Intermediate Accounting Test Preparation - 1263 Verified Questions
Chapter 3: The Reporting Entity and the Consolidation of
Less-Than-Wholly- Owned Subsidiaries With No Differential
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Q1) On December 31,20X9,Play Company acquired 80 percent of the common stock of Station Company.At the time,Play held land with a book value of $100,000 and a fair value of $260,000;Station held land with a book value of $600,000 and fair value of $600,000.At what amount would land be reported in a consolidated balance sheet prepared immediately after the combination?
A)$550,000
B)$590,000
C)$700,000
D)$860,000
Answer: C
Q2) Based on the preceding information,what amount should be reported as noncontrolling interest in net assets in Power Company's December 31,20X6,consolidated balance sheet?
A)$35,200
B)$48,200
C)$76,800
D)$112,800
Answer: A
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Chapter 4: Consolidation of Wholly Owned Subsidiaries
Acquired at More Than Book Value
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Q1) Based on the preceding information,what amount of retained earnings will be reported in the consolidated balance sheet prepared immediately after the business combination?
A)$300,000
B)$409,000
C)$259,000
D)$191,000
Q2) Based on the preceding information,at what amount should the land be reported in the consolidated balance sheet prepared immediately after the business combination?
A)$135,000
B)$140,000
C)$150,000
D)$155,000
Q3) Based on the preceding information,what amount will be present in the revaluation capital account,when consolidating entries are prepared?
A)$0
B)$65,000
C)$60,000
D)$15,000
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Chapter 5: Consolidation
of Less-Than-Wholly- Owned
Subsidiaries Acquired at More Than Book Value
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Q1) Scissor Corporation holds assets with a fair value of $150,000 and a book value of $125,000 and liabilities with a book value and fair value of $50,000.What balance will be assigned to the noncontrolling interest in the consolidated balance sheet if Paper Company pays $90,000 to acquire 75 percent ownership in Scissor and goodwill of $20,000 is reported?
A)$50,000
B)$30,000
C)$40,000
D)$20,000
Q2) Based on the preceding information,what amount of goodwill will be reported in the consolidated balance sheet prepared immediately after the business combination?
A)$0
B)$40,000
C)$20,000
D)$15,000
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Chapter 6: Intercompany Inventory Transactions
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Q1) Based on the information given above,what will be the consolidated net income for 20X7?
A)$495,000
B)$317,750
C)$486,250
D)$690,000
Q2) Based on the information given above,what amount of consolidated net income will be assigned to the controlling shareholders for 20X1?
A)$14,000
B)$16,100
C)$17,900
D)$20,000
Q3) Based on the information given above,what amount of cost of goods sold will be reported in the 20X6 consolidated income statement?
A)$90,000
B)$108,000
C)$120,000
D)$135,000
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Chapter 7: Intercompany Transfers of Services and
Noncurrent Assets
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Q1) Based on the preceding information,the gain on sale of equipment recorded by Plesco for 20X8 is:
A)$70,000.
B)$65,000.
C)$50,000.
D)$40,000.
Q2) Based on the preceding information,in the preparation of the 20X9 consolidated financial statements,equipment will be:
A)debited for $1,000.
B)debited for $10,000.
C)credited for $15,000.
D)debited for $25,000.
Q3) Based on the preceding information,in the preparation of the 20X8 consolidated financial statements,equipment will be:
A)debited for $1,000.
B)debited for $10,000.
C)credited for $15,000.
D)debited for $25,000.
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Chapter 8: Intercompany Indebtedness
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Q1) Based on the information given above,what amount of consolidated net income should be reported for 20X8?
A)$147,240
B)$134,240
C)$149,134
D)$136,134
Q2) Based on the information given above,what amount of gain or loss on bond retirement was recorded during the consolidation process?
A)No gain or loss
B)$35,000 loss
C)$35,000 gain
D)$15,000 loss
Q3) Based on the information given above,what was the effect of DEF's purchase of Stamp's bond on the noncontrolling interest amount reported in Stamp's June 30,20X8,consolidated balance sheet?
A)No effect
B)$35,000 increase
C)$8,500 decrease
D)$8,500 increase
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Chapter 9: Consolidation Ownership Issues
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Q1) Based on the preceding information,what is the portion of Safety's retained earnings assignable to its preferred shareholders on January 1,20X6?
A)$52,000
B)$44,000
C)$36,000
D)$28,000
Q2) Based on the preceding information,the consolidating entry to prepare the consolidated financial statements for Princeton Company as of December 31,20X9 will include a credit to noncontrolling interest in Stanford Company for:
A)$140,000
B)$154,000
C)$152,000
D)$150,000
Q3) Based on the preceding information,what is Pisa's new ownership interest?
A)84 percent
B)55 percent
C)70 percent
D)64 percent
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Q1) Based on the preceding information,assuming that Pure Life uses the direct method of computing cash flows from operating activities,what amount will be reported by the company as cash received from customers during the year?
A)$815,000
B)$785,000
C)$800,000
D)$835,000
Q2) Based on the preceding information,what amount will be reported in the consolidated cash flow statement as net cash used in financing activities for 20X9?
A)$32,000
B)$38,000
C)$42,000
D)$70,000
Q3) Based on the preceding information,income tax expense for Ponte for the year 20X8 will be:
A)$67,000
B)$64,600
C)$64,000
D)$66,400
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Q1) Upon arrival in Chile,Karen exchanged $1,000 of U.S.currency into 480,000 Chilean Pesos.While returning after her two-month visit,she exchanged her remaining 50,000 Pesos into $100 of U.S.currency.What amount of gain or a loss did Karen experience on the 50,000 pesos she held during her visit and converted to U.S.dollars at the departure date?
A)Loss of $4.
B)Gain of $4.
C)Loss of $6.
D)No gain or loss.
Q2) Based on the preceding information,the entries on June 30,20X2,include a
A)credit to Foreign Currency Transaction Gain,$6,000.
B)debit to Dollars Payable to Exchange Broker,$254,000.
C)debit to Foreign Currency Units (Br.reals),$254,000.
D)credit to Foreign Currency Receivable from Exchange Broker,$262,500.
Q3) Based on the preceding information,the entries on June 30,20X2,include a A)debit to Dollars Payable to Exchange Broker,$262,500.
B)credit to Cash,$254,000.
C)credit to Premium on Forward Contract,$6,000.
D)credit to Foreign Currency Receivable from Exchange Broker,$262,500.
Page 13
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Chapter 12: Multinational Accounting: Issues in Financial
Reporting and Translation of Foreign Entity Statements
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Q1) Saltaire Co.is a French company located in Paris.Primer Corp. ,located in New York City,acquires Saltaire Co.Saltaire has the Euro as its recording currency and the Swiss Franc as its functional currency.Primer has the U.S.dollar as its recording currency and the U.S.dollar as its functional currency.
Required:
a)The year-end consolidated financial statements will be prepared in which currency? b)Explain which method is appropriate to use to use at year-end: Translation or Remeasurement?
Q2) Refer to the above information.Assuming the U.S.dollar is the functional currency,what is the balance in Polaris's investment in foreign subsidiary account at December 31,2008?
A)$3,303,400
B)$3,294,500
C)$3,323,400
D)$3,314,500
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Chapter 13: Segment and Interim Reporting
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Q1) Davis Company uses LIFO for all of its inventories.During its second quarter of 20X9,Davis experienced a LIFO liquidation.Davis fully expects to replace the liquidated inventory in the early part of the third quarter.How should Davis report the inventory temporarily liquidated on its income statement for the second quarter?
A)Cost of goods sold for the second quarter should include the acquisition cost of the goods temporarily liquidated.
B)Cost of goods sold for the second quarter should include the expected replacement cost of the goods temporarily liquidated.
C)Cost of goods sold for the second quarter should not include the expected replacement cost of the goods temporarily liquidated.
D)Cost of goods sold for the second quarter is not affected by the temporary liquidation of LIFO inventory.
Q2) Based on the preceding information,the cost of goods sold for the year 20X8,is:
A)$2,080,000
B)$1,880,000
C)$1,835,000
D)$1,910,000
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Chapter 14: Sec Reporting
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Q1) Both the FCPA (Foreign Corrupt Practices Act of 1977)and SOX (Sarbanes-Oxley Act of 2002)contain provisions related to internal control.Discuss some significant differences between how the two acts impact internal control practices for publicly held companies.
Q2) Regulation S-X and Regulation S-K:
A)govern the preparation of financial statements and associated disclosures.
B)govern the registration requirements for private placements.
C)outline responsibilities for audit committees of publicly held companies.
D)prohibit artificial pyramids of capital in public utilities.
Q3) Proxy statements are:
A)filed by an entity that acquires a beneficial ownership of more than 5 percent in a company.
B)interim financial statements need not be audited.
C)materials submitted to shareholders for votes on corporate matters.
D)used to disclose unscheduled material events.
Q4) Which of the following forms is the most comprehensive registration statement?
A)Form S-1
B)Form S-2
C)Form S-3
D)Form 20-F
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Chapter 15: Partnerships: Formation,operation,and
Changes in Membership
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Q1) When a partnership is formed,noncash assets contributed by partners should be recorded:
I.at their respective book values for income tax purposes.
II.at their respective fair values for financial accounting purposes.
A)I only
B)II only
C)Both I and II
D)Neither I nor II
Q2) Which of the following accounts could be found in the PQ partnership's general ledger?
I.Due from P
II.P,Drawing
III.Loan Payable to Q
A)I,II
B)I,III
C)II,III
D)I,II,and III
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Chapter 16: Partnerships: Liquidation
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Q1) Refer to the information provided above.Using a safe payments schedule,how much cash will be distributed to Dennis at the end of the second month?
A)$18,000
B)$27,000
C)$36,000
D)$60,000
Q2) Refer to the above information.If the other assets are sold for $80,000,and all partners are personally insolvent,how much should E receive upon liquidation?
A)$0
B)$6,000
C)$10,000
D)$20,000
Q3) Refer to the above information.If the other assets are sold for $200,000,how much should J receive upon liquidation?
A)$50,000
B)$30,000
C)$20,000
D)$15,000
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Chapter 17: Governmental Entities: Introduction and General Fund Accounting
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Q1) Which of the following funds should use the accrual basis of accounting?
A)Enterprise and private-purpose trust funds.
B)Permanent funds and internal service funds.
C)Debt service and agency funds.
D)Special revenue and capital projects funds.
Q2) Which organization has the authority to establish generally accepted accounting principles for state and local government entities?
A)The National Council on Governmental Accounting
B)The Governmental Accounting Standards Board
C)The Financial Accounting Standards Board
D)The Municipal Officers Finance Organization
Q3) Which of the following observations concerning encumbrances is NOT true?
A)Their purpose is to ensure that the expenditures within a period do not exceed the budgeted appropriations.
B)They provide a control system and safeguard for governmental unit administrators.
C)They are an unique element of governmental accounting.
D)They are recognized only at the time disbursements are made.
Q4) Briefly discuss the various types of governmental funds and proprietary funds.
Page 19
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Chapter 18: Governmental Entities: Special Funds and Governmentwide Financial Statements
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Q1) A city's museum is supported by a special tax levy and by user charges.The user charges constitute only 10 percent of the resources needed to support the operations of the museum.In which fund should the city account for its museum?
A)An enterprise fund
B)An agency fund
C)An expendable trust fund
D)A special revenue fund
Q2) The City of Fargo issued general obligation bonds to finance construction of a new fire station.The bonds were issued at a premium.In the fire station capital projects fund,the premium should be transferred to:
A)an agency fund.
B)a special revenue fund.
C)a debt service fund.
D)an expendable trust fund.
Q3) GASB 34 requires a reconciliation schedule for the Statement of Net Assets.What does this schedule document?
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Chapter 19: Not-For-Profit Entities
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Q1) "Reported as an expenditure of the fund using plant and equipment" describes which term listed above?
A)Fair value
B)Net assets without donor restrictions
C)GASB
D)FASB
E)Statement of Revenues,Expenditures,and Changes in Fund Balance
Equity Method Using Straight-Line Interest Amortization
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Q1) Based on the information given above,what amount of interest expense does Paper record annually?
A)$10,750
B)$9,500
C)$2,500
D)$12,000
Q2) Based on the information given above,what amount of constructive gain will be allocated to noncontrolling interest in 20X8 consolidated financial statements?
A)$4,925
B)$5,550
C)$5,625
D)$4,625
Q3) Based on the information given above,what amount of premium on bonds payable will be eliminated in the preparation of the 20X8 consolidated financial statements?
A)$3,500
B)$2,800
C)$5,000
D)$2,500
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