Podcast Beta
Questions and Answers
Fair values are used as measurement bases for many items in firms' financial statements, moving away from historic costs.
True
AROs are mandated to be measured at fair value according to current standards.
False
The reason AROs are not required to be measured at fair value is that it's challenging to predict the market participant and their requirements in the future.
True
In the corporate sector, insurers are not capable of assuming environmental liabilities.
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A credit default swap can never be arranged to cover environmental liabilities.
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The Canadian standard requires annual re-measurement of AROs to account for interest rate changes.
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Once firms start measuring fair value, they must consider a hypothetical market participant in the future.
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The existence of a hypothetical Omniscient Critical Accountant is less far-fetched in the public sector compared to a hypothetical market participant in the corporate sector.
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In an open economy, the OCA would need to consider 'ecological subsidies' granted by other countries.
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If Country X allowed companies like Oil to operate without any obligation to reduce pollution, Oil might go bankrupt due to its ARO.
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Citizens’ equity could only be impacted positively if Canada ensures lost jobs and GDP per capita are less.
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Canada making its citizens 'proud to be Canadians' would have no effect on Citizens’ equity according to OCA's view.
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Agreements between countries like Canada and Country X can influence the journal entries of the OCA.
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The CEO of Oil would not need to modify estimates if international competition caused a considerable decrease in Oil's operations.
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OCA’s receivable from Oil would increase if agreements were made between countries like Canada and Country X.
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The text suggests that ecological subsidies play a minor role in determining Citizens’ equity changes.
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If Oil were to go out of business, it would have no impact on Canada's social welfare according to OCA's determinants.
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In an open economy, the concept of 'ecological subsidies' is not relevant to the considerations of the OCA.
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