How MPSAS 23 affects non-exchange transactions

Multiple-choice questions: In order to be awarded CPD units you must answer the following five random questions correctly. If you fail the test, please re-read the article before attempting the questions again

  1. What is the definition of non-exchange transactions according to MPSAS?

  2. Which of the following are not regarded as revenue from non-exchange transactions?

  3. Agency Y receives RM 20 million funding from a multi-lateral development body. The agreement stipulates that Agency Y must repay RM 15 million of the funding received over a period of 10 years, at 2 percent interest when the market rate for a similar loan is 6 percent. What would be the revenue from non-exchange transaction in this case?

  4. Revenue from non-exchange transactions consists of transfers and taxes. Which of the following correctly represents revenue related to transfers?

  5. Where the national government imposes a tax that is collected by its taxation agency (say, an inland revenue board), which party or entity recognises revenue?

  6. MPSAS 23 does not permit taxation revenue to be grossed up for the amount of tax expenditures. For example, in some jurisdictions, homeowners are permitted to deduct mortgage interest and property taxes from their gross income when calculating tax-assessable income. Why would taxation revenue not allowed to be grossed up with these expenses (eg mortgage interest and property taxes) when calculating tax-assessable income?

  7. Lenders will sometimes waive their right to collect a debt owed by a public sector entity, effectively cancelling the debt. For example, a national government may cancel a loan owed by a local government. How is this event or transaction recognised according to MPSAS 23?

  8. Which of the following DOES NOT accurately describe the accounting for gifts and donations in accordance with MPSAS 23?

  9. The federal government (transferor) grants RM 20 million to a provincial government (reporting entity) to be used to improve and maintain rail services. Specifically, the money is required to be used as follows: 40 percent for existing rail system upgrades, 50 percent for new rail systems, and 10 percent for rolling stock purchases and improvements. The agreement requires the grant to be spent as specified in the current year or be returned to the national government. How would the provincial government account for this transaction?

  10. Which of the following correctly describes the accounting treatment of contributions from owners of a public sector entity that meet the definition stipulated in MPSAS?