability shall
A. Decrease the value attributed to goodwill, thus decreasing the risk of impairment of goodwill
B. Decrease the value attributed to goodwill, thus increasing the risk of impairment of goodwill
C. Increase the value attributed to goodwill, thus decreasing the risk of impairment of goodwill
D. Increase the value attributed to goodwill, thus increasing the risk of impairment of goodwill

41. Which of the following situations would require the use of the acquisition method in a business
combination?
A. The acquisition of a group of assets
B. The formation of a joint venture
C. The purchase of more than 50% of a business
D. All would require the acquisition method

42. Which of the following is not one of the steps in accounting for business combination?
A. Prepare proforma financial statements prior to acquisition
B. Determine the acquisition date
C. Identify the acquirer
D. Expense the costs and general expenses of the acquisition in the period of acquisition
43. What date should be used as the acquisition date for a business combination?
A. The date when the acquirer signs the contract to purchase the business
B. The date when the acquirer obtains control of the acquiree
C. The date when all contingencies related to the business combination are resolved
D. The date when the acquirer purchased more than 205 of the shares of the acquire

44. What is the requirement with respect to the allocation of the cost of a business acquisition?
A. Cost to be allocated based on carrying amount
B. Cost to be allocated based on fair value
C. Cost to be allocated based on original cost
D. Cost to be allocated based on management estimate

45. How should the acquirer account for the incomplete information in preparing the financial statements
immediately after the acquisition?
A. Do not record the uncertain items until complete information is available
B. Record contra account to the investment account for the amount involved
C. Record the uncertain items at the carrying amount of the acquiree
D. Record the uncertain items at a provisional amount measured at the date of acquisition

46. When does the measurement period end for a business combination in which there was incomplete
information on the date of acquisition?
A. When the acquirer receives the information or one year from the acquisition date, whichever occurs earlier
B. On the final date when all contingencies are resolved
C. Thirty days from the date of acquisition
D. At the end of the reporting period in the year of acquisition

47. What is the period after the acquisition date during which the acquirer may adjust the provisional amounts
recognized for a business combination?
A. Retroactive period
B. Prospective period
C. Retrospective period
D. Measurement period

48. What is the proper treatment of measurement period adjustment?

A. Adjusted profit or loss
B. Adjusted to other comprehensive income
C. Retroactively adjusted to goodwill or gain on bargain purchase
D. Retroactively adjusted to retained earnings
E. Report an issue

PFRS 5

1. The results of a discontinued operations are presented in the statement of profit or loss
a. before the profit or loss from continuing operations but after the profit for the year.
b. after the profit or loss from continuing operations but before the profit for the year.
c. separately from the profit or loss from continuing operations and it does not affect the profit for the
year.
d. as an adjustment to the beginning balance of the retained earnings.

2. Which of the following is included in profit from continuing operations?

a. extraordinary items
b. discontinued operations
c. other comprehensive income
d. income tax expense

3. According to PFRS 5, held for sale classification is permitted when

A. the noncurrent asset or disposal group is available for immediate sale in its present condition.
B. the sale is highly probable.
C a and b
D. the sale actually occurred after the reporting period but before the financial statements were
authorized for issue.

4. According to PFRS 5, assets held for sale are measured at

a. fair value
b. fair value less costs to sell.
c. carrying amount.
D. Lower of b and e

5. According to PFRS 5, a disposal group may qualify as discontinued operation if

A. it is a component of an entity.
B. it meets the held for sale classification criteria.
C. a and b
D. none of these

6. Non-current assets are presented as statement of financial position

 a. only when they are expected to be sold within 12 months from the end of reporting period.
b. only if they are actually sold after the reporting period but before the date of authorization of the
financial statements for issue.
c.only when they qualify as held for sale assets under PFRS 5.
d. never presented as current items.

7. The qualification of an asset to be classified as held for sale after the reporting period but before the
financial statements are authorized for issue
a. is a non-adjusting event after the reporting period.
b. is an adjusting event after the reporting period.
c. is an extraordinary item.
d. a or b

8. A noncurrent asset classified as held for sale in accordance with PFRS 5 has not been sold after a year.
The asset shall continue to be presented as held for sale under PFRS 5 if
a. the delay is due to events beyond the entity's control.
b. the entity remains committed to its plan to sell the asset.
c. the noncurrent asset is actually sold after the reporting period but before the financial statements
were authorized for issue.
d. a and b

9. According to PFRS 5, gain on impairment reversal on an asset held for sale is

a. recognized for the fair value change during the period.
b. recognized in other comprehensive income.
c. recognized only to the extent of cumulative impairment losses previously recognized.
d. not recognized.

10. The results of discontinued operations are presented separately in the statement of profit or loss and
other comprehensive income
A. as a single amount gross of tax.
B. As a single amount net of tax.
C. as part of the regular line items.
D. a or b

11. The statement of profit or loss indudes which of the following?

a. Revenue, cost of goods sold, distribution costs, general and administrative expenses and
extraordinary items.
b. Discontinued operations.
c. Gains and losses arising from treasury share transactions.
d. Other comprehensive income.

12. Assets that are classified as held for sale under PFRS 5 are
a. required under PAS 36 to be tested for impairment annually.
b. amortized over a period not exceeding 5 years.
c. depreciated.
d. not depreciated.
 13. According to PFRS 5, gains and losses on remeasurement of assets held for sale are
a. recognized in profit or loss
b. recognized in other comprehensive income.
c. recognized only for impairment losses
d. not recognized.

14. Which of the following statements is true regarding the accounting treatment of costs to sell under
PFRS 5?
a. Costs to sell are added to the fair value when determining the measurement basis for an asset held
for sale.
b. Costs to sell are never discounted because held for sale assets should be sold within one year
c. Costs to sell are discounted if it is expected that the sale will be made beyond one year
d. a and c

15. According to PFRS 5, the assets and liabilities of a disposal group are presented
a. as one line item in either current assets or current liabilities.
b. as one line item in either noncurrent assets or noncurrent liabilities.
c. separately on the face of the statement of financial position.
d. a or b

PFRS 6

1. Which of the following is not a requirement of IFRS 6?

A. To improve the existing accounting practices for exploration and evaluation expenditures
B. To measure any impairment of exploration and evaluation assets in accordance with IAS 36
Impairment of Assets
C. To disclose the information that identifies and explains the amounts in the entity’s financial
statements arising from the utilisation of mineral resources
D. None of the above

2. An entity shall apply IFRS 6 to exploration and evaluation __________ that it incurs.
A. Income
B. Expenditures
C. Cash flows
D. Liabilities

3. According to IFRS 6, how shall exploration and evaluation assets be measured?

A. At present value
B. At cost
C. At amortised cost
D. At fair value

4. According to IFRS 6, an entity may classify its exploration and evaluation assets as …
A. Tangible
B. Intangible
 C. Current
D. Fixed
E. Either A or B

5. Exploration for and evaluation of mineral resources

a. The search for mineral resources after the entity has obtained legal rights to explore in a specific area
b. The search for mineral resources, including minerals, oils, natural gas and similar non regenerative
resources AFTER the entity has obtained legal rights to explore in a specific area, as well as the
determination of the technical feasibility and commercial viability of extracting the mineral resource
c. The search for mineral resources before the entity has obtained a legal rights to explore in a specific
area up to the date when mineral resources are actually confirmed to exist in the area
d. The search for mineral resources before the entity has obtained a legal rights to explore in a specific
area up to the date when the commercial operations begins

6. According to PFRS 6 Exploration for an Evaluation of Mineral Resources, an entity may change its
accounting policies for exploration and evaluation expenditures if
a. The change makes the financial statements more relevant and more reliable
b. Other PFRSs do not prohibit the change
c. The change makes the financial statements more relevant and no less reliable, or more reliable and no
less relevant.
d. a or b

7. according to PFRS 6 expenditures on exploration for and evaluation of mineral resources are recognized
as
a. assets
b. expenses
c. a or b depending on the entity’s accounting policy
d. not accounted for

8. according to PFRS 6, how are exploration and evaluation asset measured?

a. cost ( initial ) and cost model ( subsequent)
b. cost ( initial ) and cost model ( subsequent)
c. cost ( initial ) and cost model or revaluation model( subsequent)
d. fair value( initial ) and fair value through P/L ( subsequent)

PFRS 7 financial instruments disclosure

1. Mark Ngina’s Sari-sari Store has a sign that reads “Your credit is good but I needcash.” What type of risk
is Mr. Mark trying to avoid by putting up that sign?
a.credit risk
b.market risk
c.liquidity risk
d.store risk

2. How does PFRS 7 define “liquidity risk”?

a. The risk that an entity will encounter difficulty in meeting obligations associated with financial
liabilities.
 b. The risk that an entity will encounter difficulty in disposing a financial asset due to lack of market
liquidity.
c. The risk that an entity will encounter difficulty in meeting cash flow needs due to cash flow problems.
d. The risk that an entity's cash inflows will not be sufficient to mat the entity's cash outflows. (Adapted)

3. PFRS 7 requires the disclosure of the significance of financial instruments to the entity’s financial
position and performance which of the following is not included in this disclosure?

a. Disclosure of fair values of financial instruments in a way that the fair value can be compared with
the carrying amount of the financial instrument.
b. The carrying amounts of the various categories of financial instruments.
c. Information on any reclassification between categories of financial instruments.
d. Information on financial instruments arising from employee benefit plans and share-based

4. PFRS 7 requires the disclosure of the nature and extent of risks arising from financial instruments.
Which of the following is not included in this disclosure?
a. Qualitative and quantitative information about credit risk
b. Qualitative and quantitative information about liquidity risk.
c. Qualitative and quantitative information about market risk.
d. Qualitative and quantitative information about operational risk.

5. PFRS 7 addresses which of the following?

a. The presentation of financial instruments as financial assets, financial liabilities or equity instruments.
b. The recognition and measurements of financial instruments
c. The disclosures about the significance of financial instruments to the entity's financial position and
performance and the nature and extent of risks arising from financial instruments to which the entity is
exposed, and how the entity manages those risks.
d. All of these

6. Which of the following properly describes credit risk?

a. The possibility that Entity A will not be able to settle its financial liabilities when they become due. b.
The possibility that Entity A will incur loss on its foreign- currency denominated financial instruments
when there is an adverse change in foreign exchange rates.
c. The possibility that Entity A cannot collect on its receivables.
d. The possibility that Entity A will be required to pay higher interest on its variable-rate loan when
market interest rates increase.

PFRS 8 Operating segment

1 . According to PFRS 8, a reportable operating segment is one which

a. management uses in making decisions about operating matters.
b. results from aggregation of two or more segments and qualify under any of the quantitative
thresholds.
c. a and b
d. none of these
 2. Which of the following is not among the quantitative thresholds under PFRS 8?
a. at least 10% of total revenues (external and internal).
b. at least 10% of the higher of total profits of segments reporting profits and total losses of
segments reporting losses, in absolute amount
c. at least 10% of total assets (inclusive of intersegment receivables).
d. at least 10% of total revenues (external only)

3. According to PFRS 8, disclosures for major customer shall be provided if revenues

from transactions with a single external customer amount to
a. at least 75% of the entity’s external and internal revenues.
b. at least 75% of the entity’s external revenues.
c. 10% or more of the entity’s external revenues.
d. less than 10% of the entity’s external revenues.

PFRS 9 FINANCIAL INSTRUMENTS

1. a period, an entity acquires an investment. The entity has a "hold to collect and sell" business model.
The investment should be classified as
A. Investment measured at fair value through other comprehensive income.
B. Investment measured at amortized cost.
C. Investment measured at fair value through profit or loss 
D. Any of these.

2. If an entity's business model's objective is to hold investments in order to collect contractual cash flow
that are solely payments for principal and interests, then investments should be classified as 
A. Investment measured at fair value through other comprehensive income.
B. Investment measured at amortized cost.
C. Investment measured at fair value through profit or loss.
D. Any of these.

3. A permanent decline in the fair value of an investment in equity securities that the entity made an
irrevocable election at initial recognition to subsequently measure at FVOCI is recognized in
A. Profit or loss
B. Other comprehensive income
C. Either a or b
D. Not recognized.
 4. Boss Co. Purchased bonds at a dicount in the open market as an investment. The bond will be held in
order to collect their contractual cash flows. Boss should account for these bonds at 
A. Cost.
B. Amortized cost.
C. Fair value through OCI
D. Lower of cost or market.
 5. According to PFRS 9, on initial recognition, the entity has the option of designating financial assets to be
measured at FVPI.
A. If doing so enhances the qualitative characteristic of financial information presented in the
financial statements.
B. If doing so significantly reduces or eliminates "accounting mismatch."
C. If it is required by "shadow accounting."
 D. At the entity's management's absolute discretion 

MEASUREMENT
 6. Which of the following financial assets are measured at fair value through profit or loss?
A. Held for trading securities 
B. Designated financial assets 
C. Trade receivables 
D. a and b

7. According to PFRS 9, it is the amount at which a financial asset or a financial

liability is measured at initial recognition minus principal repayments, plus or
minus the cumulative amortization using the effective interest method of any
difference between that initial amount and the maturity amount and, for financial
assets adjusted for any loss allowance.
a. cost
b. carrying amount
c. amortized cost
d. fair value

8. Which of the following is measured at fair value with fair value changes recognized
in profit or loss?
a. Held to maturity investments
b. Financial assets designated at FVPL
c. FVOCI
d. All of these

9. If the entity’s business model’s objective is to hold assets in order to collect

contractual cash flows and cash flows are solely payments of principal and interest
on the principal amount outstanding, the financial asset is classified
a. according to management’s intention of holding the securities.
b. as financial asset measured at amortized cost.
c. as financial asset measured at fair value through other comprehensive income.
d. any of these