Log out Go to App
Go to App

Learning Materials

Features

Discover

Chapter 13: Q2ISTQ (page 658)

Which of the following statements is correct?

(a) IFRS permits the fair value option for the equity method of accounting.

(b) GAAP permits recovery of impairment losses.

(c) Under IFRS, non-trading equity investments are accounted for at amortised cost.

(d) IFRS and GAAP both have a trading investment classification

Short Answer

Expert verified

Option (d) is correct option

Step by step solution

01

Definition of GAAP

It stands for Generally Accepted Accounting Principles; it contains all the principles and rules which are used in the accounting of the company.

02

Correct statement

All of the given statements are incorrect except for one real piece of information. Statement four is true that IFRS and GAAP both have a trading investment classification

Hence, option (d) is correct.

Option (a) is incorrect because the IFRS does not permit an equity method for accounting.

Option (b) is incorrect because GAAP does not permit the recovery of impairment losses.

Option © Is incorrect because non-trading securities are accounted for fair value in IFRS.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Distinguish between the accounting treatment for marketable versus nonmarketable equity securities.

Distinguish between a determinable current liability and a contingent liability. Give two examples of each type.

Consider the bond investment by Lady Gaga in IFRS17-5. Discuss the accounting for this investment if Lady Gaga’s

Business model is to hold the investment to collect interest while outstanding and to receive the principal at maturity.

Question: The presentation of current and non-current liabilities in the statement of financial position (balance sheet):

  1. is shown only on GAAP financial statements.
  2. is shown on both a GAAP and an IFRS statement of financial position.
  3. is always shown with current liabilities reported first in an IFRS statement of financial position.

(d)includes contingent liabilities under IFRS.

BE13-1 (L01) Roley Corporation uses a periodic inventory system and the gross method of accounting for purchase discounts. On July 1, Roley purchased \(60,000 of inventory, terms 2/10, n/30, FOB shipping point. Roley paid freight costs of \)1,200. On July 3, Roley returned damaged goods and received credit of $6,000. On July 10, Roley paid for the goods. Prepare all necessary journal entries for Roley.
See all solutions

Recommended explanations on Business Studies Textbooks

Introduction to Business

Read Explanation

Change Management

Read Explanation

Nature of Business

Read Explanation

Intermediate Accounting

Read Explanation

Business Case Studies

Read Explanation

Financial Performance

Read Explanation
View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free