Cpa Pep Practice Test
Free · 140 Questions.

Question 1

Under IFRS 15 (Revenue from Contracts with Customers), what is the mandatory 5-step model required to recognize revenue?

• A. 1. Deliver goods, 2. Credit sales revenue, 3. Debit inventory, 4. Calculate cost of sales, 5. File corporate tax returns, in accordance with applicable regulatory and safety standards.
• B. 1. Identify contract, 2. Identify performance obligations, 3. Determine transaction price, 4. Allocate transaction price, 5. Recognize revenue when performance obligations are satisfied, following safety rules.
• C. 1. Receive cash, 2. Ship inventory, 3. Issue invoice, 4. Record accounts receivable, 5. Settle sales tax, as required by official licensing and statutory certification guidelines.
• D. 1. Sign agreement, 2. Accrue warranty expenses, 3. Estimate bad debts, 4. Collect accounts receivable, 5. Recognize gross margin, following standard statutory compliance and regulatory procedures.

Explanation: IFRS 15 establishes the 5-step framework: 1. Identify contract, 2. Identify performance obligations, 3. Determine transaction price, 4. Allocate price, 5. Recognize revenue as/when obligations are satisfied.

Question 2

How does the accounting treatment for operating leases differ for a lessee under IFRS 16 versus ASPE 3065?

• A. There is no difference between IFRS 16 and ASPE 3065 for lease accounting, under established provincial operating and compliance protocols, pursuant to provincial guidelines, pursuant to provincial guidelines, pursuant to provincial guidelines.
• B. Under IFRS 16, lessees must recognize a Right-of-Use (ROU) asset and a lease liability on the balance sheet for virtually all leases; under ASPE 3065, operating leases remain off-balance-sheet with lease payments expensed straight-line.
• C. Under IFRS 16, leases are expensed as incurred, whereas ASPE requires all leases to be capitalized as equity, following standard statutory compliance and regulatory procedures, pursuant to provincial guidelines.
• D. Under IFRS 16, lease liabilities are discounted using the prime rate plus 10%, while ASPE forbids discount rates, pursuant to governing provincial legislation and regulatory guidelines.

Explanation: IFRS 16 eliminates the operating vs finance lease distinction for lessees (requiring ROU asset and lease liability capitalization), whereas ASPE 3065 retains the dual classification model where operating leases are expensed straight-line off-balance sheet.

Question 3

Under ASPE 3400 (Revenue), when is revenue from the sale of goods recognized?

• A. When the seller has transferred the significant risks and rewards of ownership, reasonable assurance exists regarding measurement and collectibility, and performance is completed.
• B. At the end of the fiscal year regardless of delivery timing, following standard statutory compliance and regulatory procedures, following standard statutory rules.
• C. On the date the customer signs a non-binding letter of intent, pursuant to governing provincial legislation and regulatory guidelines, as specified in the official syllabus.
• D. Only when 100% of the customer's cash payment is deposited into the corporate bank account, in accordance with applicable regulatory and safety standards, under standard rules, under standard rules.

Explanation: Under ASPE 3400, revenue is recognized when risks and rewards of ownership are transferred, the buyer has taken delivery/performance is achieved, and consideration is measurable and collectibility is reasonably assured.

Question 4

Under IAS 36 / ASPE 3063 (Impairment of Long-Lived Assets), how is an impairment loss calculated for Property, Plant, and Equipment under IFRS?

• A. The excess of the carrying amount over the recoverable amount (which is the higher of fair value less costs of disposal and value in use).
• B. The difference between the asset's replacement cost and accumulated straight-line depreciation, following standard statutory rules.
• C. A mandatory flat write-down of 20% of net book value annually, in accordance with applicable regulatory and safety standards, under official standards.
• D. The excess of the original historical purchase cost over the current undiscounted future cash flows, as specified in the official syllabus.

Explanation: Under IFRS (IAS 36), impairment exists when carrying amount exceeds recoverable amount, where Recoverable Amount = Higher of [Fair Value less Costs of Disposal, Value in Use (discounted cash flows)].

Question 5

How does the impairment model for long-lived assets under ASPE 3063 differ from IFRS (IAS 36)?

• A. ASPE requires impairment to be recorded directly in Accumulated Other Comprehensive Income (AOCI), pursuant to governing provincial legislation and regulatory guidelines, as required by law.
• B. ASPE uses discounted cash flows in Step 1 and permits unlimited impairment reversals, in accordance with applicable regulatory and safety standards, following standard statutory rules, in compliance with law, in compliance with law.
• C. ASPE calculates impairment solely based on municipal property tax assessments, under established provincial operating and compliance protocols, under authorized compliance procedures.
• D. ASPE uses a 2-step model: Step 1 tests whether carrying amount exceeds undiscounted future cash flows; if impaired, Step 2 measures the loss as carrying amount minus fair value (reversals are prohibited).

Explanation: ASPE 3063 uses a 2-step approach: 1. Undiscounted cash flow recoverability test. 2. Impairment measured as Carrying Value - Fair Value. Under ASPE, impairment reversals for PP&E are never permitted.