International Accounting Final
Exam Questions
Course Introduction
International Accounting explores the principles and practices of accounting in a global context, examining how cultural, economic, and legal differences shape financial reporting across countries. The course covers international financial reporting standards (IFRS), the harmonization of accounting practices, and the implications of multinational operations on accounting systems and financial statements. Students will analyze the challenges of cross-border financial disclosures, currency translation, consolidated financial statements, and the impact of international regulatory bodies. Through case studies and real-world examples, the course equips students with the tools to interpret and compare financial information from organizations operating worldwide, preparing them for careers in international finance and accounting.
Recommended Textbook
Advanced Financial Accounting 9th Edition by Richard Baker
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Page 2
Chapter 1: Intercorporate Acquisitions and Investments in Other Entities
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Q1) FASB 141R (ASC 805)requires contingent consideration in a business combination to be classified as:
A)An asset
B)A liability or equity
C)An asset or equity
D)An asset or a liability
Answer: B
Q2) Which of the following observations is (are)consistent with the acquisition method of accounting for business combinations?
I.Expenses related to the business combination are expensed.
II.Stock issue costs are treated as a reduction in the issue price.
III.All merger and stock issue costs are expensed.
IV.No goodwill is ever recorded.
A)III
B)IV
C)I and II
D)I,II,and IV
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 will be reported by Yang as balance in investment in Spiel on December 31,20X8,if it used the fair value method of accounting?
A)$105,000
B)$118,750
C)$100,000
D)$122,500
Answer: A
Q2) A cash dividend returns assets to the stockholders while reducing corporate liquidity.Why are not all cash dividends considered to be "liquidating dividends"? In your response include a discussion of how an investor accounts for a liquidating dividend. Answer: A dividend represents earnings of a company being returned to its shareholders. A liquidating dividend occurs when an investee declares dividends in excess of the earnings from the purchase date of the investment.An individual investor must treat a liquidating dividend associated with its investment as a return of capital and reduce the investment account accordingly.It is possible for blocks of stock acquired at different times to have different amounts associated with a potential liquidating dividend.
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Chapter 3: The Reporting Entity and Consolidation of
Less-Than-Wholly-Owned Subsidiaries With No Differential
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Q1) All of the following statements accurately describe Special Purpose Entities (SPEs)except for:
A)SPEs are corporations,trust or partnerships created for a single specified purpose.
B)SPEs usually have no substantive operations and are used for financing operations.
C)SPEs are used for asset securitization,risk sharing and taking advantage of tax statues.
D)A variable interest entity (VIE)is a type of SPE with a limited number of equity investors.
Answer: D
Q2) Based on the preceding information,what amount would be reported as income to controlling interest in the consolidated financial statements for 20X9?
A)$168,000
B)$138,000
C)$164,000
D)$150,000
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 preceding information,what amount should be allocated to goodwill in the consolidated balance sheet,prepared after this business combination?
A)$0
B)$25,000
C)$70,000
D)$45,000
Q2) Based on the information provided,the consolidated balance sheet of Enya and Celtic will reflect goodwill in the amount of:
A)$0.
B)$58,000.
C)$22,000.
D)$36,000.
Q3) Based on the preceding information,what amount of goodwill will be reported if the acquisition price was $240,000?
A)$0
B)$40,000
C)$15,000
D)$35,000
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Chapter 5: Consolidation of
Less-Than-Wholly-Owned
Subsidiaries Acquired at More Than Book Value
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Q1) Rohan 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 Helms Company pays $90,000 to acquire 75 percent ownership in Rohan 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 inventory will be included in the consolidated balance sheet immediately following the acquisition?
A)$0
B)$65,000
C)$70,000
D)$60,000
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Chapter 6: Intercompany Inventory Transactions
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Q1) During the year a parent makes sales of inventory at a profit to its 75 percent owned subsidiary.The subsidiary also makes sales of inventory at a profit to its parent during the same year.Both the parent and the subsidiary have on hand at the end of the year 20 percent of the inventory acquired from one another.Consolidated revenues for the year should exclude:
A)80 percent of the total revenues from intercompany sales.
B)total revenues from intercompany sales.
C)only the revenues from the subsidiary's intercompany sales.
D)only the revenues from the parent's intercompany sales.
Q2) Based on the information given above,what amount of inventory should be eliminated in the consolidation worksheet for 20X8?
A)$15,000
B)$14,000
C)$12,000
D)$13,000
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8
Chapter 7: Intercompany Transfers of Services and
Noncurrent Assets
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Q1) Based on the preceding information,in the preparation of the 20X9 consolidated income statement,depreciation expense will be:
A)debited for $25,000 in the eliminating entries.
B)credited for $15,000 in the eliminating entries.
C)debited for $15,000 in the eliminating entries.
D)credited for $25,000 in the eliminating entries.
Q2) 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
Q3) Based on the preceding information,what amount of gain or loss on sale of land should be reported in the consolidated income statement for 20X8?
A)$60,000
B)$0
C)$75,000
D)$23,000
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Chapter 8: Intercompany Indebtedness
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Q1) When one company purchases the debt of an affiliate from an unrelated party,a gain or loss on the constructive retirement of debt is recognized by which of the following?
A)Option A
B)Option B
C)Option C
D)Option D
Q2) Culver owns 80 percent of the common stock of Fowler Company.Culver also purchases some of Fowler's bonds directly from Fowler and holds the bonds as a long-term investment.How is the acquisition of the bonds treated for consolidated reporting purposes?
A)As a retirement of bonds.
B)As an increase in the Bonds Payable account on Fowler's books.
C)Everything related to the bonds is eliminated in the consolidation worksheet,and nothing related to the bonds appears in the consolidated financial statements.
D)As an increase in noncurrent assets.
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Chapter 9: Consolidation Ownership Issues
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Q1) Based on the preceding information,the eliminating entry to prepare the consolidated financial statements for Company A as of December 31,20X9 will include a credit to Investment in Company B-Common Stock for:
A)506,000
B)440,000
C)400,000
D)500,000
Q2) What is Pisa's new ownership interest?
A)84 percent
B)55 percent
C)70 percent
D)64 percent
Q3) Based on the preceding information,what is Connector's percentage ownership in the joint venture?
A)20 percent
B)50 percent
C)40 percent
D)25 percent
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Chapter 10: Additional Consolidation Reporting Issues
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Q1) Based on the preceding information,what amount will be reported in the consolidated cash flow statement as net cash provided by operating activities for 20X9?
A)$207,000
B)$163,000
C)$180,000
D)$149,000
Q2) Based on the information provided,what amount of income tax expense should be assigned to Company C?
A)$24,000
B)$35,200
C)$19,200
D)$30,400
Q3) 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
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Chapter 11: Multinational Accounting: Foreign Currency
Transactions and Financial Instruments
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Q1) On November 1,20X8,Denver Company borrowed 500,000 local currency units (LCU)from a foreign lender evidenced by an interest-bearing note due on November 1,20X9,which is denominated in the currency of the lender.The U.S.dollar equivalent of the note principal was as follows:
In its income statement for 20X9,what amount should Denver include as a foreign exchange gain or loss on the note principal?
A)15,000 gain
B)25,000 gain
C)15,000 loss
D)40,000 loss
Q2) Based on the preceding information,had Myway not used the forward exchange contract,net income for the year would have:
A)increased by $1,000.
B)increased by $500.
C)decreased by $1,000.
D)decreased by $1,500.
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Chapter 12: Multinational Accounting: Issues in Financial
Reporting and Translation of Foreign Entity Statements
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Q1) Based on the preceding information,at what dollar amount is the ending inventory shown in the trial balance of the consolidated worksheet?
A)$45,000
B)$50,000
C)$40,000
D)$35,000
Q2) Based on the preceding information,the receipt of the dividend will result in a credit to the investment account for:
A)$16,800
B)$17,680
C)$18,000
D)$17,600
Q3) Based on the preceding information,at what amount is the inventory shown on the consolidated balance sheet for the year?
A)$45,000
B)$30,000
C)$40,000
D)$35,000
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Chapter 13: Segment and Interim Reporting
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Q1) The management approach to the definition of segments for financial reporting expects a company to:
I.Report disaggregated information on the same organizational basis as used by the company's internal decision makers.
II.Report disaggregated information for at least ten segments.
A)I
B)II
C)Both I and II
D)Neither I nor II
Q2) All of the following are differences between international standards and U.S.GAAP regarding operating segments,except:
A)IFRS requires disclosures about geographical segments,not business segments.
B)IFRS requires two different bases of segmentation,a primary basis and a secondary basis.
C)IFRS required more disclosure for primary segments.
D)The amounts disclosed under IFRS are based on the same accounting policies as the financial statements,not based on amounts reported to the chief operating decision maker.
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Chapter 14: Sec Reporting
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Q1) Which of the following divisions of the SEC regulates national securities exchanges,brokers,and dealers of securities?
A)Division of Investment Management
B)Division of Corporation Finance
C)Division of Corporation Regulation
D)Division of Market Regulation
Q2) Schedule 13D is filed
A)by entities that acquire a beneficial ownership of more than 5 percent of a class of registered equity securities.
B)to broadly report material information that is being provided to securities analysts,selected institutional investors,or others.
C)to disclose material items related to asset-backed securities such as a bond issue.
D)by management to report the existence and effectiveness of the company's internal control over financial reporting.
Q3) Customary Review
Q4) Accounting and Auditing Enforcement Releases
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Chapter 15: Partnerships: Formation, operation, and
Changes in Membership
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Q1) The terms of a partnership agreement provide that one of the partners is to receive a salary allowance of $30,000,plus a bonus of 20 percent of income after deduction of the bonus and the salary allowance.If income is $150,000,the bonus should be:
A)$18,000
B)$20,000
C)$24,000
D)$30,000
Q2) Which of the following accounts is not maintained for each partner in its accounting records?
A)Capital account
B)Drawing account
C)Earnings account
D)Loan account
Q3) Transferable interest of a partner includes all of the following except:
A)the partner's share of the profits and losses of the partnership.
B)the right to receive distributions.
C)the right to receive any liquidating distribution.
D)the authority to transact any of the partnership's business operations.
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Chapter 16: Partnerships: Liquidation
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Q1) The BIG Partnership has decided to liquidate at December 31,20X8.The capital and loan balances of the partners at December 31,20X8,are provided below:
If you were to calculate the Loss Absorption Power for each partner,how would the partners rank (from highest to lowest LAP)?
A)B,I,G
B)I,B,G
C)B,G,I
D)G,I,B
Q2) Which of the following items are important in the determination of safe installment payments to partners?
I.Deficits created in capital accounts are distributed to the remaining partners.
II.All unsold noncash assets are assumed to be worthless.
A)I only
B)II only
C)Both I and II
D)Neither I nor II
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Chapter 17: Governmental Entities: Introduction and General Fund Accounting
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Q1) At the end of the fiscal year,uncollected property taxes in the general fund should be:
A)reclassified from current to delinquent.
B)written off as uncollectible.
C)charged against unassigned fund balance.
D)reclassified from current to noncurrent.
Q2) Which of the following observations concerning interfund transfers is true?
A)They are expected to be repaid.
B)They are classified as fund revenues or expenditures.
C)The receiving fund recognizes these transfers as revenue.
D)These transfers are classified under "Other Financing Sources or Uses."
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
Q4) Accounting processes differ between a for-profit entity and a governmental entity.Discuss three differences between a governmental entity and a for-profit entity.
Page 19
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Chapter 18: Governmental Entities: Special Funds and
Government-Wide Financial Statements
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Q1) Fixed assets and investments are reported in which of the following funds?
A)I,II,III
B)II,IV,V
C)I,II,V
D)II,III,IV
Q2) Refer to the above information.On the statement of fiduciary net assets at June 30,20X9,the nonexpendable trust fund should report investments and interest receivable of:
A)Option A
B)Option B
C)Option C
D)Option D
Q3) An enterprise fund of Grist was billed $10,000 for using the services of an internal service fund's data processing center.What account should Grist's enterprise fund debit to record this billing?
A)Due to Internal Service Fund
B)Expenditures
C)Transfer Out to Internal Service Fund
D)General Operating Expenses
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Chapter 19: Not-For-Profit Entities
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Q1) "Basis for measuring expenditures for contributed services requiring special skills" describes which term listed above?
Q2) Transaction: Received contributions restricted by donors for research activities.
Effect on Statement of Operations:
A)Increases operating income.
B)Decreases operating income.
C)The transaction is reported on the statement of operations,but there is no effect on operating income.
D)The transaction is not reported on the statement of operations.
Q3) Incurred fund-raising costs.
Q4) "Basis for measuring contributions" describes which term listed above?
Q5) Based on the preceding information,the increase in present value of the contributions receivable recognized at the end of the first year equals:
A)$5,000.
B)$1,264.
C)$4,212.
D)$787.
Q6) "Classification of an endowment contribution" describes which term listed above?
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Chapter 20: Corporations in Financial Difficulty
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Q1) A reorganization value in excess of amounts assignable to identifiable assets is:
A)not reported.
B)reported as an intangible asset called Reorganization Value in Excess of Amounts
Allocable to Identifiable Assets.
C)reported as Goodwill Associated with Exit or Disposal Activities.
D)passed on to prior shareholders of the company.
Q2) Which monthly report shows the results of the trustee's fiduciary actions beginning at the point the trustee accepts the debtor's assets?
A)Statement of affairs
B)Statement of realization and liquidation
C)Statement of financial position
D)Statement of activities
Q3) To obtain cash quickly,DebCo.sold $750,000 of its receivables to Finco. ,with recourse.As the accountant for DebCo. ,what issues do you need to resolve in order to determine the appropriate accounting treatment?
Q4) What are the conditions necessary for using fresh start reporting in reorganization?
Q5) Briefly explain the three classes of creditors specified in the Bankruptcy Code.
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