Module 3 - Part B

<p>Use of probability in measurement (D)</p> Signup and view all the answers

<p>Nature and likelihood of outflows (D)</p> Signup and view all the answers

<p>Executory contracts (A)</p> Signup and view all the answers

<p>To manipulate reported accounting numbers (D)</p> Signup and view all the answers

<p>It applies to all provisions except for those covered by other standards. (C)</p> Signup and view all the answers

<p>Expected value method (C)</p> Signup and view all the answers

<p>Most likely outcome (C)</p> Signup and view all the answers

<p>Pre-tax rate reflecting current market assessments (B)</p> Signup and view all the answers

<p>Avoid overstatement of liabilities (D)</p> Signup and view all the answers

<p>Estimate based on current available technology (D)</p> Signup and view all the answers

<p>5% (B)</p> Signup and view all the answers

<p>$7,000 (B)</p> Signup and view all the answers

<p>Nature of the obligation and expected timing of outflows (D)</p> Signup and view all the answers

<p>Future cash flow estimates (B)</p> Signup and view all the answers

<p>Using a range of possible amounts and related probabilities (C)</p> Signup and view all the answers

<p>To assist users in understanding potential earnings manipulation (C)</p> Signup and view all the answers

<p>Reassess estimates based on new information (A)</p> Signup and view all the answers

<p>Time value of money when material (A)</p> Signup and view all the answers

<p>The timing or amount of the obligation must have a significant level of uncertainty. (D)</p> Signup and view all the answers

<p>The amount and the corresponding asset recognized must be disclosed. (B)</p> Signup and view all the answers

<p>They may involve significant subjectivity and discretion. (B)</p> Signup and view all the answers

<p>Exemptions are applicable only in extremely rare cases. (D)</p> Signup and view all the answers

<p>Using the best estimate considering the uncertainty of future claims. (A)</p> Signup and view all the answers

<p>They reduce the scope for manipulation of provisions significantly. (C)</p> Signup and view all the answers

<p>Provision for warranties. (A)</p> Signup and view all the answers

<p>Historical information may not always predict future claims accurately. (B)</p> Signup and view all the answers

<p>Costs associated with voluntary redundancy and direct closure costs. (D)</p> Signup and view all the answers

<p>An obligation due to an unfavorable judgment. (A)</p> Signup and view all the answers

<p>To reflect the time value of money in the measurement of provisions. (C)</p> Signup and view all the answers

<p>Provision for dividends. (D)</p> Signup and view all the answers

<p>Historical warranty claims and trends. (D)</p> Signup and view all the answers

<p>20X2 (D)</p> Signup and view all the answers

<p>A reliable estimate can be made of the amount of the obligation. (C)</p> Signup and view all the answers

<p>Provisions have uncertain timing or amount. (B)</p> Signup and view all the answers

<p>An unrecognized warranty obligation. (D)</p> Signup and view all the answers

<p>A present obligation arises from a past event that makes it likely that an outflow will occur. (D)</p> Signup and view all the answers

<p>Accrued payroll expenses. (B)</p> Signup and view all the answers

<p>It must result from a past event that could lead to resource outflow. (D)</p> Signup and view all the answers

<p>A bank's legal obligation to honor customer deposits. (A)</p> Signup and view all the answers

<p>The expectation of future economic benefits. (C)</p> Signup and view all the answers

<p>There is a significant level of certainty regarding timing or amount. (C)</p> Signup and view all the answers

<p>A company deciding to discontinue a service with potential costs. (C)</p> Signup and view all the answers

<p>It results from the entity's actions, creating valid expectations. (D)</p> Signup and view all the answers

<p>When it is possible but not probable that an obligation exists. (A)</p> Signup and view all the answers

<p>Lack of historical data for estimating the obligation. (C)</p> Signup and view all the answers

<p>A duty that the entity is practically unable to avoid. (C)</p> Signup and view all the answers

<p>Expected-value method and most likely outcome method (A)</p> Signup and view all the answers

<p>By underestimating provision amounts to reduce total liabilities (C)</p> Signup and view all the answers

<p>Warranty expenses decrease by $1500 (B)</p> Signup and view all the answers

<p>The disclosure of provisions helps explain the timing and likelihood of cash outflows. (D)</p> Signup and view all the answers

<p>When an obligation exists as a result of a past event that is probable to require an outflow of benefits. (D)</p> Signup and view all the answers

<p>They increase the chances of detecting manipulations. (C)</p> Signup and view all the answers

<p>Management's estimates must be free of subjectivity and error. (D)</p> Signup and view all the answers

<p>The inherent uncertainty and subjectivity in the measurement (B)</p> Signup and view all the answers

<p>$5500 in total provision (D)</p> Signup and view all the answers

<p>The amount must be reliably estimable (B)</p> Signup and view all the answers

<p>It requires an external party's legal right to enforce it. (D)</p> Signup and view all the answers

<p>It creates expectation based on past actions rather than legal enforcement. (D)</p> Signup and view all the answers

<p>A reliability of measurement must exist. (D)</p> Signup and view all the answers

<p>When claims are expected based on industry research. (C)</p> Signup and view all the answers

<p>By applying the expected value method with associated probabilities. (C)</p> Signup and view all the answers

<p>Obligations arising from normal business practices or customs. (A)</p> Signup and view all the answers

<p>The entity can establish a range of possible outcomes. (A)</p> Signup and view all the answers

<p>Personal beliefs of stakeholders. (D)</p> Signup and view all the answers

<p>They should be recognized as a liability in financial statements. (B)</p> Signup and view all the answers

<p>A reliable estimate must be made of the expenditure required. (C)</p> Signup and view all the answers

<p>Legally binding agreements explicitly stating the company's obligations. (C)</p> Signup and view all the answers

<p>Using the most likely outcome as the best estimate. (A)</p> Signup and view all the answers

<p>An obligation must exist that requires settlement. (B)</p> Signup and view all the answers

An amount set aside for probable future expenses or losses.

International Accounting Standard for provisions, contingent liabilities and assets.

Criteria for recognizing a provision include existence and likelihood of outflows.

Involves estimating the expenditure required to settle obligations.

Possible obligations that may arise from past events.

Obligations to report details on provisions in financial statements.

Contracts where neither party has fully performed their obligations.

Contracts where costs exceed any economic benefit.

An obligation that requires an entity to pay or perform based on legal or constructive factors.

An obligation enforced by law that requires an entity to fulfill specific actions or payments.

An obligation based on expectations created by an entity’s actions, creating valid expectations in others.

A system that guides the definition and recognition of liabilities in accounting.

The likelihood that economic resources will be required to settle an obligation.

The ability to make a sufficiently accurate estimate of an obligation's amount.

The rational amount an entity expects to pay to settle an obligation.

A statistical method to estimate a provision involving many items by weighting outcomes by probability.

A distinct responsibility that can often be estimated by the most likely outcome.

The process by which management determines the appropriate estimates for provisions based on experience.

Analysis and data from industry standards used to forecast claims or obligations.

Reports summarizing an entity's financial performance and position, including provisions.

Actions taken by an entity to correct environmental harm, possibly beyond legal requirements.

Responsibilities arising from general business practices or customs, not formal agreements.

A lease that becomes disadvantageous before its start date.

Leases that are not considered onerous due to their duration.

Assets that are not significant in monetary terms within leases.

Present obligations to transfer an economic resource due to past events.

An occurrence that creates a present obligation for the entity.

Key element in determining if a liability should be classified as a provision.

A liability that may occur, based on the outcome of a future event.

A reasonably dependable forecast of an obligation's timing or amount.

Obligations arising from laws or prior actions that compel action.

Criteria for determining if a past event has resulted in a current obligation.

Information available that supports the existence of a present obligation.

A legal agreement requiring the parties to fulfill obligations.

The middle value in a continuous range of possible outcomes used for estimating provisions.

A statistical method used to calculate the best estimate based on probabilities of different outcomes.

The likelihood of warranty claims being substantiated or not, affecting provisions.

The process of adjusting future cash flows to present value considering time value of money.

The rate used for discounting that reflects current market conditions but excludes risks in future cash flows.

The most accurate figure determined for recognizing a liability based on likelihoods of outcomes.

Addressing uncertainties in calculating provisions but avoiding excessive estimations.

The potential cost incurred when fulfilling obligations based on existing technology.

Scenarios illustrating costs related to minor or major product defects.

Reporting the beginning and ending balance of provisions during a financial period.

The potential for manipulation in reporting based on subjective estimates of provisions.

A brief description outlining the obligations and expected timing of economic outflows.

The degree of unpredictability involved in estimating the amount or timing of future provisions.

Any adjustments made to the expected value due to fluctuating interest rates affecting provisions.

Mandatory disclosures aimed at revealing significant details and uncertainties behind provisions recognized.

The authority management has to influence estimates and provisions.

Provisions reported lower than their actual amount, affecting liabilities.

Manipulation of financial reports to present a desired profit level.

Use of artificial intelligence to analyze and detect financial data inaccuracies.

Changes in provisions directly influence reported profits.

Requirements to inform users about recognized provisions and estimates.

Accountants' assessment of management's estimates for accuracy.

Key judgments about future events that must be stated in financial statements.

The amount anticipated to be received back related to a provision, recognized as an asset.

Estimated liabilities for claims related to products sold under warranty.

Liabilities recognized for potential legal costs due to court judgments.

Liabilities set aside for expenses related to organizational changes.

Total amount recognized for provisions before any adjustments.

Adjustment for the time value of money on a provision's liability.

Predictions based on historical data for expected warranty expenses.

Circumstances where certain disclosures may not be required to protect entities.

Indicates high variability in timing or amount of a provision obligation.

The approach of using the most accurate approximation for provisions.

Refers to the actual use of recognized provisions when settling obligations.

Potential benefits that may arise from past events, but not recognized as certain.