ACCT211

    Cards (54)

    • Which of the following satisfies the criteria of a current liability?

      1. A liability that is expected to be settled in the entity’s normal operating cycle
    • What is a characteristic of a current liability?

      It is expected to be settled in the entity’s normal operating cycle
    • Which of the following are provisions in accordance with NZ IAS 37?

      1. Liabilities of uncertain timing and amount
    • What defines a provision according to NZ IAS 37?

      A provision is a liability of uncertain timing and amount
    • How does a reporting entity disclose liabilities?

      1. It has a choice to disclose liabilities either on the basis of the current/non-current liability dichotomy or on the basis of order of liquidity
    • What is the basis for disclosing liabilities in a reporting entity?

      It can be based on the current/non-current liability dichotomy or order of liquidity
    • Which of the following is considered a contingent liability according to NZ IAS 37?

      1. A guarantee provided by the parent entity on behalf of a solvent subsidiary
    • What is an example of a contingent liability?

      A guarantee provided by the parent entity on behalf of a solvent subsidiary
    • What needs to be recognized in the presence of an ‘onerous contract’?

      1. An expense and a related provision
    • What is the implication of an ‘onerous contract’?

      An expense and a related provision need to be recognized
    • What is the priority of equity's claim against the assets of the entity?

      1. Ranks after liabilities in terms of priority
    • How does equity rank in relation to liabilities?

      Equity ranks after liabilities in terms of priority
    • Why are preference shares considered closer to debt?
      1. They may guarantee a regular or cumulative payment similar to interest, and may be able to be converted into ordinary shares at a specific date in the future
    • What is a characteristic of preference shares?

      They may guarantee a regular or cumulative payment similar to interest
    • What creates a revaluation surplus?
      1. The upward revaluation of non-current assets
    • What is the source of returns to investors from share capital?

      1. Dividends
    • What is an example of a company paying cash to shareholders?
      1. Share buybacks
    • What does a share buyback involve?

      A company paying cash to shareholders in exchange for those shareholders selling some of their shares back to the company
    • How should Hawk Ltd report its foreign currency debt situation according to NZ IAS 10?

      1. Additional extensive disclosure of the realisation value of assets and the amounts at which liabilities are expected to be settled
    • What does NZ IAS 10 require regarding events after the reporting period?

      It requires the financial statements to reflect the financial effect of an event that provides additional evidence of conditions that existed at the end of the reporting period
    • What happens to dividends declared after the reporting period?
      1. They are not recognised as a liability at the end of the reporting period
    • What is the treatment of dividends declared after the reporting period but before financial statements are authorised for issue?
      They are not recognised as a liability at the end of the reporting period
    • What must be done if total external revenues from reportable segments are less than 75% of total revenues?

      1. Additional reportable segments must be identified
    • What does NZ IFRS 8 require when total external revenues from reportable segments are less than 75%?

      It requires additional reportable segments to be identified until at least 75% of total revenues are included in reportable segments
    • What is one advantage of NZ IFRS 8 Segment Reporting?

      1. It highlights the performance of the different activities of an entity
    • What does segment data enable users of financial statements to do?

      It enables users to better predict future profitability
    • Which of the following is usually not considered a 'related party'?
      1. A leasing arrangement with a local government
    • What defines a related party transaction?

      A related party transaction is a transfer of resources, services or obligations between related parties that are not at arm's length
    • What is the definition of a related party transaction according to NZ IAS 24?

      1. A transfer of resources, services or obligations between a reporting entity and a related party, regardless of whether a price is charged
    • What is one of the categories used in identifying related parties?
      1. Control
    • What is a present obligation in relation to recognizing a liability?

      1. A legally binding contractual arrangement between two parties: the entity and another party
    • What is required for a liability to be recognized within the financial statements?

      It needs to be reasonably apparent that a present obligation exists
    • What is the implication of a present obligation for recognizing a liability?

      1. There must be a legal obligation
    • What does the involvement of two separate parties imply for recognizing a liability?

      It implies a legally binding contractual arrangement between the entity and another party
    • What is the current/non-current liability dichotomy?

      It is a classification of liabilities based on their due dates.
    • What choice does an entity have regarding the disclosure of liabilities?

      An entity can disclose liabilities based on either the current/non-current liability dichotomy or the order of liquidity.
    • How does the principle of conservatism affect liability disclosure?

      It allows an entity to choose how to disclose liabilities, either by current/non-current or order of liquidity.
    • What is a present obligation in the context of recognizing a liability?

      A present obligation implies there must be a legal obligation.
    • What constitutes a legally binding contractual arrangement for recognizing a liability?

      It involves two parties: the entity and another party.
    • What is necessary regarding the identity of parties involved in a liability?

      The identity of the other party need not necessarily be known.
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