Help Question:5How 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

Option a: This option is incorrect because the prudence convention does not ignore potential losses.…

Answered: Question:5 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

Chapter12: Auditing Long-lived Assets And Merger And Acquisition Activity

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Financial Accounting
93 Conptal Framo PROBLEMS PROBLEM 1: TRUE OR FALSE All changes in an entity's economic resources and claims to those resources result from the entity's financial performance. The qualitative characteristics of useful information apply nly to the financial information provided in the financial statements. . According to IFRS Practice Statement 2 Making Materiality Judgnents, cost is an important consideration when making materiality judgments. T, When making materiality judgments, assessment alone is not always sufficient to conclude that an item of information is not material. Es. Materiality judgments apply only to items that are recognized but not to those that are unrecognized. 6. The more significant the qualitative factors are, the lower the quantitative thresholds will be. Thus, an item with a zero amount can be material in light of qualitative thresholds. Fz. When making materiality judgments, an entity should judge an item's materiality only on its own and not in combination…
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.
Q21 Which of the following is NOT a step in impairment testing? Select one: a. Sell the asset after if the fair value is greater than the recoverable amount b. Calculate the asset’s carrying amount in the books of the entity c. Calculate the recoverable amount of the asset d. Assess whether there are circumstances that may indicate that the asset should be impaired.
Critically evaluate the pros and cons of the following statement: Financial statements are useless because they present assets at their historical costs rather than at their fair market values.
Which of the following would be considered a breach of the qualitative characteristic of faithful representation? Disclosing information that could influence a decision. O Omitting the recognition of transactions of insignificant dollar amounts. None of these would be considered a breach of the qualitative characteristic of faithful representation. O Applying judgement in determining the existence of a liability. Incorporating estimations in the measurement of assets. Question 7 Which of the following is an application of the principle of materiality? The aggregation of different classes of property, plant and equipment into a single line item. None of these are an example of applying the principle of materiality. O The inclusion of a declaration by the directors in a financial report. The inclusion of an auditor's report in the financial report. The preparation of financial statements at least annually.
46 Which two circumstances lead to an impairment? Choose 2 answers. A significant change in legal factors that decreases an asset's value A future net cash flow that is significantly greater than anticipated The presence of significantly fewer competitors than anticipated A significant excess of cost expectations for constructing an asset A significant increase in the expected market value of an asset A significant reduction in the expected cost of acquiring an asset

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Question:5 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