Chapter 13: Q15 (page 658)
Distinguish between the accounting treatment for marketable versus nonmarketable equity securities.
The difference between Marketable securities and non-marketable securities is the price at which both are recorded.
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Question: In determining the amount of a provision, a company using IFRS should generally measure:
(a) Using the midpoint of the range between the lowest possible loss and the highest possible loss.
(b) Using the minimum amount of the loss in the range.
(c) Using the best estimate of the amount of the loss expected to occur.
(d) Using the maximum amount of the loss in the range.
Should a liability be recorded for risk of loss due to lack of insurance coverage? Discuss.
Define a provision, and give three examples of a provision.
Under IFRS, a provision is the same as:
(a) a contingent liability (c) a contingent gain
(b) an estimated liability (d) None of the above
Use the information from IFRS17-10 but assume the shares were purchased to meet a non-trading regulatory requirements. Prepare Fairbanks' journal entries to record (a) the purchase of the investment, (b) the dividends received, and (c) the fair value adjustment.
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