Special Topics in Accounting Solved Exam Questions
Course Introduction
Special Topics in Accounting explores contemporary and emerging issues within the field of accounting, addressing areas such as advanced financial reporting, forensic accounting, international accounting standards, and the impact of new technologies like blockchain and artificial intelligence on the profession. The course offers students the opportunity to analyze case studies, interpret current research, and anticipate future developments in accounting practices. Emphasis is placed on critical thinking, problem-solving, and the ethical implications of evolving accounting topics, preparing students to meet the challenges of a rapidly changing business environment.
Recommended Textbook
Modern Advanced Accounting in Canada 6th Edition by Murray Hilton
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Chapter 1: A Survey of International Accounting
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Sample Questions
Q1) Income-smoothing has been applied to a German subsidiary of Company Inc,as it had an abnormally high operating income last year.The accountants working for the subsidiary would likely have:
A)debited an expense account and credited an equity account.
B)credited an expense account and debited an equity account.
C)credited an expense account and debited a Provision account appearing under the Liabilities section.
D)debited an expense account and credited a Provision account appearing under the Liabilities section.
Answer: D
Q2) Which enterprises will need to report under IFRSs in Canada:
A)All corporations,government agencies and private companies..
B)Public companies and private companies whose shareholders' equity is in excess of $500,000,000 at any particular year end.
C)Public companies,private companies and not-for-profit organizations.
D)Publically accountable enterprises.
Answer: D
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Chapter 2: Investments in Equity Securities
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Sample Questions
Q1) What percentage of ownership is used as a guideline to determine that significant influence exists under IAS 28?
A)20% or less.
B)Less than 20%.
C)Between 20% and 50%.
D)25% or more.
Answer: C
Q2) Which of the following types of share investment does not qualify as a strategic investment?
A)Significant influence investments.
B)Joint Control investments.
C)Held for Trading.
D)Control investments.
Answer: C
Q3) Private enterprise gap is permitted in certain instances for:
A)all privately held companies.
B)all publicly held companies.
C)all Canadian companies.
D)Canadian companies consolidating its foreign subsidiaries.
Answer: A
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Chapter 3: Business Combinations
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Sample Questions
Q1) The process of preparing Consolidated Financial Statements involves the elimination of inter-company transactions between a Parent Company and its subsidiary.Where would these entries be recorded?
A)On the Parent's books only.
B)On the Subsidiary's books.
C)The entries are not recorded in the books of either company.The entries are only made on the working papers.
D)The effect of any inter-company transaction must be reflected on the books of both companies.
Answer: C
Q2) During an acquisition,when should intangible assets NOT be recognized apart from Goodwill?
A)The assets have been identified but not accounted for by the subsidiary.
B)The assets have been identified and accounted for by the subsidiary.
C)The assets can be sold,licensed or exchanged)
D)The assets have been accounted for by the subsidiary but have no Fair Value on the date of acquisition.
Answer: D
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Chapter 4: Consolidated Statements on Date of Acquisition
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Sample Questions
Q1) Section 1625 of the CICA Handbook states that a Parent can only require Push-Down accounting when it owns at least what percentage of the Subsidiary?
A)80%
B)75%
C)90%
D)95%
Q2) Assuming that Keen Inc.purchases 80% of Lax Inc.for $240,000,prepare any journal entries you feel are necessary on the date of acquisition prior to the preparation of Consolidated Financial Statements.Assume that the Entity Method applies.
Q3) When the parent forms a new subsidiary,
A)there should be no acquisition differential.
B)a gain or loss will usually arise.
C)push down accounting rules must be followed)
D)it should not be included in the company's consolidated financial statements as this would effectively be double-counting.
Q4) Prepare Jean Inc's consolidated Balance Sheet on the date of acquisition using the Proprietary Theory.
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Chapter 5: Consolidation Subsequent to Acquisition Date
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Q1) Assume that Stanton Inc's common shares had a fair market value of $51,000 on December 31,2002.Assume also that the fair values of Stanton's net assets amounted to $26,000.Assuming that Rembrandt's fair values equalled its book values on the date of acquisition,has the consolidated Goodwill calculated above been impaired,and if so,by how much?
Q2) The amount of interest expense appearing on Big Guy's July 1,2004 Consolidated Income Statement would be:
A)$63,000.
B)$36,000.
C)$62,400.
D)$57,600.
Q3) The amount of bonds payable appearing on Big Guy's Consolidated Balance Sheet on July 1,2004 would be:
A)$330,000.
B)$317,800.
C)$347,200.
D)$309,000.
Q4) Prepare Brand X's Consolidated Balance Sheet as at December 31,2001,assuming that Brand X purchased 100% of Brand Y for $350,000.
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Chapter 6: Intercompany Inventory and Land Profits
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Sample Questions
Q1) Compute MAX's Goodwill at the Date of Acquisition.
Q2) What would be the change in the non-controlling interest account for 2009?
A)Non-controlling interest would increase by $45,000.
B)Non-controlling interest would increase by $48,000.
C)Non-controlling interest would decrease by $16,800.
D)Non-controlling interest would increase by $14,200.
Q3) Calculate Consolidated Retained Earnings as at December 31,2009.
Q4) Prepare a schedule of realized and unrealized profits for the fiscal year ended June 30,2010 for both companies.Show your figures before and after tax.
Q5) Prepare a schedule of Realized and Unrealized profits for 2009 for both companies.Show your figures before and after tax.
Q6) What effect (if any)would the unrealized profits in beginning inventory have on income tax expense for 2009?
A)They would cause a $1,240 reduction in income tax expense.
B)They would cause a $1,200 reduction in income tax expense.
C)They would cause a $1,240 increase in income tax expense.
D)They would cause a $1,200 increase in income tax expense.
Q7) Calculate the non-controlling interest (Balance Sheet)as at June 30,2010.
Q8) Calculate Consolidated Retained Earnings as at June 30,2010.
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Chapter 7: Aintercompany Profits in Depreciable Assets
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Q1) What would be the non-controlling Interest amount appearing on King's Consolidated Statement of Financial Position at the START of 2009?
A)$100,000
B)$101,800
C)$125,000
D)$185,000
Q2) Prepare a Statement of Consolidated Retained Earnings for the year ended December 31,2003 for Plax Inc.
Q3) The amount of non-controlling interest in earnings appearing on Jay's 2010 Consolidated Income Statement would be:
A)Nil.
B)$1,800
C)$1,830
D)$1,818
Q4) What is the total amount of Unrealized Profit remaining at the end of 2010?
A)$30,000
B)$26,000
C)$27,000
D)Nil.
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Chapter 8: Consolidated Cash Flows and Ownership Issues
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Sample Questions
Q1) What is the amount of the acquisition differential amortization for 2009?
A)$6,250
B)$4,375
C)$5,625
D)$12,000
Q2) Approximately what percentage of the non-controlling interest was due to Y's own earnings?
A)19%
B)45%
C)30%
D)5%
Q3) The amount appearing under equipment on the December 31,2010 Consolidated Balance Sheet would be:
A)$690,000
B)$710,000
C)$660,000
D)$772,500
Q4) Compute consolidated trademarks for Ash as at December 31,2009.
Q5) Compute the Goodwill on the date of the acquisition.
Q6) Compute consolidated inventory for Ash as at December 31,2009.
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Chapter 9: Other Consolidated Reporting Issues
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Q1) What is the total amount of sales that would appear on the Consolidated Income Statement?
A)$1,000,000
B)$880,000
C)$920,000
D)$816,000
Q2) The same facts apply,but in this case assume that X Ltd.Receives a 50% interest plus $390,000 in cash (which was contributed by the other joint venturer).Record the contribution of assets,the share of earnings and the realization of the gain on transfer.
Q3) Assuming that Larmer is NOT a joint venture and that it is also NOT a portfolio investment,prepare Roller's 2010 Income Statement in accordance with current Canadian GAAP.
Q4) What is the amount of the temporary difference between straight line depreciation and capital cost allowance on December 31,2011?
A)$1,500
B)$5,400
C)$3,600
D)$1,800
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Chapter 10: Foreign Currency Transactions
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Sample Questions
Q1) Prepare the December 31,2013 Balance Sheet Presentation of the Receivable from the American client and the accounts associated with the hedge.
Q2) At what amount (in Canadian Dollars)would the forward contract with the bank be recorded?
A)$347,500
B)$337,500
C)$343,500
D)$349,500
Q3) Which of the following statements accurately describes the manner in which transactions must be translated under IAS 21?
A)All transactions must be translated into the functional currency of the reporting entity.
B)All transactions must be converted into the local currency of the reporting entity.
C)All transactions are to be reported into the currency of the jurisdiction where the majority of shareholders reside.
D)All transactions may be reported into the currency of the country where the corporation does the majority of its business.
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Chapter 11: Translation and Consolidation of the Financial
Statements of Foreign Operations
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Q1) 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.
Q2) For a self-sustaining foreign operation,exchange gains and losses are to be included in or along with:
A)Other comprehensive income.
B)An exchange account.
C)Non-Controlling interest.
D)The acquisition differential amortization.
Q3) Translate Wilsen's 2014 Income Statement.
Q4) Calculate the exchange gain or loss that would result from the translation of Wilsen's Financial Statements.
Q5) What is the amount of the gain or loss arising from translation?
A)A $750 Loss.
B)A $5,000 Loss.
C)A $3,750 Gain.
D)A $307 Loss.
Page 13
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Chapter 12: Accounting for Not-For-Profit Organizations and Governments
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Q1) Section 4430 contains a compromise applicable to not-for-profit organizations whose provision two-year average annual revenues are less than $500,000.These organizations must disclose all of the following EXCEPT:
A)their accounting policy for capital assets
B)information about capital assets not shown in the balance sheet.
C)the amount expensed in the current period if their policy is to expense capital assets when acquired.
D)an appraised listing of the organizations capital assets,showing book values and appraised market values.
Q2) Collections are works of art that have been excluded from the definition of capital assets because of all of the following EXCEPT:
A)Many works of art are considered priceless,so it is not possible to establish reasonable amortization guidelines.
B)The works are held for public exhibition,education and research.
C)They are protected,cared for,and preserved.
D)They are subject to organizational policies that require any proceeds from their sale to be used to acquire other items for the collection,or for the direct care of the existing collection.
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