CPA Financial Reporting Exam
Questions & Answers (Grade A+)
What are the five classification criteria of a Finance Lease? -
correct answer ✅IFRS 16 ASPE 3065 Chapter 8
1. Title transfers to the lessee by the end of the term.
2. A bargain purchase option exists and it is certain the lessee will
do it.
3. The lease term is such a duration that the lessee will utilize most
of the economic benefits of the asset
4. The PV of the minimum lease payments amounts to basically all
of the FV of the asset.
5. The asset is specialized in nature and only the lessee can use it
without modifying it.
What are some inclusions, exclusions, and restricted cash
examples? -
correct answer ✅IAS 7 ASPE 1540 Chapter 3
Inclusion: legal tender, deposits, foreign currency.
Exclusion: limited market foreign currency, public shares, public
bonds, T Bills
Restricted: minimum balance requirements, donations.
,CPA Financial Reporting Exam
Questions & Answers (Grade A+)
What are the two recognition criteria for Accounts Receivable at
amortized cost? Hint: Amortized cost is regular. -
correct answer ✅IFRS 9 Chapter 3
1. the financial asset is held within a business model to collect cash
flows
2. the contractual terms of the financial asset give rise on specific
dates of payment.
What are the Accounts Receivable differences between IFRS and
ASPE? -
correct answer ✅IFRS 9 ASPE 3856 Chapter 3
IFRS: impairment assessed each year, Net realizable value is
adjusted for expected losses
ASPE: Impairment from triggering events, Net realizable value is the
highest of:
- PV cash flows
- amount if sold
- amount of right to collateral
Why would there be a subsequent measurement on Accounts
Receivable? How would you record this measurement? -
correct answer ✅IFRS 9 Chapter 3
,CPA Financial Reporting Exam
Questions & Answers (Grade A+)
Reason: there is an increased risk of collection and the company
deems the amount to be uncollected.
Recording:
Dr. Bad Debt Expense
Cr. AFDA
When would a company classify accounts receivable as FVTPL or
FVTOCI? -
correct answer ✅IFRS 9 Chapter 3
FTVPL: the company is selling the receivable
FVTOCI: the company collects cash flows or sells the receivables
How are passive investments initially measured under FVTPL,
FVTOCI, and amortized cost? -
correct answer ✅IFRS 9 Chapter 4
All at Fair Value
What are 3 classifications of a passive investment? Describe each. -
correct answer ✅IFRS 9 Chapter 4
Amortized Cost: financial assets held to collect cash flow consisting
of principal and interest.
, CPA Financial Reporting Exam
Questions & Answers (Grade A+)
FVTPL: asset is not amortized costs and is designated as FVTPL
FVTOCI: Held for collecting cash or selling the investment. Non
strategic and not a significant influence. Equity or Debt.
How would you subsequently measure a passive investment under
amortized cost, FVTPL, and FVTOCI? -
correct answer ✅IFRS 9.5 Chapter 4
Amortized Cost: Amortized costs effective interest less impairment.
FVTPL: FV gain and losses to P&L
FVTOCI: Debt: amort costs effective interest rate less impairment.
Gain and loss to OCI and at derecognition to P&L.
Equity: FV with gains and losses to OCI and does not derecognize to
P&L.
How to classify unrealized gains and losses for passive investments
for Amortized cost, FVTPL, and FVTOCI? -
correct answer ✅IFRS 9 Chapter 4
Amortized Cost: there will be none
FVTPL: profit and loss
FVTOCI: OCI net of tax
Questions & Answers (Grade A+)
What are the five classification criteria of a Finance Lease? -
correct answer ✅IFRS 16 ASPE 3065 Chapter 8
1. Title transfers to the lessee by the end of the term.
2. A bargain purchase option exists and it is certain the lessee will
do it.
3. The lease term is such a duration that the lessee will utilize most
of the economic benefits of the asset
4. The PV of the minimum lease payments amounts to basically all
of the FV of the asset.
5. The asset is specialized in nature and only the lessee can use it
without modifying it.
What are some inclusions, exclusions, and restricted cash
examples? -
correct answer ✅IAS 7 ASPE 1540 Chapter 3
Inclusion: legal tender, deposits, foreign currency.
Exclusion: limited market foreign currency, public shares, public
bonds, T Bills
Restricted: minimum balance requirements, donations.
,CPA Financial Reporting Exam
Questions & Answers (Grade A+)
What are the two recognition criteria for Accounts Receivable at
amortized cost? Hint: Amortized cost is regular. -
correct answer ✅IFRS 9 Chapter 3
1. the financial asset is held within a business model to collect cash
flows
2. the contractual terms of the financial asset give rise on specific
dates of payment.
What are the Accounts Receivable differences between IFRS and
ASPE? -
correct answer ✅IFRS 9 ASPE 3856 Chapter 3
IFRS: impairment assessed each year, Net realizable value is
adjusted for expected losses
ASPE: Impairment from triggering events, Net realizable value is the
highest of:
- PV cash flows
- amount if sold
- amount of right to collateral
Why would there be a subsequent measurement on Accounts
Receivable? How would you record this measurement? -
correct answer ✅IFRS 9 Chapter 3
,CPA Financial Reporting Exam
Questions & Answers (Grade A+)
Reason: there is an increased risk of collection and the company
deems the amount to be uncollected.
Recording:
Dr. Bad Debt Expense
Cr. AFDA
When would a company classify accounts receivable as FVTPL or
FVTOCI? -
correct answer ✅IFRS 9 Chapter 3
FTVPL: the company is selling the receivable
FVTOCI: the company collects cash flows or sells the receivables
How are passive investments initially measured under FVTPL,
FVTOCI, and amortized cost? -
correct answer ✅IFRS 9 Chapter 4
All at Fair Value
What are 3 classifications of a passive investment? Describe each. -
correct answer ✅IFRS 9 Chapter 4
Amortized Cost: financial assets held to collect cash flow consisting
of principal and interest.
, CPA Financial Reporting Exam
Questions & Answers (Grade A+)
FVTPL: asset is not amortized costs and is designated as FVTPL
FVTOCI: Held for collecting cash or selling the investment. Non
strategic and not a significant influence. Equity or Debt.
How would you subsequently measure a passive investment under
amortized cost, FVTPL, and FVTOCI? -
correct answer ✅IFRS 9.5 Chapter 4
Amortized Cost: Amortized costs effective interest less impairment.
FVTPL: FV gain and losses to P&L
FVTOCI: Debt: amort costs effective interest rate less impairment.
Gain and loss to OCI and at derecognition to P&L.
Equity: FV with gains and losses to OCI and does not derecognize to
P&L.
How to classify unrealized gains and losses for passive investments
for Amortized cost, FVTPL, and FVTOCI? -
correct answer ✅IFRS 9 Chapter 4
Amortized Cost: there will be none
FVTPL: profit and loss
FVTOCI: OCI net of tax
