International Accounting Exam Questions
Course Introduction
International Accounting examines the principles, standards, and practices related to financial accounting and reporting in the global context. The course covers the role of international bodies such as the International Accounting Standards Board (IASB), the convergence of International Financial Reporting Standards (IFRS) with local accounting standards, and the challenges faced when consolidating financial statements across borders. Students will explore topics such as foreign currency translations, international taxation, transfer pricing, and ethical considerations in a multinational environment, equipping them to interpret and analyze financial information in a diverse international marketplace.
Recommended Textbook
Advanced Financial Accounting 12th Edition by Theodore E. Christensen
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Page 2
Chapter 1: Intercorporate Acquisitions and Investments in Other Entities
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Q1) Assuming no impairment in value prior to transfer,assets transferred by a parent company to another entity it has created should be recorded by the newly created entity at the assets':
A)cost to the parent company.
B)book value on the parent company's books at the date of transfer.
C)fair value at the date of transfer.
D)fair value of consideration exchanged by the newly created entity.
Answer: B
Q2) Based on the preceding information,what number of shares of $7 par value stock did Spin issue to Conservative?
A)10,000
B)7,000
C)8,000
D)25,000
Answer: C
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Chapter 2: Reporting Intercorporate Investments and
Consolidation of Wholly Owned Subsidiaries With No Differential
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Q1) Based on the preceding information,what amount of stockholders' equity was reported in the consolidated balance sheet immediately after acquisition?
A)$200,000
B)$230,000
C)$380,000
D)$430,000
Answer: B
Q2) Based on the preceding information and assuming Parent carries its investment in Son at cost,what is the balance in Parent's Investment in Son account on December 31,20X2,prior to consolidation?
A)$416,000
B)$420,000
C)$424,000
D)$498,000
Answer: B
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4
Chapter
3: The Reporting Entity and the Consolidation of
Less-Than-Wholly- Owned Subsidiaries With No Differential
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Q1) Maple Corporation and its subsidiary reported consolidated net income of $380,000 for the year ended December 31,20X5.Maple owns 75% of the common shares of its subsidiary,acquired at book value.Noncontrolling interest was assigned income of $25,000 in the consolidated income statement for 20X5.What is the amount of separate operating income reported by Maple for the year?
A)$95,000
B)$100,000
C)$280,000
D)$285,000
Answer: C
Q2) Pluto Company owns 80 percent of the common stock of Star Corporation.During the year,Pluto reported sales of $1,000,000,and Star reported sales of $500,000,including sales to Pluto of $80,000.The amount of sales that should be reported in the consolidated income statement for the year is:
A)$500,000.
B)$1,300,000.
C)$1,420,000.
D)$1,500,000.
Answer: C
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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 information provided,what amount of retained earnings will be reported in the consolidated financial statements for the year?
A)$331,000
B)$110,000
C)$441,000
D)$456,000
Q2) Based on the preceding information,what amount of total retained earnings will be reported in the consolidated balance sheet for the year 20X8?
A)$330,000
B)$450,000
C)$430,000
D)$370,000
Q3) Based on the information provided,what amount of total assets will be reported in the consolidated balance sheet for the year?
A)$895,000
B)$801,000
C)$723,000
D)$1,111,000
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Chapter 5: Consolidation of Less-Than-Wholly- Owned
Subsidiaries Acquired at More Than Book Value
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Q1) Based on the preceding information,what balance will Polo report as its investment in Stallion at December 31,20X8,assuming Polo uses the equity method in accounting for its investment?
A)$318,750
B)$317,500
C)$330,000
D)$326,250
Q2) Based on the information given,what amount will be reported as total controlling interest in the consolidated balance sheet?
A)$254,000
B)$285,000
C)$364,000
D)$395,000
Q3) Based on the information given,Pancake Company and Syrup Company reported wages payable of
A)$50,000 and $28,000 respectively.
B)$60,000 and $32,000 respectively.
C)$40,000 and $35,000 respectively.
D)$28,000 and $60,000 respectively.
Page 7
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Chapter 6: Intercompany Inventory Transactions
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Q1) Based on the information given above,what amount of sales must be eliminated from the consolidated income statement for 20X8?
A)$117,000
B)$120,000
C)$150,000
D)$128,000
Q2) Based on the information given above,what will be the income to noncontrolling interest for 20X8?
A)$39,750
B)$37,875
C)$71,275
D)$70,875
Q3) Based on the information given above,what amount should be reported in the December 31,20X8,consolidated balance sheet as inventory?
A)$36,000
B)$12,000
C)$15,000
D)$28,000
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Chapter 7: Intercompany Transfers of Services and
Noncurrent Assets
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Q1) Based on the preceding information,the amount to be reported as consolidated net income for 20X9 will be:
A)$207,000.
B)$202,000.
C)$212,000.
D)$190,000.
Q2) Based on the preceding information,the amount of income assigned to the controlling shareholders in the consolidated income statement for 20X8 will be:
A)$190,000.
B)$170,000.
C)$175,000.
D)$150,000.
Q3) Based on the preceding information,at what amount should the land be reported in the consolidated balance sheet as of December 31,20X8?
A)$145,000
B)$220,000
C)$197,000
D)$160,000
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Chapter 8: Intercompany Indebtedness
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Q1) Based on the information given above,what amount of premium on bonds payable will be eliminated in the preparation of the December 31,20X8 consolidated financial statements?
A)$4,276
B)$6,108
C)$6,581
D)$4,607
Q2) Based on the information given above,in the preparation of the 20X8 consolidated financial statements,interest income will be:
A)debited for $12,293 in the consolidating entries.
B)credited for $12,293 in the consolidating entries.
C)debited for $16,000 in the consolidating entries.
D)credited for $16,000 in the consolidating entries.
Q3) Based on the information given above,what was the carrying amount of the bonds on Snoopy's books on the date of purchase?
A)$533,769
B)$516,875
C)$500,000
D)$550,644
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Chapter 9: Consolidation Ownership Issues
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Q1) Begin with information provided,but assume instead that Saucy declared a stock dividend of 3,000 shares on its $5 par value common stock.The investment elimination entry required to prepare a consolidated balance sheet immediately after the stock dividend is issued will include a debit to Additional Paid-In Capital for:
A)$65,000.
B)$95,000.
C)$50,000.
D)$110,000.
Q2) 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
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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Chapter 10: Additional Consolidation Reporting Issues
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Q1) For a subsidiary to be eligible to be included in a consolidated tax return,at least ________ of its stock must be held by the parent company or another company included in the consolidated return.
A)50 percent
B)40 percent
C)75 percent
D)80 percent
Q2) Based on the preceding information,what amount will be reported by the company as cash received from customers during the year?
A)$455,000
B)$475,000
C)$450,000
D)$425,000
Q3) Based on the information provided,what was the consolidated cash balance at January 1,20X2?
A)$300,000
B)$100,000
C)$60,000
D)$40,000
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Page 12
Chapter 11: Multinational Accounting: Foreign Currency
Transactions and Financial Instruments
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Q1) Based on the information given above,the indirect exchange rates for the Swiss franc and the Swedish krona (from a U.S.perspective)are
A)0.9642 Swiss francs and 6.5531 Swedish krona respectively.
B)1.6893 Swiss francs and 5.2563 Swedish krona respectively.
C)1.0371 Swiss francs and 0.1527 Swedish krona respectively.
D)0.8372 Swiss francs and 4.2713 Swedish krona respectively.
Q2) Based on the preceding information,what is the market price of Linked Corporation bonds on December 31,20X8?
A)$400
B)$370
C)$360
D)$380
Q3) 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.
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Chapter 12: Multinational Accounting: Issues in Financial
Reporting and Translation of Foreign Entity Statements
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Q1) Refer to the above information.Assuming the U.S.dollar is the functional currency,what is Ski's net income for 20X8 in U.S.dollars (include the remeasurement gain or loss in Ski's net income)?
A)$238,000
B)$228,000
C)$219,500
D)$202,000
Q2) Parent Company's wholly-owned subsidiary,Son Corporation,maintains its accounting records in Danish krone.However,because all of Son's branch offices are in Sweden,its functional currency is the Swedish krona.Remeasurement of Son's 20X3 financial statements resulted in a $3,200 loss,and translation of its financial statement resulted in a $2,600 loss.What amount should Parent report as a loss in its income statement for the year ended December 31,20X3?
A)$0
B)$2,600
C)$3,200
D)$5,800
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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) FASB has specified a "75% percent consolidated revenue test". Required:
a)What is the 75% test?
b)How is the 75% test impacted by the "10% Significance Rule"?
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15
Chapter 14: Sec Reporting
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Q1) Staff Accounting Bulletins
A)Provides preliminary information to investors about an upcoming issue.
B)Informs investors of an upcoming offering.
C)Required annual filing to the SEC.
D)Discloses unscheduled material events.
E)Includes amendments to the Securities Act,additional disclosure requirements,and other current issues regarding accounting and auditing principles and standards.
F)Results in a thorough examination by the SEC of a registration statement.
G)Issued by the staff of the SEC and contains differences that must be corrected in a registration statement before the securities may be offered or sale.
H)Quarterly report to SEC.
I)Includes new or revised administrative practices and interpretations used in reviewing financial statements.
J)Includes the results of actions taken against accountants or other participants because false or misleading statements were filed.
K)Includes Regulations S-X and S-K.
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Chapter 15: Partnerships: Formation,operation,and
Changes in Membership
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Q1) Refer to the above information.Which statement below is correct if a new partner purchases an interest in capital directly from the old partners?
A)C < D
B)C = D
C)C = D and B = A
D)C < D and B = A
Q2) Refer to the information provided above.What amount will Erin have to invest to give her a one-fourth interest in the capital of the partnership if no goodwill or bonus is recorded?
A)$45,000
B)$50,000
C)$60,000
D)$66,000
Q3) Based on the preceding information,if no goodwill or bonus is recorded,how much should Daniel invest for a 20 percent interest?
A)$400,000
B)$200,000
C)$300,000
D)$250,000
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Chapter 16: Partnerships: Liquidation
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Q1) 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
Q2) Refer to the information provided above.Using a safe payments schedule,how much cash will be distributed to Dennis at the end of the first month?
A)$64,000
B)$60,000
C)$24,000
D)$36,000
Q3) Based on the preceding information,what amount will be paid out to Bill upon liquidation of the partnership?
A)$0
B)$25,000
C)$11,667
D)$2,500
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18
Chapter 17: Governmental Entities: Introduction and General Fund Accounting
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Q1) In a town's general fund operating budget for the year,the amount of its estimated revenues exceeded the amount of its appropriations.This excess should be:
A)credited to Budgetary Fund Balance-Unassigned.
B)debited to Budgetary Fund Balance-Unassigned.
C)credited to Fund Balance-Unassigned.
D)debited to Fund Balance-Unassigned.
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) All of the following are elements of the statement of financial condition for state and local governments with the exception of:
A)Assets and Liabilities
B)Deferred inflow and outflow of resources
C)Net position
D)Inflow and outflow of resources
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Chapter 18: Governmental Entities: Special Funds and Governmentwide Financial Statements
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Q1) What account is debited in a debt service fund when it records matured interest payable?
I.Interest Expense
II.Expenditures
A)I only
B)II only
C)Either I or II
D)Neither I nor II
Q2) The capital projects fund of Hood River completed construction of an addition to its city hall at a cost of $4,000,000.The city council approved payment of the amount due the general contractor,less a 10 percent retainage.How should the capital projects fund account for the 10 percent retainage?
I.As a credit of $400,000 to Deferred Revenue-Retained Percentage.
II.As a credit for $400,000 to Contracts Payable-Retained Percentage.
A)I only
B)II only
C)Either I or II
D)Neither I nor II
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Chapter 19: Not-For-Profit Entities
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Q1) Bridger Hospital,which is operated by a religious organization,provides charity care for the indigent living in the region served by the hospital.How should Bridger report the amount of its charity care on its financial statements?
A)In the notes to the financial statements only.
B)As revenues without donor restrictions on the statement of operations.
C)As net patient service revenue and as an expense,equal to the net patient service revenue,on the statement of operations.
D)As revenue with donor restrictions on the statement of operations.
Q2) A private university received $280,000 from student tuition and fees for the year 20X9 summer session.The session began on June 20,20X9,and ended on July 30,20X9.The university's fiscal year end is June 30.According to the AICPA College and University Audit Guide,how should the university report the $280,000 of receipts in its financial statements for the year ended June 30,20X9?
A)Current revenue of $280,000.
B)Current revenue of $70,000 and deferred revenue of $210,000.
C)Deferred revenue of $280,000.
D)Restricted current revenue of $280,000.
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Chapter 20: Corporations in Financial Difficulty
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Q1) All of the following items are reported in a statement of realization and liquidation except:
A)Cash
B)Prepaid assets
C)Depreciable assets (net)
D)Receiver's expenses
Q2) The payment to general unsecured creditors is often termed:
A)a "preference payment."
B)a "dividend."
C)a "write-off."
D)a "bonus."
Q3) Chapter 11 of the Bankruptcy Code provides for:
I.Reorganization.
II.Liquidation.
A)I only
B)II only
C)Both I and II
D)Neither I nor II
Q4) What are the conditions necessary for using fresh start reporting in reorganization?
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Chapter 21: Intercompany Indebtednessfully Adjusted
Equity Method Using Straight-Line Interest Amortization
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Q1) Based on the information given above,what amount of premium on bonds payable will be eliminated in the preparation of the 20X9 consolidated financial statements?
A)$3,500
B)$2,800
C)$5,000
D)$2,500
Q2) Based on the information given above,what amount of gain or loss on bond retirement is included in the 20X7 consolidated income statement?
A)$6,600
B)$4,800
C)$6,000
D)$5,400
Q3) Based on the information given above,what amount of interest expense will be eliminated in the preparation of the 20X9 consolidated financial statements?
A)$17,000
B)$13,300
C)$18,500
D)$22,200
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