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California State University, Sacramento ACCY 190 CHAPTER 4 1)Agro-World Technologies Inc

Accounting

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4. Camerata Construction borrowed $19,000,000 for 10 years at 6% specifically to modernize its operations with new equipment. The average rate of interest on Camerata’s debt after considering the most recent loan was 5.5%. What rate of interest should be used for capitalizing the borrowing costs on the new equipment under IAS 23?

 

5. As defined by IAS 38, how are intangible assets unlike other assets?

 

6. Blanco Chemical Company spent $15,000,000 in development efforts to create a fertilizer for which it was able to obtain a paten, however, the expected distribution costs make it infeasible to market the chemical in the foreseeable future. According to IAS 38 (Intangible Assets), how should Blanco Chemical Company record the $15,000,000?

 

7. The following inventory information was taken from the records of a foreign corporation whose stock is listed on an exchange in the U.S.

Historical cost $15,000 Replacement cost $11,000 Expected selling price $13,500 Expected selling cost $800 Normal profit margin $2,500

 

How will income under the U.S. GAAP compare to income the company reported under IFRS after reconciliation?

 

8. According to IAS 16, a decrease in the carrying amount of a fixed asset that is identified on an asset’s first revaluation should be recorded as:

 

9. What is one major difference IFRS and U.S. GAAP relative to correction of errors?

 

10. According to IFRS 8 (Segment Reporting), which is not one of the three criteria for defining an operating segment?

An operating segment can’t merely be a lessor.