Intermediate Accounting II Final Exam
Course Introduction
Intermediate Accounting II builds upon foundational accounting principles introduced in earlier coursework, focusing on more advanced topics regarding the recognition, measurement, and reporting of liabilities, equity, and complex financial instruments. The course covers areas such as long-term debt, leases, income taxes, pensions, shareholders equity, earnings per share, accounting changes, and error analysis. Emphasis is placed on the application of generally accepted accounting principles (GAAP), the preparation and analysis of financial statements, and the ethical responsibilities of the professional accountant. Students will develop critical thinking and problem-solving skills through case studies and real-world scenarios relevant to accounting practice.
Recommended Textbook
Advanced Financial Accounting 7th Edition by Thomas H. Beechy
Available Study Resources on Quizplus 19 Chapters
513 Verified Questions
513 Flashcards
Source URL: https://quizplus.com/study-set/3518 Page 2
Chapter 1: Setting the Stage
Available Study Resources on Quizplus for this Chatper
40 Verified Questions
40 Flashcards
Source URL: https://quizplus.com/quiz/69874
Sample Questions
Q1) In Canada, there are many types of business and non-business organizations and four different reporting standards that might be applicable.
Required:
What types of organizations are required to follow IFRS? What types of organizations may follow IFRS if they choose to do so, and how is this choice made?
Answer: Public companies and those entities that have a fiduciary responsibility must follow IFRS. Government business enterprises must follow IFRS since they are competing with profit-oriented businesses.
Private enterprises that are not publicly accountable enterprises have a choice to follow IFRS or ASPE. The choice will depend on management's reporting objectives and users' objectives. Not-for-profit entities in Canada also have a choice of following IFRS. Again, this choice will depend on users' and management's objectives in preparing the financial reports.
To view all questions and flashcards with answers, click on the resource link above.
3
Chapter 2: Intercorporate Equity Investments: an Introduction
Available Study Resources on Quizplus for this Chatper
43 Verified Questions
43 Flashcards
Source URL: https://quizplus.com/quiz/69873
Sample Questions
Q1) Townsend Ltd. has the following shareholders: Palermo Co.-60%
Nix Ltd.-30%
Riley Ltd.-10%
Nix has two seats on Townsend's five-person board of directors. Which of the following statements is true?
A)Nix has significant influence over Townsend.
B)Nix has control over Townsend.
C)Townsend is a special purpose entity to Nix.
D)Nix should treat Townsend as a passive investment.
Answer: A
Q2) Jonas Co. owned 60% of Kara Co.'s voting shares and 25% of Lynn Ltd.'s voting shares. Kara owns 30% of Lynn's voting shares. Which of the following statements is true?
A)Kara is the only subsidiary of Jonas.
B)Both Kara and Lynn are subsidiaries of Jonas.
C)Lynn is a subsidiary of both Kara and Jonas.
D)Lynn is the only subsidiary of Kara.
Answer: B
To view all questions and flashcards with answers, click on the resource link above.
Page 4
Chapter 3: Business Combinations
Available Study Resources on Quizplus for this Chatper
43 Verified Questions
43 Flashcards
Source URL: https://quizplus.com/quiz/69872
Sample Questions
Q1) Dupuis Ltd. acquired Waul Ltd. through an exchange of shares. How should Waul record this on its books?
A)Waul should debit an "Investment by Dupuis" account and credit its share capital account.
B)Waul should debit an "Investment by Dupuis" account and remove all its asset and liability accounts.
C)Waul should close all its balance sheet accounts.
D)No entry should be made.
Answer: D
Q2) After an exchange of shares in a business combination, each group of shareholders held 50% of the voting rights. Which of the following factors should be considered in determining the acquirer?
A)Head office location
B)Composition of the board of directors
C)If there are material transactions between the combining companies
D)Which company initiated the combination
Answer: B
To view all questions and flashcards with answers, click on the resource link above. Page 5
Chapter 3: Appendix A: AIncome Tax Allocation
Available Study Resources on Quizplus for this Chatper
6 Verified Questions
6 Flashcards
Source URL: https://quizplus.com/quiz/69871
Sample Questions
Q1) Castle Ltd. acquired 100% of Bello Ltd. At the time of acquisition, Bello had assets with a tax value of $700,000, carrying value of $800,000, and fair value of $950,000. Both Castle and Bello are subject to a tax rate of 40%. What is the amount of the deferred tax liability on Castle's consolidated SFP?
A)$40,000
B)$60,000
C)$100,000
D)$280,000
Q2) Castle Ltd. acquired 100% of Bello Ltd. At the time of acquisition, Bello had assets with a tax value of $700,000, carrying value of $800,000, and fair value of $950,000. Both Castle and Bello are subject to a tax rate of 40%. What is the effect of recognizing the deferred tax in accounting for the acquisition?
A)Increase in liabilities and goodwill
B)Decrease in liabilities and goodwill
C)Decrease in liabilities and increase in goodwill
D)Increase in liabilities and decrease in goodwill
To view all questions and flashcards with answers, click on the resource link above.
Chapter 4: Wholly Owned Subsidiaries: Reporting
Subsequent Acquisitions
Available Study Resources on Quizplus for this Chatper
40 Verified Questions
40 Flashcards
Source URL: https://quizplus.com/quiz/69870
Sample Questions
Q1) Paranich Co. acquired Crowley Co. in a business combination at December 31, 20X4. Crowley has a capital asset that it has been amortizing at a rate of $10,000 per year. At the time of the acquisition, the asset had a book value of $70,000 and a fair value of $77,000. The asset has a remaining life of seven years. With respect to this asset, how much amortization expense should Paranich report on its December 31, 20X5, consolidated financial statements?
A)$ 1,000
B)$ 7,700
C)$10,000
D)$11,000
Q2) Under the direct method, what values should be entered for the assets, liabilities, and shareholders' equity to start the consolidation process?
A)Carrying values for both the parent and the subsidiary companies
B)Carrying values for the parent company and fair values for the subsidiary company
C)Fair values for the parent company and carrying values for the subsidiary company
D)Fair values for both the parent and the subsidiary companies
To view all questions and flashcards with answers, click on the resource link above. Page 7
Source URL: https://quizplus.com/quiz/69869
Sample Questions
Q1) At the time of acquisition, the fair values of these assets were higher than their carrying values and their tax bases. In Morin's consolidation each year, it must adjust for the deferred taxes that resulted from these temporary differences. Which of the following statements is true?
A)The consolidation adjustment will always result in an increase in the deferred tax liability.
B)The consolidation adjustment will always result in a decrease in the deferred tax liability.
C)The consolidation adjustment can result in either an increase or a decrease in the deferred tax liability.
D)The consolidation adjustment is required only if the tax basis changes.
To view all questions and flashcards with answers, click on the resource link above.
8
Source URL: https://quizplus.com/quiz/69868
Sample Questions
Q1) Under IFRS, how often should goodwill acquired in a business combination be tested for impairment?
A)Whenever there is an indication of impairment
B)Whenever there is a change in circumstances in the business
C)At least once a year
D)At least once every two years
Q2) Proudfoot Ltd. acquired all the shares of Jacob Ltd. several years ago. In conducting its goodwill impairment test for the current year, Proudfoot has determined that there has been an impairment related to revalued assets. On Proudfoot's consolidated financial statements, where should this impairment be reported?
A)As part of profit or loss
B)As part of other comprehensive income
C)As an adjustment to retained earnings
D)As a separate amount under shareholders' equity
Q3) How should goodwill acquired in a business combination be allocated?
A)Proportionately to assets
B)Proportionately to fair-value increments
C)To cash-generating units
D)It is not allocated.
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 5: Consolidation of Non-Wholly Owned
Subsidiaries
Available Study Resources on Quizplus for this Chatper
41 Verified Questions
41 Flashcards
Source URL: https://quizplus.com/quiz/69867
Sample Questions
Q1) In preparing consolidation working papers, why is it necessary to eliminate intercompany profits?
A)To nullify the effect of intercompany transactions on consolidated financial statements
B)To defer intercompany profits until the following year
C)To allocate unrealized profits until the following year
D)To differentiate between realized and unrealized profits
Q2) What is cost of sales on the consolidated statement of income for 20X6?
A)$687,000
B)$680,000
C)$685,600
D)$660,000
Q3) During 20X1, Siro sold $7,000 of goods, with a gross margin of 40%, to Portia. At the end of 20X1, $3,000 of the goods were still in Portia's inventory. What portion of consolidated net income for 20X1 is attributable to Portia?
A)$6,120
B)$6,240
C)$6,600
D)$7,080
Page 10
To view all questions and flashcards with answers, click on the resource link above.
Chapter 5: Appendix A: Step Purchases
Available Study Resources on Quizplus for this Chatper
6 Verified Questions
6 Flashcards
Source URL: https://quizplus.com/quiz/69866
Sample Questions
Q1) Dinh Co. acquired 60% of Ludo Ltd. five years ago. In the current year, Dinh purchased additional shares from the NCI to bring its holdings to 75%. How should the difference between the purchase consideration paid and the adjustment to the value of the NCI be treated?
A)It should be taken directly to equity, split equally between the shareholders of the parent and the NCI.
B)It should be taken directly to equity, split proportionately between the shareholders of the parent and the NCI.
C)It should be taken directly to equity, all attributed to the shareholders of the parent.
D)It should be taken directly to equity, all attributed to the NCI.
Q2) Under the parent-company extension method, the balance of the non-controlling interest at December 31, 20X7, was $600,000. What adjustment should be made to the consolidated shareholders' equity to reflect Frey's additional purchase of shares?
A)$50,000
B)$66,667
C)$200,000
D)$250,000
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 5: Appendix B: Decreases in Ownership Interest
Available Study Resources on Quizplus for this Chatper
4 Verified Questions
4 Flashcards
Source URL: https://quizplus.com/quiz/69865
Sample Questions
Q1) Gumble Ltd. has owned 65% of the common shares of Lopez for several years. This year, Gumble reduced its interest in Lopez to 10%. Which of the following statements is true?
A)Gumble must change from reporting under consolidation to the equity method.
B)Gumble must change from reporting under consolidation to the cost method.
C)Gumble must change from reporting under the equity method to the cost method.
D)Gumble is not required to change its reporting method.
Q2) When a subsidiary issues shares, ________.
A)no gain or loss is recognized
B)a gain or loss is always recognized
C)this reduces the NCI
D)this may increase the NCI
To view all questions and flashcards with answers, click on the resource link above.
12
Chapter 6: Subsequent-Year Consolidations: General Approach
Available Study Resources on Quizplus for this Chatper
40 Verified Questions
40 Flashcards
Source URL: https://quizplus.com/quiz/69864
Sample Questions
Q1) Linville Ltd. owns 80% of the outstanding shares of Chance Co. On January 2, 20X1, Chance sold a machine to Linville for $270,000. Chance recorded a $45,000 gain on the sale. At the time of the sale, the machine had a remaining useful life of three years. Both companies use the straight-line method of depreciation. What amount should be shown for depreciation expense on Linville's consolidated statement of comprehensive income at December 31, 20X1?
A)$15,000
B)$72,000
C)$75,000
D)$90,000
Q2) Basil Ltd. has an 80% interest in a joint venture. Under IFRS, what is attributed to the Basil?
A)80% of the realized and unrealized gains and losses arising from upstream sales
B)80% of the realized and unrealized gains and losses arising from downstream sales
C)100% of the realized and unrealized gains and losses arising from upstream sales
D)100% of the realized and unrealized gains and losses arising from downstream sales
To view all questions and flashcards with answers, click on the resource link above.
Page 13
Chapter 6: Appendix A: Preferred and Restricted Shares of Investee Corporation
Available Study Resources on Quizplus for this Chatper
5 Verified Questions
5 Flashcards
Source URL: https://quizplus.com/quiz/69863
Sample Questions
Q1) A parent company owns a subsidiary's preferred and common shares. How should the acquisition of the preferred shares be treated?
A)In the same manner as common shares
B)As a retirement of shares
C)As an expense
D)As a deduction from retained earnings
Q2) Ngo Ltd.'s subsidiary has restricted shares. What must Ngo look at in determining non-controlling interest?
A)Number of shares only
B)Participation in earnings only
C)Participation in dividends only
D)Participation in earnings and dividends
Q3) Under IFRS, which of the following statements is true?
A)Preferred shares must be classified as debt.
B)Preferred shares must be classified as equity.
C)Preferred shares can be classified as debt or equity depending on the rights attached to them.
D)Preferred shares can be classified as debt or equity at the option of the issuing company.
Page 14
To view all questions and flashcards with answers, click on the resource link above.
Chapter 6: Appendix B: Intercompany Bond Holdings
Available Study Resources on Quizplus for this Chatper
6 Verified Questions
6 Flashcards
Source URL: https://quizplus.com/quiz/69862
Sample Questions
Q1) A subsidiary has purchased some bonds from its parent company. Under the par-value method, the non-controlling interest is allocated its share of the difference between ________.
A)the bond's market value and face value
B)the bond's face value and its carrying value on the subsidiary's books
C)the bond's market value and its carrying value on the subsidiary's books
D)the bond's par value and carrying value
Q2) Gill Ltd. is the wholly owned subsidiary of Basaraba Ltd. Gill purchased all of Basaraba's outstanding bond issue on the open market at a discount. The bonds have an unamortized premium attached. This transaction, in effect, retires the bond and results in a gain. How should the gain be shown?
A)It will appear on Basaraba's separate-entity statement of comprehensive income only.
B)It will appear on both Basaraba's separate-entity and consolidated statements of comprehensive income.
C)It will appear on Basaraba's consolidated statement of comprehensive income only.
D)It will be added to the value of the bonds payable on Basaraba's statement of financial position.
To view all questions and flashcards with answers, click on the resource link above.
15
Chapter 7: Segment and Interim Reporting
Available Study Resources on Quizplus for this Chatper
41 Verified Questions
41 Flashcards
Source URL: https://quizplus.com/quiz/69861
Sample Questions
Q1) There is certain information that reportable segments are required to disclose only if that information is regularly reviewed by the chief operating decision-maker. Which of the following must be disclosed even if it is not regularly reviewed by the chief operating decision-maker?
A)Measure of profit/loss
B)Amortization and depreciation
C)Income tax expense/benefit
D)Interest revenue and expense
Q2) The recommendation for interim income tax expense requires the use of which of the following rates in the first quarter?
A)Estimated average
B)Marginal
C)Applicable progressive
D)Loss carryforward
Q3) Under IAS 34, companies generally should use the discreet approach for interim reporting. However, IAS 34 outlines exceptions to this rule. Explain what these exceptions are and how they are treated in interim reports. What argument does IAS 34 provide for this treatment?
To view all questions and flashcards with answers, click on the resource link above.
16
Chapter 8: Foreign Currency Transactions and Hedges
Available Study Resources on Quizplus for this Chatper
49 Verified Questions
49 Flashcards
Source URL: https://quizplus.com/quiz/69860
Sample Questions
Q1) Assume that the transaction qualifies as a fair-value hedge. On March 1, at what amount should the forward contract be recorded?
A)$307,440
B)$312,400
C)$317,600
D)$319,800
Q2) Which of the following statements is true about the two-transaction theory?
A)Exchange gains and losses usually flow through to net income in the period in which they are incurred.
B)Exchange gains and losses are attached to the sales or assets from the original transaction.
C)Exchange gains and losses are considered a cost of acquiring assets.
D)Exchange gains and losses affect the carrying value of acquired assets.
Q3) Assume that the transaction qualifies as a cash-flow hedge. What amount should be recognized as other comprehensive income at April 30, 20X2?
A)$ 320
B)$ 640
C)$4,640
D)$5,280
To view all questions and flashcards with answers, click on the resource link above.
Page 17
Chapter 9: Reporting Foreign Operations
Available Study Resources on Quizplus for this Chatper
44 Verified Questions
44 Flashcards
Source URL: https://quizplus.com/quiz/69859
Sample Questions
Q1) The January 1, 20X5, retained earnings balance of the London Branch of the Liverpool Company correctly translated to Canadian dollars was $1,783,774. The beginning inventory of £380,000 was acquired during the last quarter of 20X4 and the ending inventory was acquired during the last quarter of 20X5. Sales and purchases were made, and other expenses were incurred, evenly throughout the year.
Required:
Translate the December 31, 20X5, statement of financial position of Liverpool Company into dollars assuming the London branch has a functional currency of C$s and a presentation currency of C$s.
Explain how it might be determined that the London branch had a function currency of Canadian $s.
Q2) Under the temporal method, which of the following items would be translated using the year-end spot rate?
A)Inventory
B)Land
C)Long-term debentures
D)Building
To view all questions and flashcards with answers, click on the resource link above.
Chapter 10: Financial Reporting for Not-For-Profit Organizations
Available Study Resources on Quizplus for this Chatper
46 Verified Questions
46 Flashcards
Source URL: https://quizplus.com/quiz/69858
Sample Questions
Q1) The Wellness Society, a not-for-profit organization, owns 5% of the shares of the Fitness Factory, a for-profit organization. The two organizations operate independently and have no board members in common. How should the Wellness Society account for its investment in the Fitness Factory?
A)Consolidation
B)The equity method
C)The cost method
D)Note disclosure only
Q2) One of the programs that the Tyger Society operates is a drug and alcohol awareness program for junior high school students across Canada. This is an example of
A)business goods and services
B)private goods and services
C)collective goods and services
D)government goods and services
Q3) The CICA Handbook requires large not-for-profit organizations to ________.
A)immediately write-off the capital assets
B)capitalize, but not amortize the capital assets
C)capitalize and amortize the capital assets
Page 19
D)only disclose the capital assets in the notes to the financial statements
To view all questions and flashcards with answers, click on the resource link above.
Chapter 10: Appendix A: Fund Accounting
Available Study Resources on Quizplus for this Chatper
5 Verified Questions
5 Flashcards
Source URL: https://quizplus.com/quiz/69857
Sample Questions
Q1) Sparrow Pension Plan is a not-for-profit organization that administers the pension fund held for the employees of Sparrow Tech Ltd. What type of fund is the pension fund?
A)Reserve fund
B)Self-sustaining fund
C)Fiduciary fund
D)Endowment fund
Q2) Which statements are affected by inter-fund loans?
A)Statement of operations and consolidated statements
B)Statement of financial position of the individual funds and consolidated statements
C)Statement of operations and statement of financial position of the individual funds
D)Statement of financial position of the individual funds and statement of changes in net assets
To view all questions and flashcards with answers, click on the resource link above. Page 20
Chapter 11: Public Sector Financial Reporting
Available Study Resources on Quizplus for this Chatper
44 Verified Questions
44 Flashcards
Source URL: https://quizplus.com/quiz/69856
Sample Questions
Q1) What does the net debt indicate on a government's statement of financial position?
A)How much revenue the government must raise to cover its past spending
B)The government's ability to provide future services and programs
C)The government's financial position
D)The government's ability to raise revenues to meet its current year expenditures
Q2) On what statement does the amortization of tangible capital assets appear as a reconciling item?
A)Statement of financial position
B)Statement of operations
C)Statement of changes in net debt
D)Statement of cash flows
Q3) Clearly distinguish between a government business organization and a non-business government organization.
Q4) What is impairment testing of tangible capital assets based on?
A)Impairment of future cash flows
B)Impairment of future service potential
C)Impairment of anticipated residual value
D)Impairment of net present value
To view all questions and flashcards with answers, click on the resource link above.
21