Advanced Accounting Exam Bank
Course Introduction
Advanced Accounting delves into complex financial reporting issues, focusing on topics such as business combinations, consolidated financial statements, multinational operations, segment reporting, and partnership accounting. The course explores the theoretical and practical applications of accounting standards for mergers and acquisitions, intercompany transactions, foreign currency transactions and translations, and governmental and non-profit accounting. Emphasis is placed on problem-solving and analytical skills necessary to interpret financial data in complex organization structures, as well as understanding current regulatory and ethical issues facing accountants in advanced practice.
Recommended Textbook
Advanced Accounting Updated 1st Canadian Edition by Gail Fayerman
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10 Chapters
580 Verified Questions
580 Flashcards
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Page 2
Chapter 1: Accounting for Investments
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56 Verified Questions
56 Flashcards
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Sample Questions
Q1) Which of the following statements regarding joint ventures is FALSE?
A)A joint venture must be set up as a separate vehicle.
B)A company is a party to a joint venture when it does not have the right to the assets or the obligations for the liabilities.
C)A company is a party to a joint venture when it has the rights to the venture's net assets.
D)None of the above is false.
Answer: D
Q2) The parties to a joint venture will initially record their share of the investment at:
A)Fair value.
B)Cost.
C)Amortized value.
D)Equity value.
Answer: A
Q3) If a company makes a non-strategic investment it is considered a financial asset. A)True
B)False
Answer: True
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3
Chapter 2: Business Combinations
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55 Flashcards
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Sample Questions
Q1) Accounting fees for an acquisition should be deferred and amortized.
A)True
B)False
Answer: False
Q2) The transaction costs of issuing shares in an acquisition are expensed.
A)True
B)False
Answer: False
Q3) A business combination involves the joining together of assets and liabilities under the control of a specific entity. Therefore, the business combination occurs at the date:
A)the net assets are under the control of the acquirer.
B)the contract is signed.
C)the consideration is paid.
D)nominated in the contract.
Answer: A
Q4) At the acquisition date, the contingent consideration is measured at book value.
A)True
B)False Answer: False
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Chapter 3: Consolidation: Wholly Owned Subsidiaries
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56 Verified Questions
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Sample Questions
Q1) Sympo Ltd. acquired 100% of the commons shares of Grotto Co. This business combination resulted in $100,000 of goodwill. Sympo allocated the goodwill to three cash-generating units. At its year-end, Sympo conducts a goodwill impairment test. Which of the following statements about the impairment test is TRUE?
A)The impairment test is applied to Grotto Co. as a whole.
B)The impairment test is applied to the business combination as a whole.
C)Sympo is not required to conduct an impairment test unless its circumstances have changed materially from its previous year.
D)The impairment test is applied to each of the three cash-generating units to which goodwill has been allocated.
Answer: D
Q2) When there is a gain on bargain purchase at the acquisition date, the net fair value of the identifiable assets and liabilities of the subsidiary is less than the consideration transferred.
A)True
B)False
Answer: False
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Page 5
Chapter 4: Consolidations: Intragroup Transactions
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66 Flashcards
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Sample Questions
Q1) It is possible for an entity to acquire the bonds of another entity in the group on the open market.
A)True
B)False
Q2) ABC Company owns 75% of XYZ Company. During 2012, XYZ Company declared and paid $5,000 in dividends. What impact did this transaction have on the separate financial statements of ABC Company?
A)Total assets were increased
B)Net income was decreased.
C)Investment account for XYZ Company was decreased.
D)All of the above.
Q3) A basic approach in determining the adjustments needed for the consolidation of intragroup transactions is:
A)Analyze the transfer events in the records of the legal entities and determine whether these transactions are for the current period.
B)Analyze the position from the group's perspective and adjust the consolidated statements of the group.
C)Consider the income tax effects of the adjustments.
D)All of the above.
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Page 6
Chapter 5: Consolidation: Non-Controlling Interest
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61 Verified Questions
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Sample Questions
Q1) Resnick Inc. acquired 75% shareholding in Canty Ltd. for $20 million. Book value of net identifiable assets of Canty is $14 million. The fair value of Canty's asset is the same as their book value except accounts receivables which are impaired by $1 million. Book value of assets is $54 million while book value of liabilities is $40 million. The tax rate is 30%.
Required:
Calculate goodwill using the partial goodwill method.
Q2) The NCI consists of the accumulation of all the interests in the subsidiary other than that belonging to the parent.
A)True
B)False
Q3) There are three main concepts of consolidation - proprietary, entity and parent entity.
A)True
B)False
Q4) What does the "group" consist of under the entity concept of consolidation?
Q5) What are the characteristics for a transaction to require an adjustment to the calculation of the NCI share of equity?
Q6) Describe the key characteristics of the entity concept of consolidation.
Page 7
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Chapter 6: Accounting for Investments in Associates and Joint Ventures
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Sample Questions
Q1) The effect of the sale of inventory on the share of profit or loss of the associate is:
A)$875 decrease
B)$4,250 increase
C)$350 increase
D)$1,250 decrease
Q2) Dogma Ltd. records its investment in Fayer Co. at cost. During the year, Dogma received $20,000 in dividends from Fayer. How should Dogma record these dividends?
A)As dividend income in its statement of comprehensive income.
B)As an increase to the "Investment in Fayer Co." account on its statement of financial position.
C)As a decrease to the "Investment in Fayer Co." account on its statement of financial position.
D)As dividend income on its statement of changes in equity-retained earnings section.
Q3) If an entity had previously held an investment in another entity and by a further investment that investee became an associate or joint venture of the entity, what must be recorded at the date of the second investment?
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Page 8
Chapter 7: Accounting for Foreign Currency
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57 Verified Questions
57 Flashcards
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Sample Questions
Q1) Donka Co. does a lot of business in Australia. It has numerous trade accounts receivables and accounts payables that are to be settled in Australian dollars. What type of hedge does Donka have?
A)Natural hedge.
B)Fair-value hedge.
C)Cash-flow hedge.
D)Hedge instrument.
Q2) Non-monetary items are translated using the exchange rate at the balance sheet date. Any resulting foreign exchange gain or loss is recorded in other comprehensive income.
A)True
B)False
Q3) Hedge accounting is applicable only if a receivable is being hedged. A)True
B)False
Q4) A derivative instrument cannot be a hedged item.
A)True
B)False
Q5) What are the steps involved in the translation of the financial statements into a presentation currency?
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Chapter 8: Accounting for Foreign Investments
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Sample Questions
Q1) Which of the following statements regarding the preparation of foreign currency adjustments, for consolidation or the application of the equity method, is FALSE?
A)Consolidation adjustments must be restated to the presentation currency.
B)Intercompany transactions are eliminated at the rate when the transaction occurred.
C)Monetary balances are eliminated using the spot rate.
D)Fair value adjustments must be reflected on the balances sheet at the closing rate for the year.
Q2) What are the primary indicators that need to be considered in the determination of a functional currency?
Q3) Goodwill and fair value adjustments related to a foreign operation are treated as gains and losses of the foreign operation for the purposes of foreign currency translation.
A)True B)False
Q4) Consolidation adjustments must be restated to the presentation currency. A)True B)False
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Chapter 9: Reporting for Not-For-Profit Organizations
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Sample Questions
Q1) The reader of the financial statements of a not-for-profit organization needs to be able to Review section if:
A)They have made a profit for the period.
B)The return on investments is positive.
C)Its mission has been fulfilled in the most cost efficient way.
D)All of the above.
Q2) During the year, a not-for-profit art gallery acquired a number of pieces for its collection. Which of the following choices for reporting the acquisitions is NOT in accordance with the CICA Handbook?
A)Immediate write-off.
B)Capitalize, but do not depreciate.
C)Capitalize and depreciate.
D)Note disclosure only.
Q3) When is it NOT appropriate to use an encumbrance system?
A)When only a small part of expenditures for goods and services are discretionary.
B)When there is a significant lag between purchase orders and the receipt of goods.
C)When reporting is done on a yearly basis.
D)When commitments are made on a decentralized basis.
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11
Chapter 10: Reporting for Public Sector Entities
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58 Flashcards
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Sample Questions
Q1) Many view the presence of multiple objectives as the overriding characteristic of public sector entities.
A)True
B)False
Q2) A government business enterprise sells goods and services to individuals and organizations within the government reporting entity as its principal activity.
A)True
B)False
Q3) A government business enterprise's net income or loss is reported on the government's statement of operations.
A)True
B)False
Q4) ___________________requires that the transactions and events reported on be presented in a manner that is in agreement with the underlying facts and circumstances.
A)Representational faithfulness
B)Comparability
C)Reliability
D)Accountability value.
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