Chapter 8
Notes (Part 2)
I. Related Party Disclosures
PROBLEM 1: TRUE OR FALSE
1. TRUE 6. TRUE
2. TRUE 7. TRUE
3. TRUE 8. FALSE
4. TRUE 9. TRUE
5. TRUE 10. FALSE
PROBLEM 2: FOR CLASSROOM DISCUSSION
1. C
2. D
3. B
4. C
5. C
PROBLEM 3: EXERCISE
1. Solution:
Requirement (a):
“Accounts receivable” is assumed to connote trade receivables. “Accounts
receivable” represents amounts owed by customers for goods sold and
services rendered as part of normal business operations. Inclusion of other
forms of receivables under the caption "accounts receivable" thus may be
confusing and misleading. Although, the three items listed above may be
aggregated with “accounts receivable” and presented under a single line item
described as “trade and other receivables,” the three items must not be
included in the “accounts receivable” account.
Requirement (b):
Related party disclosures:
a. Advances made to officers (key management personnel only) and
b. Advances to subsidiary company (in the separate financial
statements). This account is eliminated in the consolidated financial
statements.
1
, PROBLEM 4: MULTIPLE CHOICE – THEORY
1 6. D
A
.
2 7. D
B
.
3 8. D
C
.
4 9. B
D
.
5 10. D
B
.
II. Operating Segments
PROBLEM 5: TRUE OR FALSE
1. TRUE 6. TRUE
2. TRUE 7. TRUE
3. FALSE 8. FALSE
4. TRUE 9. FALSE
5. FALSE 10. FALSE
PROBLEM 6: FOR CLASSROOM DISCUSSION
1. D
2. D
3. B – “Management approach” – “The company is divided for internal
reporting purposes into 5 different divisions…….”
4. C
5. D – “Management approach” – “The entity reports to the board of
directors on the basis of each of the four regions.”
6. B – “Management approach” – an operating segment can be a
reportable segment even if it does not meet any of the quantitative
thresholds if that segment is treated as a reportable segment for internal
reporting purposes.
7. C – PFRS 8 uses a “management approach” in determining which
operating segments are reportable.
8. Solutions:
Requirement (a):
2
Notes (Part 2)
I. Related Party Disclosures
PROBLEM 1: TRUE OR FALSE
1. TRUE 6. TRUE
2. TRUE 7. TRUE
3. TRUE 8. FALSE
4. TRUE 9. TRUE
5. TRUE 10. FALSE
PROBLEM 2: FOR CLASSROOM DISCUSSION
1. C
2. D
3. B
4. C
5. C
PROBLEM 3: EXERCISE
1. Solution:
Requirement (a):
“Accounts receivable” is assumed to connote trade receivables. “Accounts
receivable” represents amounts owed by customers for goods sold and
services rendered as part of normal business operations. Inclusion of other
forms of receivables under the caption "accounts receivable" thus may be
confusing and misleading. Although, the three items listed above may be
aggregated with “accounts receivable” and presented under a single line item
described as “trade and other receivables,” the three items must not be
included in the “accounts receivable” account.
Requirement (b):
Related party disclosures:
a. Advances made to officers (key management personnel only) and
b. Advances to subsidiary company (in the separate financial
statements). This account is eliminated in the consolidated financial
statements.
1
, PROBLEM 4: MULTIPLE CHOICE – THEORY
1 6. D
A
.
2 7. D
B
.
3 8. D
C
.
4 9. B
D
.
5 10. D
B
.
II. Operating Segments
PROBLEM 5: TRUE OR FALSE
1. TRUE 6. TRUE
2. TRUE 7. TRUE
3. FALSE 8. FALSE
4. TRUE 9. FALSE
5. FALSE 10. FALSE
PROBLEM 6: FOR CLASSROOM DISCUSSION
1. D
2. D
3. B – “Management approach” – “The company is divided for internal
reporting purposes into 5 different divisions…….”
4. C
5. D – “Management approach” – “The entity reports to the board of
directors on the basis of each of the four regions.”
6. B – “Management approach” – an operating segment can be a
reportable segment even if it does not meet any of the quantitative
thresholds if that segment is treated as a reportable segment for internal
reporting purposes.
7. C – PFRS 8 uses a “management approach” in determining which
operating segments are reportable.
8. Solutions:
Requirement (a):
2
