International Accounting Exam Review
Course Introduction
International Accounting examines the principles and practices of accounting in a global context, focusing on the differences and similarities among various national accounting standards and the impact of cultural, economic, and legal factors on accounting systems worldwide. This course explores the development and application of International Financial Reporting Standards (IFRS), key issues in multinational financial reporting, foreign currency transactions, and consolidation of international operations. Students gain insights into the challenges faced by multinational corporations in financial statement preparation and analysis, cross-border mergers and acquisitions, and international taxation, equipping them with the knowledge to navigate the complexities of accounting in an interconnected global economy.
Recommended Textbook
Advanced Accounting 9th Edition by Joe Ben Hoyle
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19 Chapters
1679 Verified Questions
1679 Flashcards
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Page 2
Chapter 1: The Equity Method of Accounting for Investments
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Sample Questions
Q1) Club Co.appropriately uses the equity method to account for its investment in Chip Corp.As of the end of 2008,Chip's common stock had suffered a significant decline in fair value,which is expected to be recovered over the next several months.How should Club account for the decline in value?
A)Club should switch to the fair-value method.
B)No accounting because the decline in fair value is temporary.
C)Club should decrease the balance in the investment account to the current value and recognize a loss on the income statement.
D)Club should not record its share of Chip's 2008 earnings until the decline in the fair value of the stock has been recovered.
E)Club should decrease the balance in the investment account to the current value and recognize an unrealized loss on the balance sheet.
Answer: B
Q2) What amount of unrealized intercompany profit should be deferred by Steven at December 31,2009?
Answer: [($75,000 - $54,000)x .10 x .40] = $840
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Chapter 2: Consolidation of Financial Information
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Sample Questions
Q1) Required:
Determine consolidated Net Income for at December 31,2009.
Answer: SHAPE \* MERGEFORMAT
11ea88ab_df3e_a0be_bb89_bbd949c7de70_TB4174_00
Q2) Lorne Co.issued its common stock in exchange for the common stock of Fenn Corp.in a combination accounted for as a pooling of interests.At the date of the combination,Lorne had land with a book value of $700,000 and a fair value of $980,000.Fenn had land with a book value of $280,000 and a fair value of $250,000.The purchase was not a bargain purchase.
Required:
If a consolidated balance sheet was prepared at the date of the combination,what was the consolidated balance for Land?
Answer: 11ea88ab_df3e_2b83_bb89_5d61584b3c95_TB4174_00
Q3) Compute the amount of consolidated cash after recording the transaction.
A)$220.
B)$185.
C)$200.
D)$205.
E)$215.
Answer: B
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Chapter 3: Consolidations - Subsequent to the Date of Acquisition
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Sample Questions
Q1) Compute the December 31,2010,consolidated land.
A)$220,000.
B)$180,000.
C)$670,000.
D)$630,000.
E)$450,000.
Answer: C
Q2) According to SFAS 142,which of the following statements is true?
A)Goodwill recognized in consolidation must be amortized over 20 years.
B)Goodwill recognized in consolidation must be expensed in the period of acquisition.
C)Goodwill recognized in consolidation will not be amortized but subject to an annual test for impairment.
D)Goodwill recognized in consolidation can never be written off.
E)Goodwill recognized in consolidation must be amortized over 40 years.
Answer: C
Q3) For an acquisition when the subsidiary retains its incorporation,which method of internal recordkeeping is the easiest for the parent to use?
Answer: The initial value method is the easiest to use.
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Chapter 4: Consolidated Financial Statements and Outside Ownership
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Q1) According to SFAS 160,Non-controlling Interests and Consolidated Financial Statements,a non-controlling interest is most likely to be shown as part of equity under the
A)Acquisition method
B)Proportionate consolidation method
C)Economic unit method
D)Parent company method
E)Proprietary method
Q2) What amount should have been reported for the land on a consolidated balance sheet,according to SFAS 141(R),using the acquisition method?
A)$70,000
B)$75,000
C)$85,000
D)$92,500
E)$100,000
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Chapter 5: Consolidated Financial StatementsIntercompany Asset Transactions
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Sample Questions
Q1) Compute the income from Devin reported on Pepe's books for 2010.
A)$190,200.
B)$196,000.
C)$194,400.
D)$187,000.
E)$195,000.
Q2) What is consolidated net income for 2009?
Q3) Justings Co.owned 80% of Evana Corp.During 2009,Justings sold to Evana land with a book value of $48,000.The selling price was $70,000.In its accounting records,Justings should
A)not recognize a gain on the sale of the land since it was made to a related party.
B)recognize a gain of $17,600.
C)defer recognition of the gain until Evana sells the land to a third party.
D)recognize a gain of $8,000.
E)recognize a gain of $22,000.
Q4) How is the gain on an intercompany transfer of land realized?
Q5) How is the gain on an intercompany transfer of a depreciable asset realized?
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Q6) How do upstream and downstream inventory transfers differ in their effect on a year-end consolidation?
Chapter
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Sample Questions
Q1) What is the new percent ownership Ryan owns in Chase?
A)80%.
B)87.5%.
C)90%.
D)75%.
E)82.5%.
Q2) Net cash flow from financing activities was:
A)$(28,000).
B)$(35,000).
C)$(50,000).
D)$(63,000).
E)$(64,200).
Q3) Net cash flow from operating activities was:
A)$92,000.
B)$27,000.
C)$63,000.
D)$29,000.
E)$33,000.
Q4) Describe how this transaction would affect Panton's books.
Q5) Describe how this transaction would affect Panton's books.
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Chapter 7: Consolidated Financial Statements - Ownership
Patterns and Income Taxes
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Sample Questions
Q1) What is the total noncontrolling interest in the subsidiaries' income for 2009?
A)$55,240.
B)$66,020.
C)$67,280.
D)$76,280.
E)$76,480.
Q2) The accrual-based income of West Corp.is calculated to be
A)$734,000.
B)$1,261,000.
C)$1,123,900.
D)$1,140,700.
E)$1,149,700.
Q3) Why might a consolidated group file separate income tax returns?
A)There are no intercompany transfers.
B)There are no unrealized gains in ending inventory.
C)One company is a foreign company.
D)Parent owns 68 percent of one company and 82 percent of another.
E)All of the above.
Q4) Required:
Determine the noncontrolling interest in Lawrence Co.'s net income.
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Chapter 8: Segment and Interim Reporting
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Q1) Which of the following is not a required disclosure in an interim financial report?
A)Sales or gross revenues.
B)Provision for income taxes.
C)Extraordinary items.
D)Gains on sales of major equipment.
E)Earnings per share.
Q2) According to SFAS 131,which of the following would be an acceptable grouping for providing information by geographic area for a United States company?
A)United States,All Other Countries.
B)United States,Europe,Taiwan.
C)United States,Asia,Germany.
D)United States,Central America,Mexico,Germany.
E)South America,Spain,All Other Countries.
Q3) Prepare the journal entries to reflect the sales and cost of goods sold,assuming Urbanski does not expect to replace the liquidated inventory at year-end.
Q4) Compute cost of goods sold and gross profit for the quarter ending June 30,2009.
Q5) Compute the after-tax effect of Harrison's change in inventory method.
Q6) What is the major objective of segment reporting?
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Chapter 9: Foreign Currency Transactions and Hedging
Foreign Exchange Risk
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Sample Questions
Q1) A company has a discount on a forward contract for an asset.How is the discount recognized over the life of the contract?
A)It is charged to a deferred credit.
B)It is charged to a deferred asset.
C)It is charged to accumulated other comprehensive income.
D)It increases sales.
E)It decreases sales.
Q2) What amount of foreign exchange gain or loss should be recorded on December 31?
A)$300 gain.
B)$300 loss.
C)$0.
D)$941 loss.
E)$941 gain.
Q3) What is meant by the spot rate?
Q4) Assuming this is a fair value hedge,prepare journal entries for this sales transaction and forward contract.
Q5) Yelton Co.just sold inventory for 80,000 lira,which Yelton will collect in sixty days.Briefly describe a hedging transaction Yelton could engage in to reduce its risk of unfavorable exchange rates.
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Chapter 10: Translation of Foreign Currency Financial Statements
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Sample Questions
Q1) When consolidating a foreign subsidiary,which of the following statements is true?
A)Parent reports a cumulative translation adjustment using the equity method.
B)Parent's reports a gain or loss in net income using the equity method.
C)Subsidiary's cumulative translation adjustment is carried forward to the consolidated balance sheet.
D)Subsidiary's income/loss is carried forward to the consolidated balance sheet.
E)All foreign currency gains/losses are eliminated on the consolidated income statement and balance sheet.
Q2) Under the temporal method,depreciation expense would be restated at what rate?
A)Beginning of the year rate.
B)Average rate.
C)Current rate.
D)Historical rate.
E)Composite amount.
Q3) Under what circumstances would the translation of a foreign subsidiary's financial statements not be required?
Q4) Farley Brothers,a U.S.company,had a subsidiary in Italy.Under what conditions would the U.S.dollar be the functional currency for this subsidiary?
Page 12
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Chapter 11: Worldwide Accounting Diversity and International Accounting Standards
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Sample Questions
Q1) What is the amount of inventory loss shown on the income statement under IFRSs?
A)$1,000.
B)$2,000.
C)$4,000.
D)$5,000.
E)$6,000.
Q2) What is the amount of inventory loss shown on the income statement under US GAAP?
A)$1,000.
B)$2,000.
C)$4,000.
D)$5,000.
E)$6,000.
Q3) Which one of the following countries today most likely does not use a function of expense format to report operating income?
A)Bangladesh.
B)Netherlands.
C)Mexico.
D)France.
E)Germany.
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Chapter 12: Financial Reporting and the Securities and Exchange Commission
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Sample Questions
Q1) What is required by the Trust Indenture Act of 1939?
Q2) What is Form 10-K?
A)a quarterly report filed with the SEC.
B)an annual report filed with the SEC.
C)a semiannual report filed with the SEC.
D)a form filed with the SEC before the company issues stock for the first time.
E)a form filed with the SEC before issuing stocks to acquire another company.
Q3) Name the two broad categories of filings with the SEC.
Q4) Name five securities offerings exempt from registration with the SEC.
Q5) Which one of the following is not a prescribed event for the filing of Form 8-K?
A)bankruptcy or receivership.
B)changes in control of the registrant.
C)resignation of a middle manager.
D)changes in the registrant's certified public accountants.
E)acquisitions or dispositions of assets.
Q6) When must Form 8-K be filed with the SEC?
Q7) What information is required in proxy statements?
Q8) How has the Sarbanes-Oxley Act of 2002 changed the role of the audit committee?
Q9) What are accredited investors? Page 14
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Page 15
Chapter 13: Accounting for Legal Reorganizations and Liquidations
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Sample Questions
Q1) Compute the amount of total liabilities with priority.
Q2) Which one of the following is a requirement that must be met before an involuntary bankruptcy petition can be filed?
A)The petition must be filed by all creditor(s)to whom the debtor owes at least $13,475.
B)The petition must be signed by creditor(s)with unsecured debts of at least $5,000.
C)The petition must be signed by a majority of the creditor(s).
D)The petition must be signed by creditor(s)to whom the debtor owes more than half of its debts.
E)The petition must be signed by creditor(s)with unsecured debts of at least $13,475.
Q3) What are the four categories of debts in a Statement of Financial Affairs?
Q4) Required:
Free assets after payment of liabilities with priority are calculated to be what amount?
Q5) What is the purpose of Chapter 7 of the Bankruptcy Reform Act?
Q6) Total liabilities with priority are calculated to be what amount?
Q7) To what does the term Chapter 11 bankruptcy refer?
Q8) Compute the amount of total free assets.
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Chapter 14: Partnerships: Formation and Operation
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Sample Questions
Q1) Determine the balance in both capital accounts at the end of 2008 to the nearest dollar.
Q2) What is the new total balance of the partnership accounts?
A)$84,000.
B)$140,000.
C)$176,000.
D)$200,000.
E)$400,000.
Q3) What is the dissolution of a partnership?
Q4) What was Wasser's capital balance at the end of 2007?
A)$150,000.
B)$160,000.
C)$165,000.
D)$213,000.
E)$201,000.
Q5) What events cause the dissolution of a partnership?
Q6) Determine the amount of income allocated to each partner for 2008 to the nearest dollar.
Q7) Why are the terms of the Articles of Partnership important to partners?
Q8) Determine the balance in both capital accounts at the end of 2007.
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Chapter 15: Partnerships: Termination and Liquidation
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Q1) Which statement below is correct?
A)If a partner of a liquidating limited liability partnership is unable to pay a capital account deficit,the deficit is absorbed by the other partners in the income-sharing ratio of those partners.
B)Gains and losses from the sale of noncash assets are divided in the ratio of the partners' capital account balances if there is no income-sharing plan in the partnership contract.
C)A loan receivable from a partner is added to the partner's capital account balance in the preparation of a cash distribution plan.
D)Partners may receive cash before creditors receive cash when liquidating a limited liability partnership.
E)All cash payments to partners are made using their income-sharing ratio when liquidating the partnership.
Q2) Determine the cash to be retained and prepare a schedule to distribute $35,000 cash to the partners.
Q3) Develop a predistribution plan for this partnership,assuming $12,000 of liquidation expenses are expected to be paid.
Q4) Prepare the schedule to compute the cash payments to the partners.
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Page 18
Chapter 16: Accounting for State and Local Governments,
Part I
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Q1) A city enacted a special tax levy to provide medical services at the municipal hospital.What kind of fund should have been used to record the revenues generated by the tax?
Q2) When should property taxes be recognized under modified accrual accounting?
Q3) The board of commissioners of the city of Jarmaine adopted a General Fund budget for the year ending June 30,2008,which indicated revenues of $1,300,000,bond proceeds of $520,000,appropriations of $1,170,000,and operating transfers out of $390,000.
Required:
If this budget was formally integrated into the accounting records used to produce the Fund-Based Financial Statements,what was the required journal entry at the beginning of the year?
Q4) Shell City transfers $100,000 from the General Fund to the Debt Service fund.
Required:
Prepare the required journal entries and identify the funds in which they are recorded.
Q5) What is a special revenue fund used to account for?
Q6) For a government,what kind of operations are accounted for using a proprietary fund? Give three examples.
Q7) Under modified accrual accounting,when are expenditures recorded?
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Chapter 17: Accounting for State and Local Governments,part II
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Q1) What is meant by the term legally independent?
Q2) A method of depreciation for infrastructure assets that allows the expensing of all maintenance costs each year instead of computing depreciation is called
A)Government-wide depreciation.
B)Proprietary depreciation.
C)GASB depreciation.
D)Modified approach.
E)Alternative depreciation.
Q3) The employees of the City of Raymond earn vacation compensation that totals $1,500 per week.During 2008,$30,000 in vacation time was taken and $48,000 is expected to be used during the latter part of next year.On fund-based financial statements,what liability should be reported at the end of 2008?
A)$0.
B)$1,500.
C)$30,000.
D)$48,000.
E)$78,000.
Q4) What information is required in the introductory section of a state or local government's CAFR?
Page 20
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Chapter 18: Accounting for Not-For-Profit Organizations
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Q1) During 2008,the Garfield Humane Society,a voluntary health and welfare organization,received cash donations of $892,000 and membership dues of $62,000.A member of the Humane Society donated services valued at $8,000 that would otherwise have been performed by a paid staff member.A pet food manufacturer donated dog food valued at $16,400.The Humane Society received a gift of $140,000,to be used in building a new animal shelter.Also during 2008,investments held by the Humane Society earned interest of $2,000.
Required:
Prepare a schedule showing the amount that the Garfield Humane Society should have recorded for public support for 2008.
Q2) The Yelton Center is a voluntary health and welfare organization.During 2008,unrestricted pledges of $780,000 were received by the center,sixty percent of which were payable in 2008,with the remainder payable in 2009 (for use in 2009).Officials estimated that fifteen percent of these pledges will be uncollectible.
Required:
How much should the Yelton Center report as revenue for 2008?
Q3) According to FASB Statement 117,how are not-for-profits to utilize separate funds?
Q4) Give several examples of voluntary health and welfare organizations.
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Page 21
Chapter 19: Accounting for Estates and Trusts
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Q1) Debts of $52,000 were discovered. Prepare the journal entry to record the transaction.
Q2) What is the purpose of the Uniform Probate Code?
Q3) What amount of federal income tax must be paid?
Q4) In an executor's accounting for an estate,debts and other obligations are recorded
A)at book value.
B)at fair market value.
C)on the date of payment.
D)as soon as they are discovered.
E)only if they are past due.
Q5) What are the goals of probate laws?
(1)gather and preserve all of the decedent's property;
(2)carry out an orderly and fair settlement of all debts;
(3)discover and follow the decedent's intent for the remaining property
A)1 only.
B)2 only.
C)3 only.
D)1 and 2.
E)1,2,and 3.
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