Learning Module 3 Analyzing Balance Sheets

Which of the following best describes an intangible asset under IFRS?

Under IFRS, how are costs incurred in the research phase of an internally generated intangible treated?

Which statement about goodwill is correct under IFRS and US GAAP?

A company pays 10 million to acquire another firm. Fair value of identifiable net assets is 7 million. What amount of goodwill is recognized?

Under IFRS, which measurement model may be used for intangible assets when an active market exists?

Which of the following changes would most likely require retrospective application under accounting rules?

Under IFRS, an internally generated intangible asset can be capitalized when which of the following is demonstrated?

A firm reports an intangible asset with an indefinite life. How is this asset treated subsequently under IFRS?

Which of the following is a key disclosure an analyst should expect for goodwill and business combinations?

Which measurement basis for a financial asset generally results in unrealized gains and losses reported directly in profit or loss (income statement)?

Under IFRS, which business model and contractual cash-flow characteristics permit a debt asset to be measured at amortized cost?

Which statement about impairment under IFRS is correct?

An analyst adjusting a company that capitalized software development costs wants to estimate adjusted net income if the company had expensed those costs. Which of the following effects should the analyst most likely include?

If a company measures debt at amortized cost and implicitly pays interest at a market rate lower than stated coupon, which of the following is true about the carrying amount at issuance?

Which of the following is most likely to appear in the notes to financial statements and is especially important for analysts evaluating balance-sheet comparability?

A company reports a large goodwill balance that represents 50% of total assets. Which conclusion is most appropriate for an analyst?

Which of the following measurement outcomes for financial assets increases reported equity through other comprehensive income but does not increase retained earnings until realized (or recycled) under IFRS classification?

Which of these items is most likely reported as a non-current liability on the balance sheet?

Which balance-sheet ratio indicates how many dollars of assets are financed by each dollar of equity?

A company has total assets of 120 million and total equity of 40 million. What is its financial leverage (assets/equity)?

When a company elects the revaluation model for property, plant and equipment under IFRS, which of the following is true?

Which balance-sheet item would an analyst examine to assess whether a company used fair-value measurement for its financial assets?

If a company adopts the revaluation model for buildings and the revaluation increases the carrying amount by 20 million, how is that increase most likely reported on the financial statements under IFRS (assuming no previous deficit)?

A company reports a decrease in its LIFO reserve over the year. Which of these is the most likely explanation?

Which of the following ratio changes is most likely to occur immediately after a company recognizes a large impairment loss on PP&E?

Which of the following does NOT normally appear in the note disclosures for long-term debt?

Under IFRS, deferred tax liabilities arise due to:

A company classifies an equity investment as FVOCI under IFRS. Which is a likely consequence?

Which of the following actions will most directly increase a company's current ratio?

Which of these inventory accounting choices generally makes a company's balance sheet appear more conservative (lower inventory carrying amounts) in a rising-price environment?

Which of the following is an example of a non-recurring item that should be separately disclosed on the income statement to aid analysts?

An analyst wants to compare two companies but finds that one uses the revaluation model for PPE and the other uses cost model. Which adjustment is most appropriate to improve comparability?

A company has available-for-sale debt securities under US GAAP (historical classification). How are unrealized gains reported prior to sale?

Which statement about deferred revenue classified as non-current on the balance sheet is most accurate?

If a firm's intangible asset with finite life is determined to be impaired under IFRS, the impairment loss is recorded as:

Which of the following best describes the effect of reclassifying a financial asset from amortized cost to fair value through profit or loss (FVTPL)?

Which of these is the most appropriate analyst response to a company reporting 'other comprehensive income' gains due mainly to remeasurement of available-for-sale securities?

Which effect would an analyst most likely expect from a large, one-time goodwill impairment recognized in the current year?

Which of the following best summarizes how an analyst should treat a company's disclosed LIFO reserve when comparing to FIFO-reporting competitors?

Which of the following statements is most accurate regarding comparison of balance sheets across IFRS and US GAAP reporters?

Which of the following is NOT a common item to be capitalized as part of property, plant, and equipment cost under the cost model?

Which financial-statement line best indicates a company is heavily invested in intangible assets rather than tangible assets?

Under US GAAP, which statement regarding reversal of impairments is correct?

Company A uses the cost model for intangibles and Company B uses the revaluation model for similar assets with an active market. Which firm will show more volatility in reported equity from period to period due to those assets?

A company in a capital-intensive industry has rapidly rising PP&E relative to sales. Which ratio is most directly useful to assess whether asset growth is producing sales growth?

Which disclosure is most helpful to assess management's estimate risk for intangible assets?

An analyst converts LIFO inventory figures to FIFO using a disclosed LIFO reserve. Which income-statement amounts are most directly affected by adding the LIFO reserve to inventory at year-end?

Which is the most appropriate analyst action when a company discloses a large deferred tax asset but limited history of profits?

Which of the following best explains why analysts sometimes calculate 'tangible book value' by subtracting intangible assets from equity?

A firm reports significant investments in marketable securities (long-term) classified as available-for-sale and shows a large accumulated other comprehensive income (AOCI) credit balance. Which of the following statements is most appropriate for the analyst?