Intermediate Accounting
Final Exam Questions
Course Introduction
Intermediate Accounting delves into the theory and application of financial accounting principles beyond the introductory level. This course emphasizes the preparation, analysis, and interpretation of financial statements in accordance with generally accepted accounting principles (GAAP). Topics include revenue recognition, inventory valuation, long-term assets, liabilities, shareholders equity, and the complexities of income measurement and reporting. Students will develop the analytical and technical skills necessary to address accounting issues faced by businesses and will gain experience in applying standards and procedures to real-world scenarios, laying the groundwork for advanced accounting coursework and professional certification.
Recommended Textbook
Modern Advanced Accounting in Canada 6th Edition by Murray Hilton
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Page 2
Chapter 1: A Survey of International Accounting
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Q1) IMVAR INC is US-based Company with Subsidiaries in both the United States and in Canada.The Company's Consolidated Financial Statements show a significantly higher net-income amount when prepared under Canadian GAAP than under U.S.GAAP.This difference can be largely explained by
A)different corporate tax rates in each country.
B)timing differences which will reverse out in the future.
C)differing reporting requirements in each country.
D)currency fluctuations.
Answer: B
Q2) The European Union has attempted to harmonize accounting principles amongst its member nations by issuing:
A)statutes.
B)standards.
C)bylaws.
D)directives.
Answer: D
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Chapter 2: Investments in Equity Securities
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Sample Questions
Q1) What is the amount of the Acquisition Differential?
A)($100,000)
B)$ 28,000
C)$ 80,000
D)$100,000
Answer: C
Q2) Which of the following statements is correct?
A)Under the Cost Method,Consolidated Net Income is equal to the sum of the income of the parent and it's pro rata share of the net incomes of each of its subsidiaries.
B)Under the Cost Method,Consolidated Net Income is equal to the sum of the income of the parent and the total of the net incomes of each of its subsidiaries.
C)Under the Equity Method,Consolidated Net Income is equal to the sum of the income of the parent and it's pro rata share of the net incomes of each of its subsidiaries.
D)Consolidated Net Income should be equal to the Investor's total income when the Equity method is used.
Answer: D
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4
Chapter 3: Business Combinations
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Sample Questions
Q1) Which of the following statements regarding the Pooling of Interests Method is false?
A)It will result in a higher net income being shown when the Fair Market Values of a company's assets exceeds its book values.
B)It is currently the required method for accounting for Business Combinations in Canada when an acquirer cannot be identified)
C)It is more widely used in the United States than in Canada)
D)The Purchase Method was created under the assumption that all parties involved in a Business Combination would essentially be considered equal.
Answer: B
Q2) Which of the following would NOT be included in the Acquisition Cost?
A)Share issue costs.
B)The Fair Market Value of any Shares Issued)
C)Contingent Consideration.
D)Direct expenses arising from a Business Combination.
Answer: A
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5
Chapter 4: Consolidated Statements on Date of Acquisition
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Sample Questions
Q1) What would be the amount of Non-Controlling Interest appearing on the Consolidated Balance Sheet on the date of acquisition,assuming once again that Parent purchased 80% of Sub Inc.for $180,000 under current GAAP?
A)$26,000
B)$86,000
C)$72,000
D)The answer cannot be determined from the information given.
Q2) Assume the same facts as Question 62 except that Company B's Bondholders had a conversion option which,if exercised,would be convertible to 2,000,000 common voting shares.Would this change your response? Explain.
Q3) Using Push Down accounting is:
A)permissible under IFRSs.
B)is likely permissible under Canadian GAAP.
C)required for SEC registration in some cases.
D)will be presented in the financial statements when the information is meaningful.
Q4) Prepare Jean Inc's consolidated Balance Sheet on the date of acquisition using the Proprietary Theory.
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Chapter 5: Consolidation Subsequent to Acquisition Date
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Q1) The amount of Retained Earnings appearing on the Consolidated Balance Sheet as at January 1,2007 would be:
A)$130,000
B)$70,000
C)$60,000
D)$160,000
Q2) Assuming once again that GNR owned 80% of NXR instead of 100%,what would be the effect on GNR's investment in NMX account under the cost method if GNR received $9,000 in dividends from NMX?
A)An increase of $1,000.
B)No effect
C)A decrease of $1,000.
D)An increase of $23,000.
Q3) The amount of Accounts Receivable appearing on Big Guy's Consolidated Balance Sheet as at July 1,2004 would be:
A)$325,000.
B)$305,000.
C)$314,000.
D)$270,000.
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Page 7
Chapter 6: Intercompany Inventory and Land Profits
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Sample Questions
Q1) Prepare a schedule showing the realized and unrealized profits for Q Inc.for 2006 and 2007.Your schedule should include both pre-tax and after-tax amounts.
Q2) Under which of the following Consolidation Theories would the elimination of the Parent's share of any intercompany profits be required for the preparation of Consolidated Financial Statements?
A)The Ownership Theory.
B)The Entity Theory.
C)The Proprietary Theory.
D)The Parent Theory.
Q3) Under which of the following Theories is the elimination of ALL intercompany profits called for?
A)The Ownership Theory.
B)The Entity Theory.
C)The Proprietary Theory.
D)The Parent Theory.
Q4) In your own words,explain what effect (if any)these intercompany transactions would have on non-controlling interest.
Q5) Calculate the non-controlling interest (Balance Sheet)as at June 30,2010.
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Chapter 7: Aintercompany Profits in Depreciable Assets
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Sample Questions
Q1) What would be the amount of consolidated patents appearing on Ting's Consolidated Statement of Financial Position as at December 31,2010?
A)$14,000
B)$16,000
C)$18,000
D)$15,000
Q2) Compute the Balance in Hot's Investment in Cold account as at December 31,2010
Q3) Ignoring taxes,what is the total amount of pre-tax profit from intercompany inventory sales that was realized during 2009?
A)$10,000
B)$2,000
C)$5,000
D)$7,000
Q4) What is the total amount of Unrealized Profit remaining at the end of 2010?
A)$30,000
B)$26,000
C)$27,000
D)Nil.
Q5) Compute the amount of income tax that would be deferred as at December 31,2010.
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Chapter 8: Consolidated Cash Flows and Ownership Issues
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Sample Questions
Q1) What is the amount of the acquisition differential amortization for 2009?
A)$6,250
B)$4,375
C)$5,625
D)$12,000
Q2) What would be Whine's ownership interest in Dine following Chompster's purchase of Whine's shares?
A)75%
B)80%
C)60%
D)64%
Q3) By how much would the non-controlling interest amount have changed as a result of the Hanson's second purchase?
A)An Increase of $37,857.
B)A decrease of $37,857.
C)An Increase of $51,900
D)A decrease of $51,900
Q4) Compute the Consolidated Net Income for 2011.Do not prepare an Income Statement.
Q5) Compute the Consolidated Cost of Goods Sold for 2009.
Q6) Compute consolidated inventory for Ash as at December 31,2009.
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Chapter 9: Other Consolidated Reporting Issues
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Sample Questions
Q1) Which of the following was often cited as a significant weakness of Section 1700 "Segmented Information" of the CICA Handbook?
A)The application of the provisions of this section was difficult to enforce.
B)The section did little to enhance the comparability of financial statements.
C)Companies in other countries were not subject to the same reporting requirements as Canadian companies.
D)Segments that were inherently different were often grouped together for reporting purposes.
Q2) The implied value of a VIE at acquisition under Canadian GAAP is equal to:
A)The fair value of the VIE.
B)The fair value of the non-controlling interest of the VIE.
C)The book value of the VIE.
D)Consideration paid by the primary beneficiary,plus the reported value of any previously held interests.
E)(b)& (d).
Q3) Prepare Alpha's Consolidated Income Statement for the year ended December 31,2010.
Q4) Prepare A Corp.'s equity method journal entries for 2010,assuming that the assets donated by B Corp did not include cash.
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Chapter 10: Foreign Currency Transactions
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Sample Questions
Q1) What is the amount of interest expense (in Canadian Dollars)recorded for 2011?
A)$250,080
B)$249,920
C)$287,175
D)$287,250
Q2) What is the amount of foreign exchange gain or loss recognized on the 2011 Income Statement?
A)$800 gain
B)$800 loss
C)$2,500 gain
D)$2,500 loss
Q3) What is the amount of CMI's foreign exchange gain or loss at year-end?
A)Nil.
B)$120 Gain.
C)$120 Loss.
D)$480 Gain.
Q4) Prepare a partial Balance Sheet for Maplehauff Inc.on December 31,2012 showing the Account Receivable from the American client as well as the accounts associated with the hedge.
Q5) Prepare any and all journal entries arising from this transaction.
Page 12
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Chapter 11: Translation and Consolidation of the Financial
Statements of Foreign Operations
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Sample Questions
Q1) Which of the following statements is correct?
A)If an organization is self-sustaining,dividends must be translated using closing rates.
B)If an organization is self-sustaining,dividends must be translated using average rates.
C)If an organization is self-sustaining,dividends must be translated using historical rates.
D)If an organization is considered an integrated foreign subsidiary dividends must be translated using average rates.
Q2) For the sake of simplicity,assume that US1's cost of sales was calculated to be
$4,000,000 CDN.What is the amount of the gain or loss arising from translation?
A)A $251,285 Gain.
B)A $3,000 Loss.
C)A $3,750 Gain.
D)A $2,750 Loss.
Q3) Translate Wilsen's December 31,2014 Statement of Retained Earnings.
Q4) Translate Martin's December 31,2011 Balance Sheet into Canadian dollars.
Q5) Calculate Larmer's Consolidated Net Income for 2011.
Q6) Compute Wilsen's exchange gain or loss for 2014.
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Chapter
12: Accounting for Not-For-Profit Organizations and Governments
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Sample Questions
Q1) The following are selected transactions from Helpers Cooperative which uses the restricted fund method.Helpers has an operating fund,a capital fund and an endowment fund:
Pledges amounting to $400,000 were received,of which $80,000 applies to the operations of the following year.It is estimated that 2% of the pledges will be uncollectible.
The association purchased office equipment at a cost of $6,000. Pledges of $300,000 were collected,while pledges amounting to $4,000 were written off as uncollectible.
A local newspaper agreed to offer Helpers a full-page ad.This had an estimated value of $5,000.
Interest and dividends received amounted to $15,000 on endowment fund investments.These earnings are considered unrestricted. Depreciation for the year amounted to $40,000.
Required:
Prepare journal entries to record the above transactions.Also,indicate which fund will be used for each entry.
Q2) Describe what fund accounting is and why is it used for not-for-profit organizations.
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