CFA Practice Question

There are 86 practice questions for this study session.

CFA Practice Question

Select the three most useful types of discussions regarding the impact of recently issued accounting changes in management's discussion.

I. The standard does not apply.
II. The standard will have no material impact.
III. Management is still evaluating the impact.
IV. The impact of adoption is discussed.
A. I, II and III
B. I, II and IV
C. II, III and IV
Explanation: III creates some uncertainty about whether the change might materially affect the company.

IV would be the most meaningful discussion.

User Contributed Comments 12

User Comment
jgraham6 The third bullet, taken specifically from the LOS, states:
The impact of recently issued accounting changes. The conclusions include:

* The standard does not apply;
* The standard will have no material impact;
* Management is still evaluating the impact; or
* The impact of adoption is discussed.
nneks yes it does state that but the question asks for the three most useful!
najat I understand that "Management is still evaluating the impact" isn't very helpful but I don't get why "The impact of adoption is discussed" would be more useful? because if the changes are adopted, then the impact could be material or non-material, we still don't know...?
justbassbaby why "adoption is discussed" more meaningful than "have no material impact" and "standard does not apply"?
endurance the question only asks for three choises out of four - pick the three most useful here - B is correct
dybacis "Adoption is discussed" means they actually give a number and explain the impact
siggarusfigs I agree with dybacis, but what I don't get is why "does not apply" or "no impact" are more useful than "still evaluating"
Megumirox yeah i agree with siggarusfigs. It doesn't makes sense to me that "does not apply" or " no impact" are more useful than "still evaluating"
Shaan23 NO MATERIAL impact....that means no materiality --- means this has nothing to do with the price and has no affect --- Conclusion is stated.

III is still evaluating so no conclusion....therefor not as useful guys.
rjdelong Questinon asks for "most useful DISCUSSIONS on these NEW STANDARDS

I - Standard does not apply - Present Financials Presently Unaffected If they do not apply, that pretty much sums it up, but more details on how that might change that in future (that they will apply might change)

II Applies but no material impact - if they do apply we want details on how and why they aren't material impact bc they very well may in our opinion

III. Still Evaluating I and II and IV as well...

IV. Changes have admitted (def) impact and details are know n be needed in present and future
Benbracey I see a lot of people asking why 'The Standard does not apply' and 'The Standard will have no material impact' are not useful.

Surely it seems obvious that if they have reached a conclusion that nothing is affected it's better than the unknown? It is useful to know it has been evaluated and no changes (or changes), rather than 'hmmmm..'
bwhitele As a shareholder it is more re-assuring hearing one of those 3 options as they are better than uncertainty
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