Q1. Marcel Inc. is a large manufacturing company based in the U.S. but also operating in several European countries. Marcel has long-lived assets currently in use that are valued on the balance sheet at $600 million. This includes previously recognized impairment losses of $80 million. The original cost of the assets was $750 million. The fair value of the assets was determined in a professional appraisal to be $690 million. Assuming that Marcel reports under U.S. GAAP, the new appraisal of the assets’ value most likely results in: A) no change to Marcel’s financial statements. B) a $90 million gain in other comprehensive income. C) an $80 million gain on income statement and $10 million gain in other comprehensive income.
Q2. Davis Inc. is a large manufacturing company operating in several European countries. Davis has long-lived assets currently in use that are valued on the balance sheet at $600 million. This includes previously recognized impairment losses of $80 million. The original cost of the assets was $750 million. The fair value of the assets was determined by in independent appraisal to be $690 million. Which of the following entries may Davis record under IFRS? A) $90 million gain on income statement. B) $90 million gain in other comprehensive income. C) $80 million gain on income statement and $10 million gain in other comprehensive income.
Q3. A firm revalues its long-lived assets upward. All other things equal, which of the following financial impacts is least likely to occur? A) Higher earnings in the revaluation period. B) Lower leverage ratios. C) Higher profitability in the periods after revaluation.
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发表于 2009-1-19 10:26
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