?! Question:How does the prudence convention differ from theconservatism principle?a) It ignores all potential lossesb) It requires delaying all revenue recognitionc) It requires evidence before recognizing positive eventswhile still reporting threatsd) It only applies to asset valuation

Explanation of Prudence Convention: The prudence convention is an accounting principle that requires…

Answered: Question: How does the prudence…

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter10: Auditing Cash, Marketable Securities, And Complex Financial Instruments

Section: Chapter Questions

Problem 15CYBK

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The policy of "Anticipate no profit and provide for all possible losses" arises due to convention of A) Disclose B) materiality C) Conservatism D) Consistency
14 which statements is incorrect regarding for value measurements? a. fair value is normally the amount that an entity would receive or pay in a forced transaction, involuntary liquidation, or distress sale. b. underlying the concept of fair value measurements is a presumption that the entity is a going concern. c. the measurement of fair value may be relatively sample for assets that are bought and sold in active and open markets. d. the estimation of fair value may be achieved through the use of valuation model or through the assistance of an expert, such as an independent appraiser.
Which of the following is correct about subsequent measurement of financial asset at fair value? a. the financial asset shall be measured at fair value if the business model is not to collect contractual cash flows on specified dates and the contractual cash flow ae not solely payment of principal and interest. b. An entity may designate a finacncial asset as measured at fair value through profit or loss even if the financial asset satisfies the amortized cost measurement. c. both are correct d. both are incorrect
What serious consequences occur in an inaccurate estimate of asset needs?
Fair Value Accounting and Valuation in 3 Steps: Asset or Liability Identification: The first step involves identifying the specific assets or liabilities that will be measured at fair value. This could include financial instruments, tangible assets, intangible assets, or other items on the balance sheet. Market-Based Valuation Techniques: Fair value is determined using market-based valuation techniques. This may involve assessing current market prices, recent transactions, or employing valuation models such as discounted cash flows, comparable sales, or option pricing models. Consistent Application and Disclosure: Fair value accounting requires consistent application of valuation methods across reporting periods. Additionally, transparency and disclosure are crucial, with companies providing detailed information about the inputs, assumptions, and methods used in fair value measurements.
The use of fair value accounting for measuring assets and liabilities has been a source of on-going controversy. Critically appraise benefits and challenges of fair value measurements withrespect to the global financial crisis. Explain the issues relating to the Fair Value Hierarchymeasurement (IFRS 13) as part of your answer.
Explain thoroughly why it is the answer.
6. Which of the following statements is true?a. No loss contingencies should be disclosed if there is just a reasonable possibility of a loss.b. Indirect guarantees should normally be accrued.c. Losses may be accrued for unasserted claims and other potential unfiled lawsuits.d. In the case of loss contingencies, accrual can be made even if the exact payee and payment date are not
Which is not a scenario wherein revenue is recognized over time? a. The customer simultaneously receives and consumes the benefits by the entity’s performance b. The entity’s performance creates or enhances an asset that will be transferred to the customer at a future date c. The entity’s performance does not create an asset with an alternative use to the entity and the entity has an enforceable right to payment for performance completed to date d. All of the above are scenarios wherein revenue is recognized over time e. None of the above
Is it true that legal enforceability of a right, for example ownership, is necessary for control over an economic resource to exist?
What if noncurrent asset is not a subtitle I can chose from? Is there another heading I can use or do I not put it on the balance sheet? Would it then fall under investments or intangible assets?
An inaccurate estimate of asset needs can have serious consequences. Explain how?

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Question: How does the prudence convention differ from the conservatism principle? a) It ignores all potential losses b) It requires delaying all revenue recognition c) It requires evidence before recognizing positive events while still reporting threats d) It only applies to asset valuation