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Lecture quiz 5 – 10 minutes

The correct answer is indicated in bold letters. 1. Reporting events after balance sheet date is concerned with: A. Information that becomes available between the date the reports are completed and the date the auditor signs the audit report. B. Events that occur or information that becomes available after the directors sign the Directors’ Declaration and before the reports are printed. C. Events or transactions which occur or about which information becomes available between reporting date and time of authorisation. D. Events or transactions which occur or about which information becomes available between balance sheet date and reporting date. E. None of the given answers. 2. A non-adjusting event is one that occurs: A. After the reporting date. B. After the auditor has signed the audit report. C. After the completion of the financial reports. D. After the financial statements have been distributed. E. None of the given answers. 3. The following are material events that occurred for Linda Ltd between the reporting date and the date when the financial report is authorized for issue. I Determination after the reporting date of the costs assets purchased before the reporting date. II Decline in market value of investments after the reporting date (investments were purchased before the reporting date) III Dividends declared after the reporting date. IV A lawsuit was filed by a customer after the reporting date. V Discovery of fraud that shows that the financial report is incorrect. Which of the following options identify all the adjusting events for Linda Ltd, in accordance with AASB 110 “Events after the reporting date”? A. I, II and III. B. I and V. C. I, III and IV. D. III and V. E. I, III and V. 4. Wattle Ltd is in the process of completing its financial reports for the period ended 30 June 2011 when its accountant completes the collection of information about the realisable value of inventory as at reporting date. A number of items are reflected at a cost greater than net realisable value with a material effect on the accounts. What treatment does AASB 110 “Events after the reporting date” require for this event? A. It should be disclosed in the Directors’ Declaration. B. The effect on the accounts should be disclosed in the notes to the financial statements. C. No disclosure is required. D. The financial statements should be adjusted to reflect the impact of the event. E. None of the given answers.
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Write-off of an immaterial loan to a director. G and H. E. B. Issue of bonus shares to directors. H and I. Which of the following statement(s) is/are correct? A. G and H. a statement to that effect. I and G. 8. where it is not possible to estimate the effect reliably. F and H. I and F. Which of the companies shown would most likely be considered related parties? F Ltd G Ltd 25% H Ltd 40% 32% I Ltd A. B. B. Which of the following transactions is usually not considered a “related party transaction” in AASB 124 “Related Party Disclosures”? A. None of the given answers. F and G. H and I. All of the given answers. A related party transaction is a transfer of resources. D. G and H. A description of why the event only came to be known of after balance sheet date. F and H. Leasing arrangement with a separate joint venturer. H and I. Sale of non-current assets to an associate. The following diagram shows four companies and their associated equity ownership percentages. I and G. F and H. Related parties include organisations that are under the control or significant influence of the entity and individuals such as key management personnel and their close family members. C. The disclosures AASB 110 “Events after the reporting date” requires for a material nonadjusting event include: A. The existence of a related party transaction can expose an entity to risks or opportunities that otherwise would not have existed in the absence of the relationship. 6. Details of the corporate governance procedures in place to ensure that further information regarding the event is gathered in a timely fashion. The financial effect of the event or. B. F and H. G and H. E. D. D. 2 . F and G. C. C. F and G. 7. E.5. The financial effect of the event or. services or obligations between related parties that is not at arm’s length. H and I. where it is not possible to estimate the effect reliably. Sale of inventory to a subsidiary. a statement to that effect and a description of why the event only came to be known of after balance sheet date. C.

Close family members of key management personnel include: A. E. E. Bankers. Subsidiaries. 9. Dependents of domestic partner. Associates. B. Key executive personnel. D. B. Domestic partner and children. All of the previous answers. C. 3 . 10.D. D. Which of the following is a not related party within the provisions of AASB 124 “Related Party Disclosures”? A. All of the previous answers. Children of domestic partner. E. Non-executive directors. Domestic partner and children and children of domestic partner. The existence of a related party transaction can expose an entity to risks or opportunities that otherwise would not have existed in the absence of the relationship and related parties include organisations that are under the control or significant influence of the entity and individuals such as key management personnel and their close family members. C.