Intermediate Accounting II Test Preparation
Course Introduction
Intermediate Accounting II builds upon foundational accounting principles introduced in earlier coursework, delving deeper into complex financial reporting topics such as liabilities, stockholders' equity, income taxes, pensions, leases, and accounting changes. The course emphasizes the application of generally accepted accounting principles (GAAP) in preparing and analyzing financial statements, with a focus on both the theoretical framework and practical implications of accounting standards. Students develop advanced problem-solving skills and gain experience interpreting financial disclosures, which prepares them for professional accounting roles and further academic study.
Recommended Textbook
Modern Advanced Accounting in Canada 6th Edition by Murray Hilton
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12 Chapters
691 Verified Questions
691 Flashcards
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Page 2
Chapter 1: A Survey of International Accounting
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38 Verified Questions
38 Flashcards
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Sample Questions
Q1) The CICA Handbook is the handbook of Canadian accounting standards.Why do companies in Canada ensure that there financial reporting is consistent with Canadian GAAP?
A)because their bank requires them to.
B)because their auditors require that they report.
C)because reporting under the CICA Handbook is required by public companies boards' of directors.
D)because the CICA Handbook pronouncements constitute the accounting standards required by the provincial and federal Companies Acts and the Ontario Securities Commission.
Answer: D
Q2) Which of the following statements is correct?
A)IFRS rules are broader based than U.S or Canadian GAAP.
B)Canadian accounting rules will be closer to those of the FASB in the next few years than to IFRS.
C)FASB standards are clearly superior to IFRS.
D)IFRS expressly prohibits the use of fair values and optional accounting treatments.
Answer: A
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3
Chapter 2: Investments in Equity Securities
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58 Verified Questions
58 Flashcards
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Sample Questions
Q1) On January 1,2001,Joyce Inc.paid $600,000 to purchase 25% of Mark Inc's outstanding voting shares.Joyce has significant influence over Mark.On the date of acquisition,Mark's net assets were valued at $2,000,000.Any Acquisition Differential was allocated to Plant & Equipment,with a remaining useful life of 5 years.Mark's earnings for 2001 and 2002 were $100,000 and $200,000 respectively.Mark paid dividends in the amount of $20,000 and $10,000 during 2001 and 2002,respectively.
Required:
Calculate the balance in Joyce's Investment account as at December 31,2002.
Answer: 11ea8eda_c610_4104_9698_7f3eca5a3fbf_TB4094_00_TB4094_00
Q2) Which of the following is NOT a possible indicator of significant influence?
A)The investor has the ability to elect members to the Board of Directors.
B)The investor has the right to participate in the policymaking process.
C)The investor has engaged in numerous intercompany transactions with the Associate. D)The Associate's new CEO was previously CEO of the investor company.
Answer: D
Q3) Prepare X's journal entries for 2002 and 2003,assuming that this is a Portfolio Investment.
Answer: 11ea8eda_c611_a09a_9698_8df93e35ac5e_TB4094_00_TB4094_00
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Chapter 3: Business Combinations
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73 Verified Questions
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Sample Questions
Q1) Assume that Intron's Assets and Liabilities were purchased instead of its shares for $300,000.Prepare the journal entry to record this purchase.
Answer: 11ea8eda_c603_48a7_9698_653e76b52d66_TB4094_00_TB4094_00
Q2) Which of the following methods of accounting for Business Combinations is/are consistent with the Historical Cost Principle?
A)The Pooling of Interests Method
B)The Purchase Method)
C)The New Entity Method)
D)The Acquisition Method)
Answer: B
Q3) How should intangible assets which are readily identifiable but not accurately measured be accounted for?
A)They should be ignored since they can't be accurately measured)
B)They should be independently appraised and accounted for at their appraised value.
C)They should be included in Goodwill.
D)They should be accounted for at an amount deemed reasonable by management. Answer: C
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Chapter 4: Consolidated Statements on Date of Acquisition
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52 Verified Questions
52 Flashcards
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Sample Questions
Q1) There are a number of theories of how financial statements should be prepared for non-wholly owned subsidiaries.Briefly discuss each theory and provide your reasoning to support the theory that is being adopted under IFRSs.
Q2) Under the Proprietary theory,Non-Controlling Interest is
A)non-existent.Goodwill is established based on the Parent's pro-rata share of any acquisition differential.
B)non-existent.Goodwill is established based on the Parent's acquisition cost.
C)based on the fair market values of the subsidiary's net assets.Goodwill is established based on the Parent's acquisition cost.
D)based on the book values of the subsidiary's net assets.Goodwill is established based on the Parent's acquisition cost.
Q3) Assuming that Keen Inc.purchases 80% of Lax Inc.for $240,000,prepare any journal entries you feel are necessary on the date of acquisition prior to the preparation of Consolidated Financial Statements.Assume that the Entity Method applies.
Q4) Assuming that Keen Inc.purchases 80% of Lax Inc.for $240,000,prepare the Consolidated Balance Sheet on the Date of Acquisition.
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Chapter 5: Consolidation Subsequent to Acquisition Date
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61 Verified Questions
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Sample Questions
Q1) Assuming that Davis purchases 80% of Martin for $300,000,answer the following: Required:
a)Prepare Davis' Equity-Method journal entries for 2002 and 2003.
b)Compute the following as at December 31,2003:
i.Investment in Martin Inc.
ii.Goodwill
iii.The amount of unamortized Acquisition Differential.
Q2) Assume that Stanton had other Intangible assets with indefinite lives on its books at the date of acquisition.How would the impairment test differ from question 67 above,if at all? A simple explanation is required)Please do not use any numbers to support your answer.
Q3) The amount of depreciation expense appearing on Big Guy's July 1,2004 Consolidated Income Statement would be:
A)$115,000.
B)$116,280.
C)$113,720.
D)$113,400.
Q4) Prepare Brand X's Consolidated Balance Sheet as at December 31,2001,assuming that Brand X purchased 80% of Brand Y for $350,000.Assume the Entity Method is applied)
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Chapter 6: Intercompany Inventory and Land Profits
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59 Verified Questions
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Sample Questions
Q1) Where would the amortization of the acquisition differential be reflected on Kho's Consolidated Income Statement?
A)It would be reflected through non-controlling interest in earnings.
B)It would be reflected through other expenses.
C)It would be reflected through cost of sales.
D)It would be reflected as a reduction of sales.
Q2) What would be the amount of other revenue appearing on Kho Inc's Consolidated Income Statement for the Year ended December 31,2009?
A)$460,000.
B)$444,000.
C)$410,000.
D)$415,000.
Q3) Ignoring taxes,what is the total amount of unrealized profits in inventory at the end of 2009?
A)Nil.
B)$8,000.
C)$6,000.
D)$7,800.
Q4) Prepare YIN's Consolidated Income Statement for the Year ended June 30,2010
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Chapter 7: Aintercompany Profits in Depreciable Assets
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Sample Questions
Q1) Prepare a summary of intercompany interest revenues and expenses.
Q2) The amount of deferred taxes appearing on Jay's 2010 Consolidated Statement of Financial Position would be:
A)Nil.
B)$2,550
C)$1,140
D)$1,000
Q3) 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
Q4) Prepare a summary of intercompany bond transactions.Be sure to show the gain or loss for each company as well as the effect on the consolidated entity.
Q5) Prepare Plax's Consolidated Statement of Financial Position as at December 31,2009.
Q6) Prepare Plax's Consolidated Income Statement for the year ended December 31,2009.
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Chapter 8: Consolidated Cash Flows and Ownership Issues
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58 Verified Questions
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Sample Questions
Q1) Which of the following statements pertaining to preferred shares is correct?
A)If the preferred shares are participating only the current year's Net Income would be allocated to the preferred shares.
B)If the preferred shares are non-cumulative dividends are never in arrears.
C)If the preferred shares are participating the current year's Net Income would be allocated to the shares only if the subsidiary is fully owned by the parent.
D)There can never be any dividends in arrears when preferred shares are participating.
Q2) Assume that X Corp.controls X Corp.X constantly purchases and sells Y's voting shares on the open market while always ensuring that it maintains a controlling interest over Y.Which of the following statements pertaining to X buying and selling activity is correct?
A)X's activity has no effect on the non-controlling interest.
B)As X sells shares of Y,the non-controlling interest Increases.
C)As X sells shares of Y,the non-controlling interest decreases.
D)As X buys shares of Y,the non-controlling interest Increases.
Q3) Compute consolidated trademarks for Ash as at December 31,2009.
Q4) Compute the Goodwill on the date of the acquisition.
Q5) Prepare a statement of non-controlling interest as at December 31,2011.
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Chapter 9: Other Consolidated Reporting Issues
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Sample Questions
Q1) Which of the following statements pertaining to any acquisition differential arising from a joint venture is correct?
A)There can be no acquisition differential arising from the formation of a new joint Venture.
B)The acquisition differential arising from a newly formed joint venture is allocated across the venture's identifiable net assets.
C)The acquisition differential arising from a newly formed joint venture is immediately charged to the retained earnings of each venturer on a pro-rata basis.
D)There can be no acquisition differential arising from the sale of a venturer's interest in the joint venture.
Q2) Prepare a Balance Sheet for Clarke on December 31,2010 in accordance with current Canadian GAAP,assuming that Clarke's investment in Jensen is a significant influence investment.
Q3) Using only the Assets test,which of the following segment(s)would be reportable?
A)A
B)A,B,C
C)A,B,C,D
D)B,C and D
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Chapter 10: Foreign Currency Transactions
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Sample Questions
Q1) Which statement is NOT correct?
A)In a fair value hedge the entity uses a hedging instrument to hedge against the fluctuation in the fair value of the hedged item.The method will be used when the hedged item will be valued at fair value.
B)In a cash flow hedge the entity uses a hedging instrument to hedge against the fluctuation in the Canadian dollar value of future cash flows.
C)The gain or loss on the hedging instrument in a cash flow hedge is initially reported in other comprehensive income and reclassified to profit and loss when the hedged item affects profit.
D)The gain or loss on the hedging instrument in a fair value hedge is initially recognized in other comprehensive income and transferred to profit and loss when the hedged item has be revalued for accounting purposes in accordance with IFRS.
Q2) What is the amount of the premium on the forward contract?
A)Nil
B)$11,000
C)$3,900
D)$6,000
Q3) Prepare the journal entries for 2011.
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Chapter 11: Translation and Consolidation of the Financial
Statements of Foreign Operations
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56 Verified Questions
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Sample Questions
Q1) Prepare Larmer's December 31,2011 Consolidated Balance Sheet.
Q2) Translate Wilsen's December 31,2014 Statement of Retained Earnings.
Q3) 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.
Q4) For the sake of simplicity,assume once again that US1's cost of sales was calculated to be $4,000,000 CDN.What is the amount (in Canadian dollars)of US1's retained earnings?
A)$665,750
B)$666,750
C)$682,500
D)$667,250
Q5) Translate Wilsen's December 31,2014 Statement of Retained Earnings.
Q6) Translate Wilsen's December 31,2014 Balance Sheet.
Q8) Compute Wilsen's exchange gain or loss for 2014. Page 13
Q7) Translate Martin's December 31,2011 Balance Sheet into Canadian dollars.
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Page 14
Chapter 12: Accounting for Not-For-Profit Organizations and
Governments
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Sample Questions
Q1) If a not-for-profit organization has revenues in excess of $500,000,how must it report its capital assets?
A)All asset purchases must be immediately and entirely expensed.
B)All capital assets must be capitalized and amortized.
C)All capital assets must be capitalized but not amortized.
D)All capital assets must be disclosed in a note to the financial statements.
Q2) What would be the carrying value of the equipment on December 31,2012?
A)$8,000
B)$8,400
C)$6,000
D)$6,300
Q3) Prepare the necessary journal entries to record these transactions assuming that the deferral method of accounting for contributions is used.
Q4) What would be the balance in the General Fund on December 31,2012?
A)$8,000
B)$6,400
C)$6,000
D)Nil
Page 15
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