International Accounting Final Exam
Course Introduction
International Accounting explores the principles, standards, and practices of accounting as they apply in a global context. The course examines key topics such as the harmonization of accounting practices across borders, differences between International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP), and the impact of international business operations on financial statements and disclosures. Students will analyze how cultural, economic, legal, and regulatory environments affect accounting systems around the world, and gain practical skills in interpreting and preparing financial information for multinational enterprises. The course also addresses the challenges and opportunities facing accountants in an increasingly interconnected global economy.
Recommended Textbook
Modern Advanced Accounting in Canada 6th Edition by Murray Hilton
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Page 2
Chapter 1: A Survey of International Accounting
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Q1) Tax Law has the greatest effect on the accounting policies of which of the following countries?
A)Canada
B)The United Kingdom
C)Japan
D)The United States
Answer: C
Q2) Which of the following accounting standards have been revised by the FASB to be fully consistent with IFRS?
A)Deferred taxes.
B)Pension costs.
C)Contingencies.
D)Financial instruments.
Answer: D
Q3) At present,Canada's accounting policies most resemble those of which nation?
A)The United Kingdom.
B)The United States.
C)The European Union (EU)
D)Australia
Answer: B
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Chapter 2: Investments in Equity Securities
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Q1) What is the amount of unrealized after-tax profit from downstream sales deducted from the Investment in Klein account during 2002?
A)$8,000
B)$5,000
C)$3,000
D)Nil
Answer: C
Q2) If the Investor sells part of its stake in the Associate,the gain or loss on the sale of these shares is calculated using which of the following?
A)The average carrying value of the Investment.
B)FIFO.
C)LIFO.
D)Specific Identification.
Answer: A
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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Q1) Which of the following must be possible in order for a business combination to exist?
A)Control of a subsidiary's net assets.
B)Ownership of 100 % of a subsidiary's voting shares.
C)Ownership of all of a subsidiary's assets.
D)Ownership of all of a subsidiary's operating assets.
Answer: A
Q2) The carrying value of Depreciable Assets on a potential subsidiary's books is only of concern when:
A)The Purchase Method is used to account for the Business Combination.
B)The companies are contemplating using the Pooling of Interests Method to account for the Business Combination.
C)The New Entity method will be used to account for the Business Combination.
D)The carrying value of a subsidiary's depreciable assets is irrelevant to any business combination.
Answer: B
Q3) 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
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Page 5
Chapter 4: Consolidated Statements on Date of Acquisition
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Q1) What would be the amount of Non-Controlling Interest appearing on the Consolidated Balance Sheet on the date of acquisition,assuming once again that Parent purchased 80% of Sub Inc.for $180,000 under current GAAP?
A)$26,000
B)$86,000
C)$72,000
D)The answer cannot be determined from the information given.
Q2) In many countries,exceptions to the general rule that all subsidiaries must be consolidated are allowed)These exclusions could include any of the following except:
A)any subsidiaries that are under temporary control.
B)any subsidiaries that are immaterial in size.
C)any holding companies that are not actively engaged in any business activity.
D)any subsidiaries that are under reorganization or are bankrupt.
Q3) Prepare Jean Inc's consolidated Balance Sheet on the date of acquisition using the Proprietary Theory.
Q4) Discuss the disclosure requirements for long term investments including accounting policies and NCI.
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6
Chapter 5: Consolidation Subsequent to Acquisition Date
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Q1) Testing intangible assets with indefinite useful lives for impairment
A)occurs every year.
B)occurs when only there has been an indication of an impairment in the value of the asset such as a reduction in cash flow generation,idle assets,etc.
C)never occurs because the asset has an indefinite useful life.
D)whenever required by the company's auditors..
Q2) What would be the net income reported on Errant's Consolidated Income Statement on December 31,2007? Assume that Errant's income for the year does not include any income from Grub.
A)$90,000
B)$250,000
C)$160,000
D)$230,000
Q3) The amount of Retained Earnings appearing on the Consolidated Balance Sheet as at January 1,2007 would be:
A)$130,000
B)$70,000
C)$60,000
D)$160,000
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Page 7
Chapter 6: Intercompany Inventory and Land Profits
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Q1) Under which of the following Consolidation Theories would the elimination of the Parent's share of any intercompany profits be required for the preparation of Consolidated Financial Statements?
A)The Ownership Theory.
B)The Entity Theory.
C)The Proprietary Theory.
D)The Parent Theory.
Q2) Consolidated Net Income for 2008 would be:
A)$15,000
B)$12,500
C)$53,200
D)$36,300
Q3) What would be the non-controlling interest amount appearing on Kho's Consolidated Statement of Financial Position at the end of 2007?
A)$29,936.
B)$57,400.
C)$74,907.
D)$55,840.
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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Q1) What would be the amount appearing for accumulated depreciation - equipment on King's 2009 Consolidated Statement of Financial Position?
A)$390,000
B)$400,000
C)$395,000
D)$391,000
Q2) What is the amount of acquisition differential to be amortized during 2010?
A)$80,000
B)$8,800
C)$10,000
D)$7,200
Q3) Ignoring income taxes and any minority interest effects,what is the amount of unrealized profit remaining from the intercompany sale of equipment at December 31,2009?
A)Nil
B)$15,000
C)$20,000
D)$10,000
Q4) 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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Q1) Assuming that A acquired a controlling interest in B through numerous small acquisitions,what would be appropriate accounting with respect to these acquisitions?
A)An acquisition differential must be computed following each purchase.
B)The equity method must be adopted retroactively once 20% ownership is obtained.
C)The purchases should all be grouped together and treated as a single block purchase.
D)The cost method should be used until a controlling interest is acquired.
Q2) Compute the Goodwill on the date of the acquisition.
Q3) What is the net Income for the combined entity?
A)$2,170,000
B)$660,000
C)$1,510,000
D)$1,773,625
Q4) Compute the Consolidated Cost of Goods Sold for 2009.
Q5) Prepare Lime's December 31,2011 Consolidated Balance Sheet.
Q6) Prepare a statement of non-controlling interest as at December 31,2011.
Q7) Prepare an acquisition differential amortization table since the acquisition date.
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Page 10
Chapter 9: Other Consolidated Reporting Issues
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Q1) Prepare a schedule of intercompany items as at December 31,2010.
Q2) Which of the following is NOT used as a quantitative threshold to determine that an operating segment is reportable under IFRS 8?
A)10% of the combined revenues of all operating segments.
B)10% of the combined assets of all operating segments.
C)10% of all expenses are traced to the segment.
D)10% or more of the absolute amount of the combined reported profit of all operating segments that did not report a loss AND 10% or more of the absolute amount of the combined reported loss of all operating segments that did report a loss.
Q3) Using ALL of the applicable tests,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
Q4) Calculate the gain on the contribution of equipment and prepare the journal entries to record the events on January 1 and December 31,2009.Also calculate under the equity method X Ltd.'s share of net income and the amount it will recognize.
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Page 11
Chapter 10: Foreign Currency Transactions
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Q1) What would be the amount of the foreign exchange gain or loss recorded at the settlement date?
A)A $5 Exchange Gain.
B)A $10 Exchange Loss.
C)A $10 Exchange Gain.
D)A $15 Exchange Loss.
Q2) Prepare the journal entries for 2011.
Q3) What is the amount of CMI's foreign exchange gain or loss at year-end?
A)Nil.
B)$120 Gain.
C)$120 Loss.
D)$480 Gain.
Q4) Prepare a partial Balance Sheet for Canada Corp on December 31,2013 showing the account receivable from the Japanese client as well as the accounts associated with the hedge.
Q5) Prepare the journal entries to record the receipt of the 500,000 Yen on March 1,2014,assuming that Canada Corp did not enter into a hedge transaction in December 2013.
Q6) Prepare any and all journal entries arising from this transaction.
Q7) Prepare GRL's journal entries for each of 2011,2012 and 2013.
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Chapter 11: Translation and Consolidation of the Financial
Statements of Foreign Operations
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Q1) Translate Wilsen's December 31,2014 Statement of Retained Earnings.
Q2) Which of the following rates would be used to translate the company's inventory?
A)$1CDN=$0.815 U.S.
B)$1CDN=$0.8175 U.S.
C)$1CDN=$0.8250 U.S.
D)$1CDN=$0.83 U.S.
Q3) Which of the following rates would be used to translate the company's current liabilities?
A)$1CDN=$0.815 U.S.
B)$1CDN=$0.8175 U.S.
C)$1CDN=$0.8250 U.S.
D)$1CDN=$0.83 U.S.
Q4) Calculate Larmer's Consolidated Net Income for 2011.
Q5) Translate Wilsen's 2014 Income Statement.
Q6) Compute Wilsen's exchange gain or loss for 2014.
Q7) Under the Temporal Method:
A)The relationship of balance sheet items is best preserved.
B)A single historic rate is used to translate all income statement items.
C)A net asset exposure is most likely.
D)Historic rates are used to translate most non-monetary items. Page 13
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Chapter
12: Accounting for Not-For-Profit Organizations and Governments
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Q1) The following are selected transactions from Helpers Cooperative which uses the restricted fund method.Helpers has an operating fund,a capital fund and an endowment fund:
Pledges amounting to $400,000 were received,of which $80,000 applies to the operations of the following year.It is estimated that 2% of the pledges will be uncollectible.
The association purchased office equipment at a cost of $6,000. Pledges of $300,000 were collected,while pledges amounting to $4,000 were written off as uncollectible.
A local newspaper agreed to offer Helpers a full-page ad.This had an estimated value of $5,000.
Interest and dividends received amounted to $15,000 on endowment fund investments.These earnings are considered unrestricted. Depreciation for the year amounted to $40,000.
Required:
Prepare journal entries to record the above transactions.Also,indicate which fund will be used for each entry.
Q2) Describe what fund accounting is and why is it used for not-for-profit organizations.
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