A contractual right to receive cash or exchange financial instrument under favorable condition

Answer: Financial Asset

It represents the excess of the carrying amount of an asset over its recoverable amount

Answer: Impairment loss

An amount higher of an assets fair value less cost of disposal and value in use

Answer: Recoverable amount

The present value of the future cash flow is expected to be derived from an asset or cash generating unit

Answer: Value in use

Incremental cost directly attributable to the disposal of an asset or cash generating unit excluding
finance cost and income tax expense

Answer: Cost of disposal

A pre-tax rate that reflects current assessment of the time value of money and risks for which the future
cash flow estimates have not been adjusted

Answer: Discount rate

Any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument
of another entity

Answer: Financial instrument

A contractual obligation to pay cash or exchange financial instrument under unfavorable condition

Answer: Financial liability

A contract that evidence a residual interest in the entity’s asset after deducting all of its liabilities

Answer: Equity instrument

A form of profitability ratio which provides a measure of how much profit (loss) each ordinary share has
earned during the period

Answer: Earnings per share

An equity instrument that is subordinate to all other classes of equity instrument

Answer: Ordinary share

It has preference over other classes of shares

Answer: Preference share

The sum of subscribe unissued shares less treasury shares

Answer: Outstanding share

A financial instrument or other contract that may entitle its holder to ordinary shares

Answer: Potential ordinary share

When converted or exercise they decrease the basic earnings per share or increase basic loss per share

Answer: Dilutive potential ordinary shares

Financial instrument that give rise the holder the right to purchase ordinary shares

Answer: Options and warrants

This computed when an entity has potential ordinary shares that are dilutive

Answer: Diluted earnings per share

Financial statements that provide only minimum information required under PAS 34

Answer: Condensed financial statement

The smallest identifiable group of assets that generates cash inflows that are largely independent of the
cash inflows

Answer: Cash generating unit

Financial statements prepared for a period of less than one year

Answer: Interim financial statement

Computations of basic earnings per share

Computation for the earnings per share if there are adjustments on the outstanding shares

Determination of how much expense to be recognized in the interim financial reporting

Determination of the equity component of convertible bonds

Computation for diluted earnings per share

Computation of impairment loss

Answers on quiz

Entity A had the following instruments outstanding all throughout 20x1:

12% convertible bonds payable issued at face amount, each ₱1,000                                      bond is

convertible into 30 ordinary shares                                                      ₱2,000,000

Ordinary shares, ₱10 par, 100,000 shares issued and outstanding                1,000,000     

Profit for the year is ₱1,200,000. Entity A’s income tax rate is 30%.

What is the diluted earnings per share in 20x1?

Answer: 8.55

Entity A has 200,000 ordinary shares outstanding on January 1, 20x1. Entity A offers rights issue to its
existing shareholders that enable them to acquire 1 ordinary share at a subscription price of ₱120 for
every 5 rights held. The rights are exercised on May 1, 20x1. The market price of one ordinary share
immediately before exercise is ₱180. Entity A reported profit after tax of ₱2,700,000 in 20x1. What is the
basic earnings per share in 20x1?

Answer: 11.71

Entity A had 200,000 ordinary shares outstanding all throughout 20x1. In 20x2, share issuances
occurred:

On April 1, 20,000 shares were issued for cash.

On September 30, a 10% bonus issue (share dividend) was declared.

On November 1, a 2-for-1 share split was issued.

Entity A had the following profits: ₱1,200,000 in 20x2 and ₱900,000 in 20x1. What are the earnings per
share to be disclosed in Entity A’s 20x2 comparative financial statements?

Answer: 20x2 - 2.54 ;  20x1 - 2.05

Entity A is computing for its basic earnings per share and has gathered the following information:
Loss for the year                        (800,000)
Preferred dividends                       50,000
Outstanding ordinary shares     100,000

There have been no changes in the number of outstanding ordinary shares during the period. What is
the basic earnings (loss) per share?

Answer: -8.50

Which of the following is within the scope of PAS 32?

Answer: Financial instruments that are within the scope of PFRS 9

Which of the following is not a financial instrument?

Answer: All of these are financial instruments

Entity A had 100,000, ₱10 par, 10% cumulative preference shares outstanding all throughout 20x1.  
Entity A reported profit after tax of ₱1,200,000 for the year ended December 31, 20x1. The movements
in the number of ordinary shares are as follows:

1/1/20x1  Ordinary shares outstanding 120,000

3/1/20x1  Shares issued for cash   42,000
9/30/20x1  Subscribed shares   20,000
11/1/20x1  Reacquisition of treasury shares  (12,000)
 Outstanding shares at the end of period 170,000
 What is the basic earnings per share?

Answer: 6.96

Which of the following is not a financial asset?

Answer: Inventory

These are bonds that can be exchanged for shares of stocks of the issuer.

Answer: Convertible bonds