International Accounting Practice Questions
Course Introduction
International Accounting explores the principles, standards, and practices of accounting in a global context. This course examines the key differences between international and domestic accounting methods, focusing on the International Financial Reporting Standards (IFRS) and their comparison with Generally Accepted Accounting Principles (GAAP). Students will learn about the challenges of financial reporting across borders, currency translation, international taxation, and cross-cultural ethical considerations. By analyzing real-world case studies, students gain an understanding of how multinational corporations manage financial statements and disclosures, deal with foreign exchange risks, and comply with global regulatory environments.
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) Which of the following situations best describes a business combination to be accounted for as a statutory merger?
A)Both companies in a combination continue to operate as separate,but related,legal entities.
B)Only one of the combining companies survives and the other loses its separate identity.
C)Two companies combine to form a new third company,and the original two companies are dissolved.
D)One company transfers assets to another company it has created.
Answer: B
Q2) Point Co.purchased 90% of Sharpe Corp.'s voting stock on January 1,20X2 for $5,580,000.Prior to the acquisition,Point held a 10% equity position in Sharpe Company.On January 1,20X2 Point's 10% investment in Sharpe has a book value of $340,000 and a fair value of $620,000.On January 1,20X2 Point records the following:
A)Debit Gain on revaluation of Sharpe's stock $280,000
B)Credit Gain on revaluation of Sharpe's stock $280,000
C)Credit Investment in Sharpe stock $5,860,000
D)Debit Investment in Sharpe stock $6,200,000
Answer: A
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Chapter 2: Reporting Intercorporate Investments and
Consolidation of Wholly Owned Subsidiaries With No
Differential
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Q1) What portion of the balances of subsidiary stockholders' equity accounts are eliminated in preparing the consolidated balance sheet?
A)Common stock
B)Additional paid-in capital
C)Retained Earnings
D)All of the balances are eliminated
Answer: D
Q2) 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 equity method of accounting?
A)$111,250
B)$118,750
C)$100,000
D)$122,500
Answer: D
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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) Based on the preceding information,what is the amount of net income to be reported in the consolidated income statement for the year under the entity theory approach?
A)$210,000
B)$202,000
C)$160,000
D)$220,000
Answer: D
Q2) Based on the preceding information,what will be the amount at which Garfield's buildings and equipment will be reported in consolidated statements using the parent company approach?
A)$350,000
B)$340,000
C)$280,000
D)$300,000
Answer: B
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5
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 preceding information,what amount will be reported for total accounts payable in the consolidated balance sheet for the year 20X8?
A)$56,000
B)$46,000
C)$60,000
D)$42,000
Q3) Based on the preceding information,the amount of differential associated with the acquisition is:
A)$0.
B)$58,000.
C)$22,000.
D)$36,000.
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Chapter 5: Consolidation of Less-Than-Wholly-Owned
Subsidiaries Acquired at More Than Book Value
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Q1) Which of the following stockholders equity accounts are eliminated during the consolidation process?
A)Common Stock of the subsidiary
B)Preferred Stock of the subsidiary
C)Additional Paid-in Capital of the subsidiary
D)All of the above
Q2) When a parent owns less than 100% of a subsidiary,the noncontrolling interest shareholders are allocated their ownership percentage of income or net assets in all of the following eliminating entries except for:
A)The basic investment account elimination entry
B)The excess value (differential)reclassification entry
C)The optional accumulated depreciation elimination entry
D)The amortized excess value reclassification entry
Q3) Based on the preceding information,which of the following is an eliminating entry needed to prepare a full set of consolidated financial statements at December 31,20X8?
A)Choice A
B)Choice B
C)Choice C
D)Choice D
Page 7
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Chapter 6: Intercompany Inventory Transactions
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Q1) Based on the information given above,what amount should be reported in the 20X8 consolidated income statement as cost of goods sold?
A)$36,000
B)$12,000
C)$48,000
D)$45,000
Q2) When a parent and its subsidiary use a periodic inventory system rather than a perpetual system,the income and asset balances reported in the consolidated financial statements are:
I.affected only if there are upstream intercompany sales of inventory.
II.affected only if there are downstream intercompany sales of inventory.
A)I
B)II
C)Both I and II
D)Neither I nor II
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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 of income assigned to the controlling shareholders in the consolidated income statement for 20X9 will be:
A)$207,000.
B)$202,000.
C)$212,000.
D)$190,000.
Q2) Based on the information provided,in the preparation of the 20X8 consolidated financial statements,building will be _____ in the eliminating entries.
A)debited for $33,000
B)debited for $36,000
C)credited for $36,000
D)debited for $3,000
Q3) Based on the preceding information,in the preparation of the 20X9 consolidated income statement,depreciation expense will be:
A)Debited for $40,000 in the eliminating entries.
B)Credited for $10,000 in the eliminating entries.
C)Debited for $10,000 in the eliminating entries.
D)Credited for $40,000 in the eliminating entries.
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Chapter 8: Intercompany Indebtedness
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Q1) Based on the information given above,what amount of interest expense will be eliminated in the preparation of the 20X8 consolidated financial statements?
A)$13,000
B)$13,500
C)$10,000
D)$15,000
Q2) A loss on the constructive retirement of a parent's bonds by a subsidiary is effectively recognized in the accounting records of the parent and its subsidiary: I.at the date of constructive retirement.
II.over the remaining term of the bonds.
A)I
B)II
C)Both I and II
D)Neither I nor II
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Chapter 9: Consolidation Ownership Issues
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Q1) Based on the preceding information,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)$50,000.
B)$95,000.
C)$230,000.
D)$185,000.
Q2) Based on the information provided,what amount of income will be assigned to the noncontrolling interest in the 20X8 consolidated income statement?
A)$23,750
B)$25,000
C)$18,000
D)$33,750
Q3) The ending balance in Additional Paid-In Capital would be:
A)$0
B)$187,500
C)$312,500
D)$125,000
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11
Chapter 10: Additional Consolidation Reporting Issues
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Q1) Based on the preceding information,what is the amount of earnings available to common shareholders reported in the consolidated financial statements for the year?
A)$89,200
B)$87,000
C)$91,000
D)$82,800
Q2) Based on the information provided,what is the diluted earnings per share for the consolidated entity for 20X8?
A)4.53
B)4.33
C)4.00
D)3.80
Q3) Based on the information provided,what was the consolidated cash balance at January 1,20X8?
A)$60,000
B)$85,000
C)$15,000
D)$380,000
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12
Chapter 11: Multinational Accounting: Foreign Currency
Transactions and Financial Instruments
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Q1) Based on the preceding information,what journal entry would Imperial make on December 31,20X8,to revalue foreign currency payable to equivalent U.S.dollar value?
A)Option A
B)Option B
C)Option C
D)Option D
Q2) Based on the preceding information,in the entry to record the increase in the intrinsic value of the options on December 31,20X8,
A)Purchased Call Options will be credited for $100,000.
B)Purchased Call Options will be debited for $130,000.
C)Retained Earnings will be credited for $100,000.
D)Other Comprehensive Income will be credited for $100,000.
Q3) Based on the preceding information,which of the following entries will be required on February 1,20X9?
A)Option A
B)Option B
C)Option C
D)Option D
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Chapter 12: Multinational Accounting: Issues in Financial
Reporting and Translation of Foreign Entity Statements
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Q1) Parisian Co.is a French company located in Paris.Yankee Corp. ,located in New York City,acquires Parisian Co.Parisian has the Euro as its local currency and the Swiss Franc as its functional currency.Yankee has the U.S.dollar as its local currency and the U.S.dollar as its functional currency.
Required:
a)The year-end consolidated financial statements will be prepared in which currency? b)Explain which method is appropriate to use at year-end: Translation or Remeasurement.
Q2) Based on the preceding information,what amount should Leo record as "income from subsidiary" based on the British subsidiary's reported net income?
A)$72,930
B)$52,500
C)$72,600
D)$69,300
Q3) Use the information given in question 52 to prepare a schedule providing a proof of the translation adjustment.
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Page 14
Chapter 13: Segment and Interim Reporting
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Q1) Tyler Company incurred an inventory loss due to a decline in market prices during its first quarter of operations in 20X8.At the end of the first quarter,management of the company believed the decline in market prices to be permanent.In the second quarter,the market prices of Tyler's inventories increased above their acquisition cost.Market prices remained higher than acquisition cost during the remainder of 20X8.How should Tyler report the facts above on its first and second quarter income statements?
A)Option A
B)Option B
C)Option C
D)Option D
Q2) Refer to the above information.Which of the operating segments above meet the revenue test?
A)B,D,and E
B)A and D
C)A,B,and D
D)B,C,D,and E
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Chapter 14: Sec Reporting
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Q1) Which of the following classes of information are included in the Form 10-K?
I.Management's discussion and analysis
II.Audited financial statements and footnotes
III.Auditor's opinion on the company's internal control system
A)I and II
B)I and III
C)II and III
D)I,II,and III
Q2) Information concerning the unexpected resignation of one or more of the registrant's directors would be disclosed on which of the following forms?
I.Form 8-Q
II.Form 8-K
A)I
B)II
C)Both I and II
D)Neither I nor II
Q3) Customary Review
Q4) Accounting and Auditing Enforcement Releases
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Page 16
Chapter 15: Partnerships: Formation, operation, and
Changes in Membership
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Q1) Miller and Davis,partners in a consulting business,share profits and losses in the ratio of 3:2,respectively.Prior to recording the admission of Shaw as a new partner,Miller has a capital balance of $80,000,and Davis has a capital balance of $40,000.
Required:
For each of the following independent cases,prepare the journal entry that was made to record the admission of Shaw into the partnership.
1)Shaw purchased 20 percent of the respective capital balances of Miller and Davis,paying $20,000 cash directly to each of them.
2)Shaw invested $30,000 cash in the partnership for a 20 percent ownership interest.Total capital after recording his admission was $150,000.
3)Shaw invested $40,000 cash into the partnership for a 20 percent ownership interest.Total capital after recording his admission was $160,000.
4)Shaw invested $50,000 into the partnership for a 20 percent interest.Goodwill is to be recognized.
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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 given above.What amount of cash will each partner receive as a liquidating distribution if the machinery is sold for 65,000 dollars?
A)Option A
B)Option B
C)Option C
D)Option D
Q3) Based on the preceding information,what amount will be paid out to Scott upon liquidation of the partnership?
A)$0
B)$2,500
C)$5,000
D)$6,429
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18
Chapter 17: Governmental Entities: Introduction and General
Fund Accounting
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Q1) Due to an error,the general fund of Pueblo did not record an encumbrance for police equipment which had been ordered but not received on June 30,20X9,the end of its fiscal year.Pueblo's outstanding encumbrances at year-end are nonlapsing.What was the effect of this error on the balance sheet of Pueblo's general fund?
A)Assets are overstated.
B)Liabilities are understated.
C)Total fund balance is overstated.
D)Unassigned fund balance is overstated.
Q2) In a statement of revenues,expenditures,and changes in fund balance,the unassigned fund balance will be increased by:
I.a decrease in the fund balance-Nonspendable.
II.an excess of other financing sources over other financing uses.
A)I only
B)II only
C)Both I and II
D)Neither I nor II
Q3) Briefly discuss the various types of governmental funds and proprietary funds.
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Page 19
Chapter 18: Governmental Entities: Special Funds and
Government-Wide Financial Statements
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Q1) A tax collection fund that collects property taxes and then distributes them to local governmental units is an example of a(n):
A)trust fund.
B)agency fund.
C)internal service fund.
D)permanent fund.
Q2) Which presentation method combines the component unit's results into the primary government's financial results?
A)Blended presentation
B)Discrete presentation
C)Combined presentation
D)Consolidated presentation
Q3) Refer to the above information.For the year ended June 30,20X9,what amount should the trust fund report as investment earnings on the statement of revenues,expenses,and changes in fund balance?
A)$60,000
B)$68,000
C)$70,000
D)$78,000
Page 20
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Chapter 19: Not-For-Profit Entities
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Q1) Based on the information provided,in Golden Path's statement of activities for the year ended December 31,20X8,what amount should be reported under the classification of supporting services?
A)$150,000
B)$720,000
C)$440,000
D)$290,000
Q2) Refer to the above information.At June 30,20X9,the amount of permanently restricted net assets reported on the statement of financial position would be:
A)$1,070,000.
B)$1,030,000.
C)$1,000,000.
D)$960,000.
Q3) "Classification of an endowment contribution" describes which term listed above?
Q4) The CFO of a "Not-for-Profit" hospital is making a presentation at your college.The presentation is for Business and Health-Science majors.During the presentation the CFO mentions assets being reported "above the line." On the way out your roommate a health-science major asks,you an accounting major,to explain what the CFO was referring to.What do you respond?
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Chapter 20: Corporations in Financial Difficulty
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Q1) Under Chapter 11 proceedings,what represents the fair value of the entity before considering liabilities and approximates the amount a willing buyer would pay for the entity's assets?
A)Reorganization value
B)Fire sale value
C)Fresh start value
D)Excess value
Q2) Eagle Company recently petitioned for bankruptcy and is now in the process of preparing a statement of affairs.The following information has been assembled for this statement:
What amount will be paid to the fully secured creditors and the creditors with priority?
A)Option A
B)Option B
C)Option C
D)Option D
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?
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