Reading 33: Understanding the Balance Sheet - LOS f ～ Q1-3 likely, required, following, class

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1.Which of the following is least likely a required financial statement disclosure according to the Financial Accounting Standards Board and the International Accounting Standards Board?

A)   A description of the entity including its domicile, legal form, and place of incorporation.

B)   Judgments made in applying accounting policies that may have a significant effect on the amounts reported in the financial statements.

C)   The liquidation values of equipment used in the production of goods and services for a firm that is expected to continue to operate in the foreseeable future.

D)   Breakdown of operating results by significant business segments.

2.Does the Financial Accounting Standards Board require firms to disclose information about operating leases and detailed information about defined benefit pension plans in the financial statement footnotes?

Operating lease information

Defined benefit pension plans

 

A)                              Yes     No

B)                              Yes     Yes

C)                              No       Yes

D)                              No       No

3.Should the notes to the financial statements include the following disclosures?
Disclosure #1 – Revenue recognition policy when a right of return exists.
Disclosure #2 – Concentrations of credit risk for receivables with common characteristics that may affect their ultimate collection.

Disclosure #1

Disclosure #2

 

A)   Yes                                    No

B)   No                                     Yes

C)   No                                     No

D)  Yes                                     Yes

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答案和详解如下：

1.Which of the following is least likely a required financial statement disclosure according to the Financial Accounting Standards Board and the International Accounting Standards Board?

A)   A description of the entity including its domicile, legal form, and place of incorporation.

B)   Judgments made in applying accounting policies that may have a significant effect on the amounts reported in the financial statements.

C)   The liquidation values of equipment used in the production of goods and services for a firm that is expected to continue to operate in the foreseeable future.

D)   Breakdown of operating results by significant business segments.

The correct answer was C)

Liquidation values of equipment used in the production of goods or services is not a required disclosure for firms that are expected to continue to operate. The other items must be reported in the financial statements.

2.Does the Financial Accounting Standards Board require firms to disclose information about operating leases and detailed information about defined benefit pension plans in the financial statement footnotes?

Operating lease information

Defined benefit pension plans

 

A)                              Yes     No

B)                              Yes     Yes

C)                              No       Yes

D)                              No       No

The correct answer was B)

Both lessees and lessors are required to provide disclosures pertaining to operating leases in the financial statement footnotes. Detailed pension plan information must also be disclosed.

3.Should the notes to the financial statements include the following disclosures?
Disclosure #1 – Revenue recognition policy when a right of return exists.
Disclosure #2 – Concentrations of credit risk for receivables with common characteristics that may affect their ultimate collection.

Disclosure #1

Disclosure #2

 

A)   Yes                                    No

B)   No                                     Yes

C)   No                                     No

D)  Yes                                     Yes

The correct answer was D)

The financial statement footnotes should disclose the specific accounting policies, including revenue recognition methods, used in preparing the financial statements. The footnotes should also disclose key estimation uncertainties that may cause material adjustments in the carrying value of assets and liabilities. One such disclosure is concentrations of credit risk.

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