Advanced Financial Reporting Exam Review
Course Introduction
Advanced Financial Reporting delves into complex accounting concepts and practices, equipping students with the skills to prepare, interpret, and analyze financial statements in accordance with International Financial Reporting Standards (IFRS) and other regulatory frameworks. The course covers advanced topics such as group accounts, foreign currency transactions, mergers and acquisitions, segment reporting, and financial instruments. Emphasis is placed on critical thinking and ethical considerations in financial reporting, as well as the impact of key accounting policy choices on stakeholders. Through real-world case studies and practical exercises, students develop a comprehensive understanding of the challenges and strategies involved in transparent and accurate financial disclosure for multinational and complex organizations.
Recommended Textbook
Intermediate Accounting 6th Edition Volume 2 by Thomas H. Beechy
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11 Chapters
1425 Verified Questions
1425 Flashcards
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Page 2
Chapter 1: The Framework for Financial Reporting
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69 Verified Questions
69 Flashcards
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Sample Questions
Q1) Debt issue costs may be expensed or included in the cost of the debt.
A)True
B)False Answer: True
Q2) Normal business risks that are insured must be provided for.
A)True
B)False Answer: False
Q3) On January 1,2000,a corporation purchased a machine (10 year estimated useful life; no residual value; straight-line method)by paying cash $1,500 and signing a note payable with a face amount of $4,500,8% interest payable each December 31.The maturity date is December 31,2002.The going market rate of interest was 10%.Give all required entry (entries)at each of the following dates:
January 1,2000: December 31,2000: Answer: 11ea71d0_1fed_b6e6_89cd_cda5a55718b9_TB2440_00
Q4) Warranties provisions may arise from legal or constructive obligations.
A)True
B)False Answer: True
Page 3
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Chapter 2: Accounting Judgements
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77 Verified Questions
77 Flashcards
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Sample Questions
Q1) RX issued $1,000,000,10% bonds payable (interest payable annually),which mature at the end of five years from issue date.The effective rate of interest at issuance was 8%.The sale price of the bonds was: $_________________.
Answer: 11ea71d0_1fe9_bf0b_89cd_4bb0ded82f9d_TB2440_00
Q2) ER issued for $2,060,000,two thousand of its 9%,$1,000 callable bonds.The bonds are dated January 1,2019,and mature many years from now.Interest is payable semi-annually on January 1 and July 1.The bonds can be called by the issuer at $102 on any interest payment date after December 31,2023.The unamortized bond premium was $28,000 at December 31,2021,and the market price of the bonds was $99 on this date.In its December 31,2021,balance sheet,at what amount should GC report the carrying value of the bonds?
A) $1,980,000
B) $2,028,000
C) $2,032,000
D) $2,040,000
E) Cannot answer; the bond term is not given Answer: B
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Page 4
Chapter 3: Statements of Income and Comprehensive Income
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168 Verified Questions
168 Flashcards
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Sample Questions
Q1) Explain what is meant by share issue costs and how they are treated for accounting purposes.
Answer: Share issue costs include legal fees,accounting fees,underwriting costs,printing,clerical and other costs associated with the share issue.There are three methods to deal with share issue costs:
Offset Method: Record the costs as a reduction in the amount received from the sale of the shares as they are argued to be one-time costs.Share costs are debited to the share capital account.
Retained earnings method: Share issue costs are charged directly to retained earnings. Deferred Charge Method: Less common method.Costs are recorded as a deferred charge and amortized over a reasonable time period.
Q2) Par value is typically set at a low amount so that the corporation can pay a minimum amount in dividends to the preferred shareholders.
A)True
B)False
Answer: False
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5
Chapter 4: Statements of Financial Position and Changes in Equity; Disclosure Notes
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127 Verified Questions
127 Flashcards
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Sample Questions
Q1) A forward contract is:
A) A debt instrument.
B) The right to sell something in the future.
C) An obligation to buy or sell something in the future.
D) The right to buy something in the future.
Q2) If it is the company's option to repay the debentures through the issuance of common shares,the principal component of the bonds is debt.
A)True
B)False
Q3) One of the most common forms of hybrid security is convertible debt.
A)True
B)False
Q4) The measurement date of a compensatory stock option must precede the date of grant.
A)True
B)False
Q5) What are hybrid securities?
Q6) Options are ONLY for the purpose of buying or selling financial instruments.
A)True
B)False Page 6
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Page 7
Chapter 5: The Statement of Cash Flows
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116 Verified Questions
116 Flashcards
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Sample Questions
Q1) Permanent differences are those that factor into the computation of both net income and taxable income.
A)True
B)False
Q2) Which of the following is an example of a temporary difference which would not result in a deferred tax asset?
A) Allowance method for doubtful accounts is used for accounting purposes while direct write-off is required for tax purposes.
B) Use of sales method of revenue recognition for accounting purposes, and instalment method of revenue recognition for tax purposes.
C) Unrealized loss on short term investment is recognized for accounting purposes during the holding period while the actual loss on date of disposal is used for tax purposes.
D) Estimated loss on disposal of a segment of a business recognized for accounting purposes but reported on the income tax return later on the basis of the actual loss.
Q3) Briefly explain the three basic issues with respect to inter-period income tax allocation.
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8
Chapter 6: Revenue Recognition
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98 Flashcards
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Sample Questions
Q1) Choose the best statement with respect to tax rates.
A) The tax rate used to record a deferred income tax asset or liability should be the enacted tax rate at the beginning of the year.
B) The current tax rate should be used to record a deferred income tax asset or liability.
C) The projected tax rate should be used to record a deferred income tax asset or liability.
D) Once recorded, the deferred income tax asset must be maintained at a rate expected to be in effect when the carry forward is utilized.
Q2) The use of a valuation allowance account is mandatory under IFRS.
A)True B)False
Q3) How should a deferred income tax benefit of a tax loss carry forward be treated on a yearly basis?
Q4) Once a deferred benefit of a tax loss carry forward has been recorded,does it have to remain on the balance sheet until realized? Explain.
Q5) How can a company use CCA to fully utilize losses that have been incurred?
Q6) Describe the difference between a tax loss and a tax benefit.
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Page 9
Chapter 7: Financial Assets: Cash and Receivables
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227 Verified Questions
227 Flashcards
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Sample Questions
Q1) LOR leased a computer to LES which cost the lessor $8,000.The terms of the lease specify four years,an annual interest rate of 15 percent,and four year-end rental payments.The lease qualifies as a finance lease (direct financing).The lessor will get the computer after the fourth year and its residual value at that time is estimated to be $1,000.The amount of each rental payment is (round to the nearest dollar):
A) $2,000
B) $2,335
C) $2,501
D) $2,602
Q2) With respect to a lessor's indirect costs,under ASPE:
A) These should be expensed for both direct financing and sales-type leases.
B) These should be capitalized for both direct financing and sales-type leases.
C) These should be expensed under direct financing leases and capitalized under sales-type leases.
D) These should be capitalized under direct financing leases and expensed under sales-type leases.
Q3) Ryan Corp.enters into a finance lease agreement with a 5-year term and a bargain renewal option of 3 years.Over what period should the asset be amortized?
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Chapter 8: Cost-Based Inventories and Cost of Sales
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93 Verified Questions
93 Flashcards
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Sample Questions
Q1) Total net pension expense recognized over the life of a pension plan will be in excess of the total amount paid into the pension fund.
A)True
B)False
Q2) In order to be registered,a pension plan must be trusteed.
A)True
B)False
Q3) All of the following are relevant policy disclosures suggested by the AcSB except: A) a reconciliation of pension plan assets from the beginning to the end of the year.
B) description of how expected return on pension plan assets is calculated.
C) actual return on plan assets during the year.
D) principle actuarial assumptions.
E) the risk profile of the employee group.
Q4) Under the simplified approach to accounting for defined benefit pension plans under ASPE there may be a pension asset ceiling.
A)True
B)False
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11
Chapter 9: Long-Lived Assets
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134 Verified Questions
134 Flashcards
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Sample Questions
Q1) For purposes of computing the weighted average number of shares outstanding during the year,a midyear event that must be treated as occurring at the beginning of the year is the:
A) Sale of additional common shares.
B) Issuance of stock warrants.
C) Purchase of treasury stock.
D) Declaration and issuance of stock dividend.
Q2) Earnings per share refer to the amount of earnings attributable to each share of common and preferred stock.
A)True
B)False
Q3) Dilutive convertible securities must be used in the computation of:
A) Diluted and basic earnings per share.
B) Diluted earnings per share.
C) Basic earnings per share.
D) Dilutive convertible securities are not used in any computations of earnings per share.
Q4) You calculate basic EPS to be $15.87 and diluted EPS to be $16.65.From a disclosure point,what needs to be disclosed?
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Page 12
Chapter 10: Depreciation, Amortization, and Impairment
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154 Verified Questions
154 Flashcards
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Sample Questions
Q1) A retrospectively applied change in accounting policy relating to fixed assets where a company changes from the straight-line amortization method to the double-declining balance method would result in a decrease to opening retained earnings.
A)True
B)False
Q2) If a $1,000 purchase on credit last year was not recorded until this year and these goods purchased were not included in any year's ending inventory,the purchase error is counterbalancing.
A)True
B)False
Q3) A plant asset was purchased for $19,000 on 1/1/x0 with a residual value of $2,000 and useful life of five years.In 20x3,the total useful life is re-estimated to be seven years and the estimated salvage value is assumed to be zero.Sum-of-the-year's-digits depreciation is used.What is depreciation expense in 20x3?
A) $2,340
B) $2,160
C) $1,350
D) $1,210
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Chapter 11: Financial Instruments: Investments in Bonds and Equity Securities
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162 Verified Questions
162 Flashcards
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Sample Questions
Q1) The current ratio is one measure of the adequacy of a company's working capital.
A)True
B)False
Q2) GAAP requires the presentation of financial statements for the current year and the two immediately preceding reporting periods.
A)True
B)False
Q3) Which of the following is not known as a solvency ratio?
A) Debt-to-equity
B) Times interest earned
C) Debt-to-total assets
D) Defensive-interval ratio
Q4) To calculate the book value per common share,total shareholders' equity (including retained earnings)must be allocated to the respective common and preferred equities.
A)True
B)False
Q5) The current ratio is a measure of the adequacy of a company's working capital.
A)True
B)False
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