Course Introduction
International Accounting Final Exam
Questions
International Accounting explores the principles, standards, and practices governing financial reporting and analysis in a global context. The course examines the impact of cultural, political, and economic factors on accounting systems worldwide, focusing on the harmonization and differences between International Financial Reporting Standards (IFRS) and other major accounting frameworks such as US Generally Accepted Accounting Principles (GAAP). Students will analyze case studies on multinational corporations, address cross-border transactions, currency translation, and consolidation, and consider ethical challenges and regulatory issues facing accountants operating in diverse international environments.
Recommended Textbook
Advanced Accounting 9th Edition by Joe Ben Hoyle
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Page 2
Chapter 1: The Equity Method of Accounting for Investments
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Sample Questions
Q1) What amount of equity income would Steven have recognized in 2009 from its ownership interest in Nicole?
Answer: [($120,000 x .4)- $12,000 - $840 + $1,500] = $36,660
Q2) What is the amount of unrealized intercompany inventory profit to be deferred on December 31,2008?
A)$900.
B)$3,000.
C)$4,500.
D)$6,000.
E)$9,000.
Answer: A
Q3) After allocating cost in excess of book value,which asset or liability would not be amortized over a useful life?
A)Cost of goods sold.
B)Property,plant,& equipment.
C)Patents.
D)Goodwill.
E)Bonds payable.
Answer: D
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Page 3
Chapter 2: Consolidation of Financial Information
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Sample Questions
Q1) Compute the amount of consolidated buildings (net)at date of combination.
A)$1,700.
B)$1,760.
C)$1,655.
D)$1,550.
E)$1,660.
Answer: C
Q2) Assuming the combination is accounted for as a purchase,compute consolidated expenses at the date of the combination.
A)$2,760.
B)$3,380.
C)$2,770.
D)$2,735.
E)$2,785.
Answer: A
Q3) Required:
Determine consolidated Net Income for at December 31,2009. Answer: SHAPE \* MERGEFORMAT 11ea88ab_df3e_a0be_bb89_bbd949c7de70_TB4174_00
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Page 4
Chapter 3: Consolidations - Subsequent to the Date of Acquisition
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Sample Questions
Q1) If Watkins pays $400,000 in cash for Glen,what amount would be represented as the subsidiary's Building in a consolidation at December 31,2011,assuming the book value at that date is still $200,000?
A)$200,000.
B)$285,000.
C)$260,000.
D)$268,000.
E)$300,000.
Answer: B
Q2) Determine the amortization expense related to the combination at the year-end date of 12/31/13.
Answer: 11ea88ab_df39_4975_bb89_55a6c0e579e6_TB4174_00
Q3) Compute goodwill,if any,at January 1,2009.
A)$150.
B)$250.
C)$700.
D)$1,200.
E)$550.
Answer: A
Page 5
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Chapter 4: Consolidated Financial Statements and Outside Ownership
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Q1) For each of the following situations,select the best answer concerning consolidating financial information where there is a non-controlling interest in the subsidiary:
(A)Acquisition method.
(B)Purchase method.
(C)Acquisition method and Purchase method.
_____ 1.Reflects the cost principle,but also assigns a value to the non-controlling interest shares at book value.
_____ 2.Recognizes the non-controlling interest has a value to be reported,but since it is not a part of the exchange transaction,no new basis of accountability arises.
_____ 3.Recognizes that management effectively controls 100% of the net assets acquired and is thus accountable for the entire fair value.
_____ 4.Requires the computation of an implied value.
_____ 5.Recognizes the full fair value of partially owned acquisitions.
_____ 6.Non-controlling interest is reported at an implied fair value.
_____ 7.Non-controlling interest is reported at book value.
_____ 8.Required by SFAS 141(R)Business Combinations.
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Page 6
Chapter 5: Consolidated Financial StatementsIntercompany Asset Transactions
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Q1) King Corp.owns 85% of James Co.King uses the equity method to account for this investment.During 2009,King sells inventory to James for $500,000.The inventory originally cost King $420,000.At 12/31/09,25% of the goods were still in James' inventory. Required:
Prepare the Consolidation Entry TI and Consolidation Entry G for the consolidation worksheet.
Q2) Assuming that Musial owned only 90% of Matin,what is consolidated net income for 2009?
Q3) Compute income from Stark reported on Parker's books for 2011.
A)$204,300.
B)$202,500.
C)$193,500.
D)$191,700.
E)$225,000.
Q4) Assuming that Musial owned only 90% of Matin and the equipment transfer had been upstream,what is consolidated net income for 2009?
Q5) Throughout 2009,Cleveland Co.sold inventory to Leeward Co. ,its subsidiary.From a consolidated point of view,when will the gain on this transfer be earned?
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Chapter 6: Variable Interest Entities,
intercompany
Statement of Cash Flows, and Other Issues
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Sample Questions
Q1) Parent Corporation acquired some of its subsidiary's bonds on the bond market,paying a price $40,000 higher than the bonds' carrying value.How should the difference between the purchase price and the carrying value be accounted for?
Q2) Describe how this transaction would affect Panton's books.
Q3) Stahl Corporation owns 80 percent of the outstanding stock of MacDonald,Inc.During the current year,MacDonald made $125,000 in sales to Stahl.How does this transfer affect the consolidated statement of cash flows?
A)Include 80 percent as a decrease in the investing section.
B)Include 100 percent as a decrease in the investing section.
C)Include 80 percent as a decrease in the operating section.
D)Include 100 percent as an increase in the operating section.
E)Not reported in the consolidated statement of cash flows.
Q4) Compute the noncontrolling interest in Smith at date of acquisition.
A)$486,000.
B)$480,000.
C)$300,000.
D)$150,000.
E)$120,000.
Q5) Prepare all consolidation entries for 2009.
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Chapter 7: Consolidated Financial Statements - Ownership
Patterns and Income Taxes
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Sample Questions
Q1) How much will the consolidated group save if it decides to file a consolidated income tax return?
Q2) Assuming that separate income tax returns are being filed,what deferred income tax asset is created?
A)$0.
B)$360.
C)$450.
D)$2,250.
E)$3,600.
Q3) B Co.owned 70% of the voting common stock of C Corp. ;C Corp.owned 20% of B Co.For 2009,B Co.and C Corp.reported net income (not including the investment)of $600,000 and $300,000,respectively.B Co.and C Corp.paid dividends of $80,000 and $60,000,respectively.
Required:
Prepare a schedule showing B Co.'s share of consolidated net income for 2009 using the treasury stock approach.
Q4) Required:
Determine the noncontrolling interest in Lawrence Co.'s net income.
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Q5) What are the benefits or advantages of filing a consolidated income tax return?
Chapter 8: Segment and Interim Reporting
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Q1) Why are quarterly financial statements required to be published for publicly traded companies in the U.S.?
Q2) The amount of gross profit for the first quarter is:
A)$83,000
B)$87,000
C)$90,000
D)$221,000
E)$250,000
Q3) How should contingencies be reported in an interim report?
A)Disclosed the same way as they are disclosed in annual reports.
B)Disclosed in the interim period discovered,and ignored in all future periods.
C)Recorded as gains or losses as incurred.
D)Recorded as gains or losses only if material.
E)Ignored.
Q4) What information does SFAS 131 require to be disclosed for a major customer?
A)The identity of the customer.
B)The operating segment reporting sales to the customer.
C)The geographic area of the customer.
D)The percentage of sales derived from the customer.
E)The length of time the customer has been a customer of the company.
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Chapter 9: Foreign Currency Transactions and Hedging
Foreign Exchange Risk
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Q1) On August 31,Ram Corporation,a U.S.company,expects to order merchandise from a German supplier in three months,denominating the transaction in euros.On August 31,the spot rate is $1.19 per euro,and Quality enters into a three-month forward contract to purchase 600,000 euros at a rate of $1.20.At the end of three months,the spot rate is $1.21 per euro,and Ram orders and receives the merchandise,paying 600,000 euros.What are the effects on net income from these transactions?
A)$6,000 Discount Expense plus a $6,000 negative Adjustment to Net Income when the merchandise is sold.
B)$ 6,000 Discount Expense plus a $12,000 negative Adjustment to Net Income when the merchandise is sold.
C)$ 6,000 Premium Expense plus a $6,000 negative Adjustment to Net Income when the merchandise is sold.
D)$ 12,000 Premium Expense plus a $6,000 positive Adjustment to Net Income when the merchandise is sold.
E)$ 12,000 Discount Expense plus an $12,000 positive Adjustment to Net Income when the merchandise is sold.
Q2) How does a foreign currency forward contract differ from a foreign currency option?
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Chapter 10: Translation of Foreign Currency Financial Statements
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Q1) Assume (1)that Boerkian was a foreign subsidiary of a U.S.multinational company that used the U.S.dollar as its functional currency and (2)that the stickle was the functional currency of the subsidiary.What was the translation adjustment for this subsidiary for 2008?
Q2) Under the current rate method,how would cost of goods sold be restated?
A)Beginning of the year rate.
B)Average rate.
C)Current rate.
D)Historical rate.
E)Composite amount.
Q3) A net liability balance sheet exposure exists and the foreign currency appreciates.Which of the following statements is true?
A)There is no translation adjustment.
B)There is a transaction loss.
C)There is a transaction gain.
D)There is a negative translation adjustment.
E)There is a positive translation adjustment.
Q4) What is the justification for the remeasurement of foreign currency transactions?
Q5) Contrast the purpose of remeasurement with the purpose of translation.
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Chapter 11: Worldwide Accounting Diversity and International Accounting Standards
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Q1) For Japanese companies,what is the primary source of financing?
A)large banks.
B)the United States stock markets.
C)international stock markets in London.
D)the Tokyo Stock Exchange.
E)governmental loans and subsidies.
Q2) At what amount should the equipment be reported on the December 2008 balance sheet under IFRSs benchmark treatment?
A)$200,000
B)$180,000
C)$164,000
D)$160,000
E)$146,000
Q3) What are the two major types of legal systems used around the world?
Q4) How did the early IASs obtain support from a sufficient number of board members?
Q5) What are measurement differences in international reporting and what would be an example of a difference?
13
Q6) What problems are caused by diverse accounting practices?
Q7) What are the topics covered under the short-term convergence project?
Q8) What are the different ways IFRSs can be used?
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Page 14
Chapter 12: Financial Reporting and the Securities and Exchange Commission
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Q1) Which one of the following regulates the subsequent trading of securities through brokers and exchanges?
A)The Securities Act of 1933.
B)The Securities Exchange Act of 1934.
C)The Investment Company Act of 1940.
D)The Investment Advisers Act of 1940.
E)The Sarbanes-Oxley Act of 2002.
Q2) The goals of the SEC include all except which one of the following?
A)prohibiting the dissemination of materially misstated information.
B)controlling the number of companies whose stock is listed on major stock exchanges.
C)regulating the operation of securities markets.
D)ensuring that full and fair information is disclosed to all investors before the securities of a company are allowed to be bought and sold.
E)preventing the misuse of information especially by inside parties.
Q3) What are the responsibilities of the SEC's Division of Corporation Finance?
Q4) Name five securities offerings exempt from registration with the SEC.
Q5) Why is the SEC's Rule 14c-3 important to the accounting profession?
Q6) What is a wrap-around filing?
Page 15
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Chapter 13: Accounting for Legal Reorganizations and Liquidations
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Q1) How much should the mortgage holder expect to collect from the liquidation?
A)$474,000
B)$510,000
C)$450,000
D)$480,000
E)$478,000
Q2) How much should Quincy expect to pay on the accounts payable?
A)$240,000.
B)$128,000.
C)$120,000.
D)$96,000.
E)$146,000.
Q3) Compute the amount of total liabilities with priority.
Q4) Total unsecured liabilities are calculated to be what amount?
A)$44,000.
B)$51,050.
C)$76,050.
D)$85,000.
E)$194,000.
Q5) Compute the amount of free assets after payment of liabilities with priority.
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Chapter 14: Partnerships: Formation and Operation
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Q1) Under what circumstances does a partner's balance in his or her capital account have practical consequences for the partner?
Q2) What was the balance in Eaton's Capital account at the end of the first year?
A)$120,900.
B)$118,300.
C)$126,100.
D)$80,600.
E)$111,500.
Q3) Prepare the journal entry for the payment to Dean in the dissolution of his partnership interest,assuming the bonus method is to be applied.
Q4) Eden contributed $124,000 in cash to the business to receive a 20% interest in the partnership.Goodwill was to be recorded.The four original partners shared all profits and losses equally.After Eden made his investment,what were the individual capital balances?
Q5) Determine the amount of income allocated to each partner for 2007.
Q6) What are the remaining partners' capital balances after Howell's interest is dissolved,assuming the goodwill method is applied?
Q7) Record the journal entry to allocate the salary of Noris.
Page 17
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Chapter 15: Partnerships: Termination and Liquidation
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Q1) What accounting transactions are not recorded by an accountant during liquidation?
A)The conversion of partnership assets into cash.
B)The allocation of the resulting gains and losses.
C)The payment of liabilities and expenses.
D)Remaining unpaid debts settled,and the distribution of any remaining assets to the partners based on their profit and loss ratio.
Q2) Why is a Schedule of Liquidation prepared?
Q3) A partnership had the following account balances: Cash,$91,000;Other Assets,$702,000;Liabilities,$338,000;Polk,Capital (50% of profits and losses),$221,000;Garfield,Capital (30%),$143,000;Arthur,Capital (20%),$91,000.The company liquidated and $10,400 became available to the partners.
Required: Who would have received the $10,400?
Q4) Record the journal entry for payment of outstanding liabilities to the creditors.
Q5) What should occur when a solvent partner has a deficit balance?
Q6) What is the purpose of a predistribution plan?
Q7) Record the journal entry for the sale of the noncash assets.
Page 18
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Chapter 16: Accounting for State and Local Governments,
Part I
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Q1) Which of the following statements is false regarding government-wide financial statements?
A)Government-wide financial statements report a government's activities and financial position as a whole.
B)The government-wide financial statement approach helps users make long-term evaluations of the financial decisions and stability of the government.
C)Government-wide financial statements focus on the short-term instead of the long-term.
D)Government-wide financial statements assess the finances of the government in its entirety,including the year's operating results.
E)The measurement focus of government-wide financial statements is on all economic resources and utilizes accrual accounting.
Q2) What are the two proprietary fund types?
Q3) What are the five types of governmental funds?
Q4) What organization is responsible for establishing accounting principles for governmental entities? By whom was this organization established?
Q5) What is the purpose of government-wide financial statements?
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Chapter 17: Accounting for State and Local Governments,part II
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Q1) Prepare a Statement of Activities
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) What are the three broad sections of a state or local government's CAFR?
A)Introductory,financial,and statistical.
B)Financial statements,notes to the financial statements,and component units.
C)Introductory,statistical,and component units.
D)Component units,financial,and statistical.
E)Financial statements,notes to the financial statements,and statistical.
Q4) What information is required in the introductory section of a state or local government's CAFR?
Q5) What is meant by the term fiscally independent?
Page 20
Q6) Prepare a Statement of Revenues,Expenditures and Changes in Fund Balances
Q7) What are the three broad sections of a state or local government's CAFR?
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Chapter 18: Accounting for Not-For-Profit Organizations
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Q1) In this month,there were several patients that had no health insurance and due to their low income level,the hospital decided that $85,000 of receivables would not be collectible
Required:
Prepare the necessary journal entry to reflect the decision to consider the $85,000 as charity care.
Q2) Which one of the following financial statements is not required by SFAS 117 for a voluntary health and welfare organization?
A)Statement of Financial Position.
B)Statement of Functional Expense.
C)Statement of Activities and Changes in Net Assets.
D)Statement of Cash Flows.
E)Statement of Operations.
Q3) A local social worker,earning $12 per hour working for the state government,contributed 600 hours of time at no charge to the Yelton Center,a voluntary health and welfare organization.Except for these donated services,an additional staff person would have been hired by the organization.
Required:
How should the Yelton Center record the contributed services?
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Page 21
Chapter 19: Accounting for Estates and Trusts
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Q1) What is the process of abatement?
A)an attempt to determine the deceased's intentions when the terms of the will are unclear.
B)a reduction of various bequests when the estate is not adequate to satisfy them completely.
C)selling of assets included in an estate to be able to pay creditors.
D)payment of the claims of creditors.
E)the establishment of how the creditors will be paid.
Q2) Prepare the journal entry to record the property of the estate.
Q3) 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.
Q4) Prepare the journal entry to record the property of the estate.
Q5) How may real property be treated in identifying estate property subject to probate?
Q6) Prepare a Charge and Discharge Statement for the estate.
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