Advanced Accounting Principles
Exam Materials
Course Introduction
Advanced Accounting Principles delves into the complex frameworks and methodologies underlying modern financial reporting and analysis. This course covers advanced topics such as consolidated financial statements, foreign currency transactions, partnership accounting, segment and interim reporting, and accounting for mergers and acquisitions. Students will explore the interpretation and application of accounting standards, the resolution of intricate accounting issues, and the implications of recent developments in international accounting standards. Emphasis is placed on analytical skills, ethical considerations, and the critical evaluation of financial information for effective decision-making in a global business environment.
Recommended Textbook Accounting for Corporate Combinations and Associations 8th Australian Edition by Neal Arthur
Source URL: https://quizplus.com/study-set/3412
Page 2
Chapter 1: Text Objectives and Introduction to Consolidation
Available Study Resources on Quizplus for this Chatper
31 Verified Questions
31 Flashcards
Source URL: https://quizplus.com/quiz/67752
Sample Questions
Q1) A reporting entity is a single entity that meets certain criteria. A)True
B)False Answer: False
Q2) If a parent loses control of a subsidiary during a financial year,that subsidiary's results are ignored for consolidation purposes.
A)True
B)False Answer: False
Q3) Discuss the potential benefits of conducting economic activity through a group structure
Answer: Potential benefits:
- Diversification-reducing risk and potentially increasing returns
- Attracting capital without loss of control
- Using corporate veil to manage risk
- Lowering cost of borrowing
- Better compliance with sovereign regulatory requirements
- Reducing tax via transfer pricing opportunities
To view all questions and flashcards with answers, click on the resource link above. Page 3
Chapter 2: Principles of Consolidation
Available Study Resources on Quizplus for this Chatper
48 Verified Questions
48 Flashcards
Source URL: https://quizplus.com/quiz/67751
Sample Questions
Q1) Goodwill on acquisition is recorded when:
A) the cost of the acquisition of the subsidiary is less than the fair value of the subsidiary's equity.
B) the cost of the acquisition is more than the fair value of the subsidiary's equity.
C) the cost of the acquisition is equal to the fair value of the subsidiary's equity.
D) none of the above.
Answer: B
Q2) The investment date and the acquisition date of a subsidiary will always be the same.
A)True
B)False
Answer: False
Q3) Goodwill is not an identifiable intangible asset because it is not separable.
A)True
B)False
Answer: True
To view all questions and flashcards with answers, click on the resource link above.
Page 4
Chapter 3: Fair Value Adjustments and Tax Effects
Available Study Resources on Quizplus for this Chatper
46 Verified Questions
46 Flashcards
Source URL: https://quizplus.com/quiz/67750
Sample Questions
Q1) In the year ended June 30 20X7,Woof Ltd acquired the assets and assumed the liabilities of the Doggie Biscuits operation from Fido Ltd for $10 000 000.At the date of acquisition,the fair values of the net separable assets and liabilities of the operation were $8 000 000 and $1 000 000 respectively.Based on this information,the transaction has resulted in:
A) a business combination of Woof Ltd and Doggie Biscuits.
B) the acquisition of certain assets and liabilities, which is not a business combination since Doggie Biscuits is not a business but simply part of the Fido Ltd business.
C) the acquisition of certain assets and liabilities, which is not a business combination since Doggie Biscuits is not managed to provide a return to investors but only to provide a return to Fido Ltd.
D) none of the above.
Answer: A
Q2) Why does a group's taxable temporary difference decrease as a plant asset ages?
Answer: Depreciation expense creates a reduction in net income for the group.A deferred tax liability that is created when the asset is initially acquired will be fully reversed at the end of the useful life of the asset.
To view all questions and flashcards with answers, click on the resource link above.
Page 5
Chapter 4: Intra-Group Transactions
Available Study Resources on Quizplus for this Chatper
38 Verified Questions
38 Flashcards
Source URL: https://quizplus.com/quiz/67749
Sample Questions
Q1) Explain why it is necessary to adjust unrealised profit in opening inventory on consolidation.
Q2) Using the same facts as Question 14 but assuming that S will depreciate the asset over its remaining estimated useful life of eight years,what is the depreciation expense adjustment required on consolidation one year after the intragroup sale?
A) Cr. $400
B) Dr. $400
C) Cr. $2100
D) Cr. $2500
Q3) S Ltd acquired land from its parent company P Ltd for $1 000 000.The land had originally cost P Ltd $100 000 (assume a tax rate of 30%).On consolidation,the deferred tax asset will be recorded at:
A) $300 000.
B) $30 000.
C) $270 000.
D) not recorded.
Q4) Discuss the basis of recognition of tax effects relating to accrued revenue and expenses for such intragroup items as management fees and interest.
To view all questions and flashcards with answers, click on the resource link above. Page 6
Chapter 5: Non-Controlling Interest
Available Study Resources on Quizplus for this Chatper
37 Verified Questions
37 Flashcards
Source URL: https://quizplus.com/quiz/67748
Sample Questions
Q1) Non-controlling interest at date of acquisition must be measured using:
A) the fair value method.
B) the proportionate interest goodwill method.
C) either A or B.
D) none of the above.
Q2) The parent interest (PI)in equity will be calculated as follows:
A) consolidated equity less non-controlling interest.
B) parent equity plus PI share of subsidiary equity.
C) parent equity plus non-controlling interest.
D) none of the above.
Q3) Unrealised intragroup profit in opening inventory of a parent company is:
A) added to subsidiary profit in calculating NCI share of profit.
B) subtracted from subsidiary profit in calculating NCI share of profit.
C) ignored in calculating NCI share of profit.
D) none of the above.
Q4) The fair value method of measuring NCI includes an amount representing the non-controlling shareholder's interest in goodwill.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 6: Partly-Owned Subsidiaries: Indirect
Non-Controlling Interest
Available Study Resources on Quizplus for this Chatper
30 Verified Questions
30 Flashcards
Source URL: https://quizplus.com/quiz/67747
Sample Questions
Q1) The sequence of acquisition dates in a tiered group is irrelevant to the consolidation process for indirect NCI.
A)True
B)False
Q2) Direct plus indirect ownership interests must always sum to 100% for a group.
A)True
B)False
Q3) Parent Ltd owns 20% of S1 Ltd and controls S2 Ltd without holding any shares in S2 Ltd.In addition,S2 Ltd owns 70% of S1 Ltd.The Parent Ltd indirect interest in S1 Ltd is:
A) 100%.
B) 70%.
C) nil.
D) none of the above.
Q4) Discuss the disadvantages of the sequential consolidation method.
Q5) In a group's consolidated statement of comprehensive income,profit attributable to the non-controlling interest is included in Other comprehensive income.
A)True
B)False
8
To view all questions and flashcards with answers, click on the resource link above.
Chapter 7: Consolidated Cash Flow Statements
Available Study Resources on Quizplus for this Chatper
27 Verified Questions
27 Flashcards
Source URL: https://quizplus.com/quiz/67746
Sample Questions
Q1) A statement of cash flows can be prepared using:
A) the reconstruction of ledgers approach.
B) the formula approach.
C) the spreadsheet approach.
D) all of the above.
Q2) A company calculates its cash flows from operating activities as profit +/accruals.This is:
A) the direct method.
B) the indirect method.
C) neither the direct or the indirect method.
D) none of the above.
Q3) Assets owned by a subsidiary acquired during the year are treated as negative financing cash flows in a consolidated statement of cash flows.
A)True
B)False
Q4) Discuss why Australia moved from a requirement to prepare a statement of sources and application of funds to a statement of cash flows.
Q5) Why is cash flow from operating activities seen as a performance measure?
Q6) Discuss the basis of classifying cash flows arising from interest paid.
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 8: Accounting for Joint Arrangements
Available Study Resources on Quizplus for this Chatper
39 Verified Questions
39 Flashcards
Source URL: https://quizplus.com/quiz/67745
Sample Questions
Q1) According to AASB 11.24,a venturer must recognise its interest in a jointly controlled entity using:
A) proportionate consolidation.
B) The equity method.
C) either proportionate consolidation or the equity method.
D) one-line method.
Q2) Supplementary disclosure requirements for joint ventures in the financial statements of venturers include:
A) significant joint venture interests.
B) contingent liabilities arising from joint ventures.
C) capital commitments arising from joint ventures.
D) all of the above.
Q3) Discuss the principles applying to the calculation of a gain on the sale of a portion of a jointly controlled operation.
Q4) The major difference between a joint venture and a joint operation is that in a joint venture,the venturers share in the output of the venture,while the joint operators share in the profits of the entity.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 10
Chapter 9: Accounting for Associates and Joint Ventures: the Equity Method
Available Study Resources on Quizplus for this Chatper
44 Verified Questions
44 Flashcards
Source URL: https://quizplus.com/quiz/67744
Sample Questions
Q1) An investee is considered to be an associate of an investor if:
A) the investor has the power to participate in the financial and operating decisions of the investee.
B) the investor has the power to participate in either or both the financial and operating decisions of the investee.
C) the investor has the power to participate in or jointly control the financial and operating decisions of the investee.
D) all of the above.
Q2) What is the rationale for the extensive note disclosure requirements under AASB 128?
Q3) It is possible that different entities can respectively exert control and significant influence over an investee entity.
A)True
B)False
Q4) Investors that are not parent entities must record all equity entries in their own records.
A)True
B)False
Q5) Discuss the basis of the equity carrying amount of the investment.
Page 11
To view all questions and flashcards with answers, click on the resource link above.
Chapter 10: Translation and Consolidation of Foreign Currency Financial Statements
Available Study Resources on Quizplus for this Chatper
31 Verified Questions
31 Flashcards
Source URL: https://quizplus.com/quiz/67743
Sample Questions
Q1) The transaction involving the purchase of the merchandise inventory from Malaysian Industries by Berhad is:
A)a foreign currency transaction from the viewpoints of both Johnson Ltd and Malaysian Industries Berhad.
B)a foreign currency transaction from the viewpoint of Johnson Ltd,but not a foreign currency transaction from the viewpoint of Malaysian Industries Berhad.
C)not a foreign currency transaction from the viewpoint of Johnson Ltd,but a foreign currency transaction from the viewpoint of Malaysian Industries Berhad.
D)not a foreign currency transaction from the viewpoints of both Johnson Ltd and Malaysian Industries Berhad.
Q2) Accounting for a foreign subsidiary must use the 'translate then consolidate' approach.
A)True
B)False
Q3) Discuss whether the use of the current rate method provides adequate disclosure of the exposure of a foreign operation to exchange rate movements.
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Segment Reporting by Diversified Entities
Available Study Resources on Quizplus for this Chatper
30 Verified Questions
30 Flashcards
Source URL: https://quizplus.com/quiz/67742
Sample Questions
Q1) On revenue and asset criteria only,the reportable business segments are:
A) Piebalds, Pintos and Crillos.
B) Piebalds, Skewbalds, Pintos and Crillos.
C) Piebalds, Skewbalds, Pintos, Crillos and Others.
D) none of the above.
Q2) Operating segments may only be combined if they have similar economic characteristics.
A)True
B)False
Q3) For purposes of the reliance on a major customer,entities under common control are considered as a single customer,
A)True
B)False
Q4) Segment information must be disclosed:
A) on the face of the financial statements.
B) in a note to the financial statements.
C) either A or B.
D) none of the above.
To view all questions and flashcards with answers, click on the resource link above.
13