International Accounting Exam Materials
Course Introduction
International Accounting explores the principles, practices, and standards that govern financial reporting and analysis in a global context. The course examines the impact of diverse accounting regulations, such as International Financial Reporting Standards (IFRS) and U.S. Generally Accepted Accounting Principles (GAAP), and analyzes how differences in culture, legal systems, and economic environments influence accounting practices worldwide. Topics also include currency translation, international taxation, transfer pricing, and the challenges multinational corporations face in consolidating financial statements. Emphasis is placed on understanding the harmonization of accounting standards, convergence issues, and the role of international regulatory bodies. This course prepares students to interpret and evaluate financial information from companies operating in multiple countries, equipping them for careers in global accounting and finance.
Recommended Textbook
Fundamentals of Advanced Accounting 5th Edition by Joe Ben Hoyle
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12 Chapters
1192 Verified Questions
1192 Flashcards
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Page 2
Chapter 1: The Equity Method of Accounting for Investments
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119 Verified Questions
119 Flashcards
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Sample Questions
Q1) Yaro Company owns 30% of the common stock of Dew Co. and uses the equity method to account for the investment. During 2011, Dew reported income of $250,000 and paid dividends of $80,000. There is no amortization associated with the investment. During 2011, how much income should Yaro recognize related to this investment?
A) $24,000.
B) $75,000.
C) $99,000.
D) $51,000.
E) $80,000.
Answer: B
Q2) Which of the following results in a decrease in the investment account when applying the equity method?
A) Dividends paid by the investor.
B) Net income of the investee.
C) Net income of the investor.
D) Unrealized gain on intra-entity inventory transfers for the current year.
E) Purchase of additional common stock by the investor during the current year.
Answer: D
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Chapter 2: Consolidation of Financial Information
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Sample Questions
Q1) Lisa Co. paid cash for all of the voting common stock of Victoria Corp. Victoria will continue to exist as a separate corporation. Entries for the consolidation of Lisa and Victoria would be recorded in
A) a worksheet.
B) Lisa's general journal.
C) Victoria's general journal.
D) Victoria's secret consolidation journal.
E) the general journals of both companies.
Answer: A
Q2) How are direct combination costs accounted for in an acquisition transaction?
Answer: In an acquisition, direct combination costs are expensed in the period of the acquisition.
Q3) How are bargain purchases accounted for in an acquisition business transaction?
Answer: A bargain purchase results when the collective fair values of the net identified assets acquired and liabilities assumed exceed the fair value of consideration transferred. The assets and liabilities acquired are recorded at their fair values and the bargain purchase is recorded as a Gain on Bargain Purchase.
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4
Chapter 3: Consolidationssubsequent to the Date of Acquisition
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Sample Questions
Q1) Hoyt Corporation agreed to the following terms in order to acquire the net assets of Brown Company on January 1, 2011:
(1)) To issue 400 shares of common stock ($10 par) with a fair value of $45 per share.
(2)) To assume Brown's liabilities which have a fair value of $1,500.
On the date of acquisition, the consideration transferred for Hoyt's acquisition of Brown would be
A) $18,000.
B) $16,500.
C) $20,000.
D) $18,500.
E) $19,500.
Answer: E
Q2) Push-down accounting is concerned with the
A) impact of the purchase on the subsidiary's financial statements.
B) recognition of goodwill by the parent.
C) correct consolidation of the financial statements.
D) impact of the purchase on the separate financial statements of the parent.
E) recognition of dividends received from the subsidiary.
Answer: A
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Chapter 4: Consolidated Financial Statements and Outside Ownership
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115 Verified Questions
115 Flashcards
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Sample Questions
Q1) How would you determine the amount of goodwill to be recognized at date of acquisition when there is a non-controlling interest present?
Q2) On January 1, 2010, Glenville Co. acquired an 80% interest in Acron Corp. for $500,000. There is no active trading market for Acron's stock. The fair value of Acron's net assets was $600,000 and Glenville accounts for its interest using the acquisition method. Determine the amount of goodwill to be recognized in this acquisition.
Q3) Prevatt, Inc. owns 80% of Franklin Company. During the current year, a portion of the investment in Franklin is sold. Prior to recording the sale, Prevatt adjusts the carrying value of its investment. What is the purpose of the adjustment?
Q4) When Jolt Co. acquired 75% of the common stock of Yelts Corp., Yelts owned land with a book value of $70,000 and a fair value of $100,000. What is the total amount of excess land allocation at the acquisition date?
A) $0.
B) $30,000.
C) $22,500.
D) $25,000.
E) $17,500.
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Chapter 5: Consolidated Financial Statementsintra-Entity
Asset Transactions
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Sample Questions
Q1) Stark Company, a 90% owned subsidiary of Parker, Inc., sold land to Parker on May 1, 2010, for $80,000. The land originally cost Stark $85,000. Stark reported net income of $200,000, $180,000, and $220,000 for 2010, 2011, and 2012, respectively. Parker sold the land purchased from Stark in 2010 for $92,000 in 2012. Compute income from Stark reported on Parker's books for 2011.
A) $185,000.
B) $157,500.
C) $166,500.
D) $162,000.
E) $180,000.
Q2) Webb Co. acquired 100% of Rand Inc. on January 5, 2011. During 2011, Webb sold goods to Rand for $2,400,000 that cost Webb $1,800,000. Rand still owned 40% of the goods at the end of the year. Cost of goods sold was $10,800,000 for Webb and $6,400,000 for Rand. What was consolidated cost of goods sold?
A) $17,200,000.
B) $15,040,000.
C) $14,800,000.
D) $16,960,000.
E) $14,560,000.
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Chapter 6: Variable Interest Entities, Intra-Entity Debt,
Consolidated Cash Flows, and Other Issues
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Sample Questions
Q1) Which of the following statements is true concerning the acquisition of existing debt of a consolidated affiliate in the year of the debt acquisition?
A) Any gain or loss is deferred on a consolidated income statement.
B) Any gain or loss is recognized on a consolidated income statement.
C) Interest revenue on the affiliated debt is recognized on a consolidated income statement.
D) Interest expense on the affiliated debt is recognized on a consolidated income statement.
E) Consolidated retained earnings is adjusted for the difference between the purchase price and the carrying value of the bonds.
Q2) During 2011, Parent Corporation purchased at book value some of the outstanding bonds of its subsidiary. How would this acquisition have been reflected in the consolidated statement of cash flows?
Q3) Parent Corporation acquired some of its subsidiary's outstanding bonds. Why might Parent purchase the bonds, rather than the subsidiary buying its own bonds?
Q4) How does the existence of a non-controlling interest affect the preparation of a consolidated statement of cash flows?
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Chapter 7: Foreign Currency Transactions and Hedging
Foreign Exchange Risk
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Sample Questions
Q1) What happens when a U.S. company purchases goods denominated in a foreign currency and the foreign currency appreciates?
Q2) Which of the following approaches is used in the United States in accounting for foreign currency transactions?
A) One-transaction perspective; defer foreign exchange gains and losses.
B) Two-transaction perspective; accrue foreign exchange gains and losses.
C) Three-transaction perspective; defer foreign exchange gains and losses.
D) One-transaction perspective; accrue foreign exchange gains and losses.
E) Two-transaction perspective; defer foreign exchange gains and losses.
Q3) A company has a discount on a forward contract for a foreign currency denominated asset. How is the discount recognized over the life of the contract under fair value hedge accounting?
A) As a debit to discount expense.
B) As a debit to amortization expense.
C) As a debit to accumulated other comprehensive income.
D) As a debit impact on net income, as a result of the hedge.
E) As a decreases to sales.
Q4) What is meant by the spot rate?
Q5) What is the major assumption underlying the one-transaction perspective?
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Chapter 8: Translation of Foreign Currency Financial Statements
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Sample Questions
Q1) Kennedy Company acquired all of the outstanding common stock of Hastie Company of Canada for U.S. $350,000 on January 1, 2011, when the exchange rate for the Canadian dollar (CAD) was U.S. $.70. The fair value of the net assets of Hastie was equal to their book value of CAD 450,000 on the date of acquisition. Any acquisition consideration excess over fair value was attributed to an unrecorded patent with a remaining life of five years. The functional currency of Hastie is the Canadian dollar. For the year ended December 31, 2011, Hastie's trial balance net income was translated at U.S. $25,000. The average exchange rate for the Canadian dollar during 2011 was U.S. $.68, and the 2011 year-end exchange rate was U.S. $.65. Kennedy's share of Hastie's net income for 2011 would be
A) $18,000.
B) $15,000.
C) $18,200.
D) $16,000.
E) $18,500.
Q2) Contrast the purpose of remeasurement with the purpose of translation.
Q3) Under what circumstances would the remeasurement of a foreign subsidiary's financial statements be required?
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Chapter 9: Partnerships: Formation and Operation
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Sample Questions
Q1) Cleary, Wasser, and Nolan formed a partnership on January 1, 2010, with investments of $100,000, $150,000, and $200,000, respectively. For division of income, they agreed to (1) interest of 10% of the beginning capital balance each year, (2) annual compensation of $10,000 to Wasser, and (3) sharing the remainder of the income or loss in a ratio of 20% for Cleary, and 40% each for Wasser and Nolan. Net income was $150,000 in 2010 and $180,000 in 2011. Each partner withdrew $1,000 for personal use every month during 2010 and 2011.
What was Nolan's total share of net income for 2011?
A) $34,420.
B) $75,540.
C) $65,540.
D) $70,040.
E) $61,420.
Q2) What is the dissolution of a partnership?
Q3) How is accounting for a partnership different from accounting for a corporation?
Q4) What theoretical argument could be made against the recognition of goodwill when there is a change in the ownership of a partnership?
Q5) Determine the balance in both capital accounts at the end of 2011 to the nearest dollar.
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Chapter 10: Partnerships: Termination and Liquidation
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Sample Questions
Q1) Why is a Schedule of Liquidation prepared?
Q2) What is the purpose of a predistribution plan?
Q3) The Arnold, Bates, Carlton, and Delbert partnership was liquidating. It had paid all its liabilities and had some assets yet to be sold. The partners had capital account balances of ($50,000), $90,000, $110,000, and $130,000. There was $40,000 cash available for distribution to the partners. What procedures would be followed to determine the amount of cash that could safely be distributed to each partner?
Q4) For a partnership, how should liquidation gains and losses be accounted for?
Q5) A local partnership has assets of cash of $5,000 and a building recorded at $80,000. All liabilities have been paid. The partners' capital accounts are as follows Harry $40,000, Landers $30,000 and Waters 15,000. The partners share profits and losses 4:4:2. If the building is sold for $50,000, how much cash will Harry receive in the final settlement?
A) $5,000.
B) $9,000.
C) $18,000.
D) $28,000.
E) $55,000.
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Chapter 11: Accounting for State and Local Governments
Part 1
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78 Verified Questions
78 Flashcards
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Sample Questions
Q1) The term "current financial resources" refers to
A) Those assets that can quickly be converted into cash.
B) Monetary assets available to meet the government's needs.
C) The government's current assets and current liabilities.
D) The current value of all net assets owned by the governmental unit.
E) Financial resources used to provide electricity to local citizens.
Q2) Bay City received a federal grant to provide health care services to low income mothers and children. When should the revenues be recognized?
A) as health care services are provided.
B) when the awarding of the grant is announced.
C) when the grant money is received.
D) at the end of Bay City's fiscal year.
E) when the grant money is receivable.
Q3) Under modified accrual accounting, when are expenditures recorded?
Q4) The City of Kamen collected $17,000 from parking meters that must be transferred to the county government.
Required:
For fund financial statements, prepare the journal entry for this transaction including the fund type in which the entry would have been recorded.
Page 13
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Chapter 12: Accounting for State and Local Governments
Part 2
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51 Verified Questions
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Sample Questions
Q1) The City of Kamen maintains a collection of paintings of a former citizen in its City Hall building. During the year, one painting was purchased by the city for $2,000 at an auction using appropriated funds in the General Fund. Also during the year, a donation of a painting valued at $3,000 was made to the city and the city has appropriately decided to record this painting as an asset.
Required:
Prepare the journal entry/entries for the two transactions for the purposes of preparing the government-wide financial statements.
Q2) How is the Statement of Cash Flows for Proprietary Funds similar and dissimilar to a Statement of Cash Flows for a for-profit business?
Q3) For fund financial statements, what account is credited when a piece of equipment is leased on a capital lease?
A) Equipment - Capital Lease.
B) Encumbrances - Long Term.
C) Encumbrances - Lease Obligations.
D) Capital Lease Obligation.
E) Other Financing Sources - Capital Lease.
Q4) What is meant by the term fiscally independent?
Page 14
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