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International Accounting Standard Quiz

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International Accounting Standard Quiz Q:-Carlson Limited purchases some common shares of Gaynor Limited, which trade on the national stock market. Carlson pays $150 plus purchase commissions of $15. At the end of the year, the shares are worth $155. Based on this information, the journal entry on the purchase date, assuming a classification of financial assets at fair value through profit or loss (FVTPL) would include: a debit to Cash for $165 a debit to Investment for $165 a debit to Broker Expense for $15 a credit to Cash for $150 Q:-On June 30, 2012, Gore Ltd., a lessor, enters into a six-year non-cancellable finance lease that requires annual rental payments of $100 beginning June 30, 2012. In addition, the lessee is required to make payments in advance of $12 each year to Gore Ltd. to cover a maintenance agreement on the equipment. The equipment has an estimated residual value of $40 at the end of the lease term. Gore Ltd. is a dealer that ordinarily sells this equipment inventory, which costs $450, for $524.50. Gore Ltd. expects to earn an 8% return on any delayed payment terms. What is Gore’s gross investment in the lease? $640 $540 $450 $524.50 Q:-On June 30, 2012, Gore Ltd., a lessor, enters into a six-year non-cancellable finance lease that requires annual rental payments of $100 beginning June 30, 2012. In addition, the lessee is required to make payments in advance of $12 each year to Gore Ltd. to cover a maintenance agreement on the equipment. The equipment has an estimated residual value of $40 at the end of the lease term. Gore Ltd. is a dealer that ordinarily sells this equipment inventory, which costs $450, for $524.50. Gore Ltd. expects to earn an 8% return on any delayed payment terms. Assuming the lessee has guaranteed the residual value, which of the following is included in Gore Ltd.’s year-end journal entry for December 31,2012? credit to Maintenance Expense for $6 debit to Maintenance Expense for $6 credit to Finance Income for $34 credit to Finance Income for $17 Q:-Which of the following statements is correct in relation to manufacturing or dealer leases? The dealer will record revenue on the sale of the asset at the commencement of the lease at the higher of the fair value of the asset and the present value of minimum lease payments. The dealer will record a cost of sales based on the carrying amount of the asset plus the amount of any guaranteed residual. Initial direct costs are capitalized into the lease receivable. The selling profit recorded by a dealer must be limited to that which would apply if a market rate of interest had been charged. Q:-On June 30, 2012, Gore Ltd., a lessor, enters into a six-year non-cancellable finance lease that requires annual rental payments of $100 beginning June 30, 2012. In addition, the lessee is required to make payments in advance of $12 each year to Gore Ltd. to cover a maintenance agreement on the equipment. The equipment has an estimated residual value of $40 at the end of the lease term. Gore Ltd. is a dealer that ordinarily sells this equipment inventory, which costs $450, for $524.50. Gore Ltd. expects to earn an 8% return on any delayed payment terms. Assuming the lessee has guaranteed the residual value, which of the following is included in Gore Ltd.’s journal entry for June 30, 2013? debit to Lease Receivable for $112 debit to Lease Receivable for $100 credit to Lease Receivable for $112 credit to Lease Receivable for $100 Q:-When an entity calculates the impact on diluted earnings per share (DEPS) of convertible instruments, which of the following is the first step in the process? Adjust the denominator to add back the number of shares that would have been issued on conversion. Assume that conversion would take place at the beginning of the year (or later if the convertible instrument was issued later). Determine whether the instruments are dilutive or not. Adjus

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