Problem 4-4 Multiple choice (PAS 37)

1. This is defined as a structured program that is planned and controlled by the

management that materially changes either the scope of a business of an entity or
the manner in which that business is conducted.

a. Restructuring
b. Liquidation
c. Recapitalization
d. Corporate revamp

2. Examples of events that qualify as restructuring include all of the following, except

a. Sale or termination of business

b. Closure of business location in a region or relocation of business from one
location to another.
c. Change in management structure such as elimination of a layer of management
d.Fundamental reorganization of an entity that has an immaterial and
insignificant impact on its operations

3. Which is a cost of restructuring?

a. Cost of retraining or relocating continuing staff

b. Marketing or advertising cost
c. Investment in new system and distribution network
d. Cost of relocating business activities from one location to another

4. It is the abusive practice of manipulation and creative accounting by dumping all

kinds of provisions under the banner of provision for restructuring.

a. Big bath provision

b. Creative accounting
c. Cookie jar
d. General reserve

5. A provision for restructuring is required when

I. The entity has a detailed plan for the restructuring.

II. The entity has raised valid expectation in the minds of those affected that the
entity will carry out the restructuring by announcing its main features to those
affected by it
 a. I only
b. II only
c. Both I and II
d. Neither I nor II

ANSWERS:
1. A
2. D
3. D
4. A
5. C