Give me Answer 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

Detailed explanation:(c.) It requires evidence before recognizing events while still reporting…

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

Section: Chapter Questions

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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.
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
15 Which circumstance leads to an impairment? A significant decrease in an asset's fair value A future net cash flow that is significantly greater than anticipated The presence of significantly fewer competitors than anticipated A significant reduction in the expected cost of acquiring an asset
Which of the following arguments supports the view that regulation is not necessary, particularly to the extent that it currently exists? Select one: a. Markets for information are not efficient and therefore produce a sub-optimum amount of information, given the problem of 'free riders'. b. Accounting information is like any other good, and people will be prepared to pay for it to the extent that it has a use. c. Investors need protection from fraudulent organisations that may produce misleading information. d. Information asymmetry exists because not everyone has the same power over resources to obtain the information they need.
18. An SME measures biological assets at fair value less costs to sell only when fair value is readily determinable without undue cost or effort. True or False
• Which of the following is incorrect? O Straight line amortization of goodwill is simpler than goodwill impairment testing. Straight line amortization is considered by many to provide little if any useful information to readers of financial statements. Straight line amortization can only be used under U.S. GAAP when impairment testing is impossible. Goodwill impairment testing provides companies with more opportunities to engage in earnings management than does straight line amortization.

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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