,1. Which of the following statements is true about IFRS
and GAAP convergence?
A) IFRS is entirely rules-based while GAAP is principles-
based.
B) The IASB and FASB have never collaborated.
C) The convergence process has resulted in some
standards being adopted by both IFRS and GAAP.
D) IFRS prohibits the use of fair value.
Correct Answer: C
Rationale: The IASB (International Accounting
Standards Board) and FASB (Financial Accounting
Standards Board) have collaborated to align their standards
to enhance comparability.
2. When assessing impairment of an asset, the
recoverable amount is defined as:
A) The fair value of an asset.
B) The higher of its net selling price and its value in use.
C) The book value of the asset.
D) The cost incurred to acquire the asset.
Correct Answer: B
Rationale: The recoverable amount is determined as
the higher of the asset's fair value less costs to sell and its
value in use.
, share of the investee's profits or losses in its financial
statements.
4. A contingent liability should be recognized in the financial
statements if it is ____ probable and can be measured
reliably.
Correct Answer: probable
Rationale: Recognizing a contingent liability hinges on
its likelihood and manageable measurement.
### True/False Questions
5. True or False: Under IFRS, a reevaluation of fixed
assets is optional, while under GAAP, it is prohibited.
Correct Answer: True
Rationale: IFRS allows the reevaluation model,
whereas GAAP does not permit this practice.
6. True or False: Deferred tax assets arise when taxable
income exceeds accounting income.
Correct Answer: False
Rationale: Deferred tax assets arise when accounting
income exceeds taxable income due to temporary
differences.
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