Question Tag: Assets
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- 1 Marks
AAA – Nov 2012 – L3 – AII – Q1 – Overview of Advanced Audit and Assurance.
Defines assets in the context of financial position.
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- Tags: Accounting, Assets, Economic Benefits, Financial Position, Financial Reporting
- Level: Level 3
- Topic: Overview of Advanced Audit and Assurance
- Series: NOV 2012
- 10 Marks
FR – Nov 2014 – L2 – Q4a – Presentation of Financial Statements
Explain the essential characteristics of assets and features of liabilities per IAS 1.
Question
The International Financial Reporting Standards (IFRS) through the International Accounting Standards Board (IASB) set out the definition and essential characteristics of assets and liabilities in the presentation of financial statements, which users of the statements are likely to rely on when making major economic decisions.
Required:
Identify the essential characteristics of assets and comment on the features of liabilities in accordance with provisions of IAS 1 on the presentation of financial statements. (10 Marks)
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- Tags: Assets, Financial Statements, IAS 1, IFRS, Liabilities
- Level: Level 2
- Topic: Presentation of Financial Statements (IAS 1)
- Series: NOV 2014
- 15 Marks
FR – Nov 2015 – L2 – Q4b – Impairment of Assets (IAS 36)
Assess whether plant and equipment is impaired and explain how impairment loss should be treated in the books.
Question
The following information relates to individual plant and equipment used by Phonex Nigeria Limited for its telecommunication operations as at December 31, 2014.
| Plant and Equipment | Carrying Amount (N’000) | Fair Value less cost to sell (N’000) | Value in use (N’000) |
|---|---|---|---|
| 1. Mast | 297,500 | 302,500 | 285,000 |
| 2. Generators | 592,500 | 517,500 | 512,500 |
| 3. Computer equipment | 287,500 | 292,500 | 307,500 |
| 4. Credit card machines | 207,500 | 187,500 | 197,500 |
| 5. Motor vehicles | 77,500 | 65,000 | – |
Additional information:
i. The Mast and the Generator are carried at revalued amounts, and the cumulative revaluation surplus in other comprehensive income for the equipment are N30,000,000 and N15,000,000, respectively.
ii. The motor vehicles are buses used for transporting employees in the morning and evening, and it is not possible to determine the value in use of the buses separately because the buses do not generate cash inflows from continuing use that are independent of the cash flows from other assets.
Required:
Draft a memo addressed to your boss indicating whether each of the plant and equipment is impaired or not and also explaining how the impairment loss should be treated in the books of Phonex Nigeria Limited as at December 31, 2014.
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- Tags: Assets, Financial Reporting, IAS 36, Impairment, Impairment Loss, Plant and Equipment
- Level: Level 2
- Topic: Impairment of Assets (IAS 36)
- Series: NOV 2015
- 5 Marks
FR – Nov 2015 – L2 – Q4a – Impairment of Assets (IAS 36)
List external and internal factors an entity should consider to assess asset impairment.
Question
The purpose of IAS 36: Impairment of Assets is to provide entities with guidance to determine whether an asset is impaired and how the impairment should be recognized.
Required:
a. In assessing whether there is an indication that an asset may be impaired, what factors should an entity consider?
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- Tags: Assets, IAS 36, Impairment, Indicators
- Level: Level 2
- Topic: Impairment of Assets (IAS 36)
- Series: NOV 2015
- 1 Marks
FA – Nov 2012 – L1 – SA – Q29 – Partnership Accounts
Identifying the necessary accounting entries when a partner takes over an asset upon dissolution.
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- Tags: Accounting Entries, Assets, Dissolution, Partnership
- Level: Level 1
- 1 Marks
FA – Nov 2012 – L1 – SA – Q10 – Financial Statements Preparation
Calculating the total asset value from opening balances.
Question
The following are opening balances in the ledger accounts of Doodle Limited:
Plant and equipment N80,000
Inventories N10,000
Trade receivables N18,000
Loan N20,000
Bank balance (credit) N15,000
What is the total asset value of the company?
A. N90,000
B. N108,000
C. N123,000
D. N128,000
E. N143,000
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- Tags: Assets, Financial Position, Total Value
- Level: Level 1
- Topic: Financial Statements Preparation
- Series: NOV 2012
- 1 Marks
FA – Nov 2012 – L1 – SA – Q3 – Financial Statements Preparation
Determining which item is not part of the statement of financial position.
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- Tags: Assets, Finance Charge, Financial Position, Liabilities
- Level: Level 1
- Topic: Financial Statements Preparation
- Series: NOV 2012
- 1 Marks
FA – Nov 2015 – L1 – SA – Q1 – Elements of Financial Statements
Defines the residual interest in the assets of an entity after deducting liabilities.
Question
In accordance with Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS), the residual interest in the assets of the entity after deducting all its liabilities is termed:
A. Liability
B. Provision
C. Equity
D. Assets
E. Reserves
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- Tags: Assets, Equity, Liabilities
- Level: Level 1
- Topic: Elements of Financial Statements
- Series: NOV 2015
- 1 Marks
FA – May 2018 – L1 – SA – Q5 – Elements of Financial Statements
Identifies elements related to the measurement of an entity's financial position.
Question
Which of the following elements is directly related to the measurement of an entity’s financial position?
A. Performance, income, and expenses
B. Income, expenses, and equity
C. Performance, income, and equity
D. Assets, liabilities, and equity
E. Assets, liabilities, and performance
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- Tags: Assets, Equity, Financial Position, Liabilities
- Level: Level 1
- Topic: Elements of Financial Statements
- Series: MAY 2018
- 1 Marks
FA – May 2018 – L1 – SA – Q2 – Recording Financial Transactions
Analyzes the impact of a purchase on the assets and liabilities of a business.
Question
Adeyemi Boat Shop bought a N70,000 electric hoist to lift engines out of boats. The Boat Shop paid N20,000 in cash for the hoist and signed a note to pay the balance in 90 days. This transaction will cause:
A. The Boat Shop’s assets to increase by N70,000 and liabilities to increase by N50,000.
B. No change in owners’ equity but a N50,000 increase in both assets and liabilities.
C. Assets to increase by N50,000 and owners’ equity to decrease by the same amount.
D. No change in total assets, but a N50,000 increase in liabilities.
E. Both assets and liabilities decrease by N50,000.
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- Tags: Assets, Liabilities, Transaction Analysis
- Level: Level 1
- 12 Marks
FA – May 2021 – L1 – SB – Q6a – Elements of Financial Statements
Explain five elements of financial statements and state four models of measurement of elements of financial statements.
Question
The International Accounting Standards Board (IASB) Conceptual Framework describes the elements of financial statements as broad classes of financial effects of transactions and other events.
i. Explain five elements of financial statements.
ii. State four models of measurement of the elements of financial statements.
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- Tags: Assets, Equity, Expenses, Financial Statements, Income, Liabilities
- Level: Level 1
- Topic: Elements of Financial Statements
- Series: MAY 2021
- 1 Marks
FA – Nov 2023 – L1 – SA – Q15 – Accounting Concepts
Calculate the new accounting equation after withdrawals.
Question
The accounting equation of Kola is ₦107,250 (Assets) = ₦55,500 (Equity) + ₦51,750 (Liabilities). Kola decides to take ₦6,000 in cash and inventories with a value of ₦3,000 out of the business for his personal use. What is the new value of the accounting equation for Kola after the withdrawals?
- A. ₦98,250 = ₦46,500 + ₦51,750
- B. ₦98,250 = ₦55,500 + ₦42,750
- C. ₦107,250 = ₦58,500 + ₦54,750
- D. ₦98,250 = ₦49,500 + ₦48,750
- E. ₦98,250 = ₦52,500 + ₦45,750
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- Tags: Accounting Equation, Assets, Withdrawals
- Level: Level 1
- Topic: Accounting Concepts
- Series: NOV 2023
- 1 Marks
FA – May 2021 – L1 – SA – Q1 – Elements of Financial Statements
Tests knowledge on the correct definition of assets.
Question
Which of the following is NOT correct about the definition of assets?
A. Resources which an entity must control
B. Resources which an entity must own
C. Resources which are expected to bring future benefits to an entity
D. Resources that their costs can be reliably measured
E. Resources for which liabilities arise from past events
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- Tags: Assets, Definition, Elements, Financial Statements
- Level: Level 1
- Topic: Elements of Financial Statements
- Series: MAY 2021
- 1 Marks
FA – May 2016 – L1 – SA – Q18 – Accounting for Property, Plant, and Equipment (IAS 16)
Determining which item qualifies as capital expenditure.
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- Tags: Assets, Capital Expenditure, Fixed Assets, Property
- Level: Level 1
- 1 Marks
FA – May 2016 – L1 – SA – Q5 – Financial Statements Preparation
A question about the effect of taking a loan on an entity's financial statements.
Question
Which of the following will be the effect of taking a loan from the bank by an entity?
A. Increase in both liabilities and equity
B. Decrease in assets and increase in liabilities
C. Decrease in both liabilities and equity
D. Increase in both assets and liabilities
E. Increase in assets and decrease in liabilities
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- Tags: Assets, Liabilities, Loan
- Level: Level 1
- Topic: Financial Statements Preparation
- Series: MAY 2016
- 5 Marks
July 2023 – L2 – Q2a – Impairment of Assets (IAS 36)
Treatment of brand name in Bondito Ltd’s financials following impairment of its subsidiary Manyabe Ltd.
Question
Bondito Ltd acquired 100% of a subsidiary, Manyabe Ltd, on 1 January 2021. The carrying amount of the assets of Manyabe Ltd in the consolidated financial statements of the Bondito group at 31 December 2021, immediately before an impairment review, were as follows:
| Assets | GH¢ million |
|---|---|
| Goodwill | 1.4 |
| Brand name | 2 |
| Property, plant, and equipment | 6 |
| Current assets (at recoverable amount) | 2.4 |
| Total | 11.8 |
The recoverable amount of Manyabe Ltd was estimated at GH¢9.6 million at 31 December 2021, and the impairment of the investment in Manyabe Ltd was deemed to be GH¢2.2 million. Bondito Ltd applies IAS 16: Property, Plant, and Equipment, and IAS 36: Impairment of Assets in preparing its financial statements.
Required:
Assuming Manyabe Ltd represents a cash-generating unit, show the financial reporting treatment of the brand name at 31 December 2021 in the books of Bondito Ltd following the impairment review.
(Total: 5 marks)
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- Tags: Assets, Brand Name, Goodwill, IAS 36, Impairment, Property
- Level: Level 2
- Topic: IAS 36: Impairment of assets
- Series: JULY 2023
- 10 Marks
AA – Nov 2023 – L2 – Q3b – Audit and Assurance Evidence
This question asks for the verification procedures to be followed for assets, liabilities, and equity in an audit.
Question
Automech Ltd is a manufacturer of automotive parts based in Ghana. The company’s accountant has been manipulating the accounts payable balance by teeming and lading to misrepresent the financial position of the company. The accountant has been recording fictitious invoices and payments to suppliers to increase the accounts payable balance and misrepresent the company’s expenses.
The external auditor, who was engaged to audit the financial statements of the company, performed substantive testing for transaction cycles and verification procedures for assets, liabilities, and equity items. However, the auditor failed to identify the risk of teeming and lading in the accounts payable balance.
During the audit, the auditor reviewed the accounts payable balance and performed confirmation procedures to verify the balance with the suppliers. However, the accountant had provided the auditor with fake confirmation responses, and the auditor failed to detect the fraud.
Although the financial statements of Automech Ltd were misstated, the Auditor issued an unqualified opinion, stating that the financial statements were presented fairly, in all material respects, in accordance with the applicable financial reporting framework. After the audit, the fraud was discovered by a whistle-blower, and the accountant was fired. The company’s reputation was damaged, and the external auditor faced legal action for failing to detect the fraud.
Required:
State and explain the procedures that should be followed for verification of assets, liabilities, and equity items in Automech Ltd.
(10 marks)
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- Tags: Assets, Audit evidence, Equity, Liabilities, Verification procedures
- Level: Level 2
- Topic: Audit and Assurance Evidence
- Series: NOV 2023
