Question 1

Under IFRS 3,which concept must be used to report the assets and liabilities of an acquired company on the parent company financial statements?

Accepted Answer

A) parent company concept 
B) equity concept 
C) entity concept 
D) historical cost concept 
A) parent company concept 
B) equity concept 
C) entity concept 
D) historical cost concept

Question 2

According to IFRS 3,how should companies account for Goodwill arising from business combinations?

Accepted Answer

A) It is capitalized and amortized over a period of no more than 40 years. 
B) It is expensed in the year the subsidiary is acquired. 
C) It is capitalized and written down when its fair value become less than its carrying value. 
D) It is amortized over between 5 and 40 years. 
A) It is capitalized and amortized over a period of no more than 40 years. 
B) It is expensed in the year the subsidiary is acquired. 
C) It is capitalized and written down when its fair value become less than its carrying value. 
D) It is amortized over between 5 and 40 years.

Question 3

What is a "holding gain?"

Accepted Answer

A) the increase in owners' equity resulting from maintaining monetary assets during a period of inflation 
B) the increase in income caused by the use of general purchasing power accounting during a period of inflation 
C) the increase in owners' equity resulting from holding nonmonetary assets during a period of inflation 
D) the increase in income caused by paying liabilities with cheaper dollars 
A) the increase in owners' equity resulting from maintaining monetary assets during a period of inflation 
B) the increase in income caused by the use of general purchasing power accounting during a period of inflation 
C) the increase in owners' equity resulting from holding nonmonetary assets during a period of inflation 
D) the increase in income caused by paying liabilities with cheaper dollars

Question 4

Why do financial analysts and other readers of financial statements want segmented information?

Accepted Answer

A) Consolidation obscures facts that may be important for evaluating financial statements. 
B) More information is always preferred to less information. 
C) to ensure that illegal business combinations are not taking place 
D) Models for economic forecasting have not been developed using consolidated financial statement information. 
A) Consolidation obscures facts that may be important for evaluating financial statements. 
B) More information is always preferred to less information. 
C) to ensure that illegal business combinations are not taking place 
D) Models for economic forecasting have not been developed using consolidated financial statement information.

Question 5

Which of the following countries requires companies to use current replacement cost accounting to prepare primary financial statements?

Accepted Answer

A) the Netherlands 
B) Mexico 
C) Brazil 
D) None of the above 
A) the Netherlands 
B) Mexico 
C) Brazil 
D) None of the above

Question 6

What term is used to refer to presenting the financial statements for a group of enterprises as if it was a single entity?

Accepted Answer

A) harmonization 
B) translation 
C) consolidation 
D) transformation 
A) harmonization 
B) translation 
C) consolidation 
D) transformation

Question 7

Which method of dealing with inflation in financial reporting updates assets by applying inflation rates to historical costs?

Accepted Answer

A) current replacement cost method 
B) current rate method 
C) temporal method 
D) general purchasing power method 
A) current replacement cost method 
B) current rate method 
C) temporal method 
D) general purchasing power method

Question 8

Under U.S.GAAP and IASB standards,the threshold for determining "significant influence" in an associate enterprise is:

Accepted Answer

A) 50% ownership of voting shares 
B) 5% ownership of voting shares 
C) 20% ownership of voting shares 
D) 10% ownership of voting shares 
A) 50% ownership of voting shares 
B) 5% ownership of voting shares 
C) 20% ownership of voting shares 
D) 10% ownership of voting shares

Question 9

Since 2001,which method of accounting for a business combination is required under U.S.GAAP?

Accepted Answer

A) pooling 
B) purchase 
C) Both purchase and pooling are allowed. 
D) Purchase is required for transnational combinations,but pooling is allowed for domestic combinations. 
A) pooling 
B) purchase 
C) Both purchase and pooling are allowed. 
D) Purchase is required for transnational combinations,but pooling is allowed for domestic combinations.

Question 10

Which method of dealing with inflation in financial reporting reflects current replacement cost of specific assets?

Accepted Answer

A) current replacement cost method 
B) general purchasing power method 
C) temporal method 
D) current rate method 
A) current replacement cost method 
B) general purchasing power method 
C) temporal method 
D) current rate method

Question 11

Canto Ltd,a Spanish corporation,acquired 100% interest in Bevo,Inc.,a U.S.corporation for $50,000,000. The net assets of Bevo had a book value of $35,000,000 and a fair value of $46,000,000. How should Canto record the business combination?

Accepted Answer

A) Entry A 
B) Entry B 
C) Entry C 
D) Entry D 
A) Entry A 
B) Entry B 
C) Entry C 
D) Entry D

Question 12

Under ARB 51,"controlling financial interest "is:

Accepted Answer

A) not defined. 
B) defined as 50% ownership of another entity's voting shares. 
C) the direct or indirect ability to make decisions about another entity's activities. 
D) the right to receive the expected residual returns of another entity if they occur. 
A) not defined. 
B) defined as 50% ownership of another entity's voting shares. 
C) the direct or indirect ability to make decisions about another entity's activities. 
D) the right to receive the expected residual returns of another entity if they occur.

Question 13

Mega Corporation acquired 65% of the voting shares of Forko Ltd for €10 billion and used the purchase method of accounting for the merger. Mega Corporation's interest in Forko Ltd had a restated value of €950 million. How should Mega account for the difference?

Accepted Answer

A) as Gain from Acquisition on the current period income statement 
B) as Goodwill on the consolidated balance sheet 
C) as a Loss from Merger on the current period income statement 
D) as Additional Paid-in Capital on the consolidated balance sheet 
A) as Gain from Acquisition on the current period income statement 
B) as Goodwill on the consolidated balance sheet 
C) as a Loss from Merger on the current period income statement 
D) as Additional Paid-in Capital on the consolidated balance sheet

Question 14

How must Goodwill resulting from business combinations be treated under U.S.GAAP?

Accepted Answer

A) It must be amortized over a period of no more than 40 years. 
B) It must be expensed when it is acquired. 
C) It must be written down when its fair value is less than its carrying value. 
D) It must be written down in no less than 5 years and no more than 40 years. 
A) It must be amortized over a period of no more than 40 years. 
B) It must be expensed when it is acquired. 
C) It must be written down when its fair value is less than its carrying value. 
D) It must be written down in no less than 5 years and no more than 40 years.

Question 15

Under both IFRS 8 and U.S.GAAP which of the following entity-wide disclosures is NOT required?

Accepted Answer

A) information about products and services 
B) information about intersegmental transfer pricing 
C) information about major customers 
D) information about geographic areas 
A) information about products and services 
B) information about intersegmental transfer pricing 
C) information about major customers 
D) information about geographic areas

Question 16

One difference that exists between IFRS 8 and U.S.GAAP is:

Accepted Answer

A) There are no differences as the two pronouncements represent total convergence in segment reporting. 
B) U)S.GAAP says that segment assets must be 5% or greater of the total combined assets to be separately disclosed. 
C) U)S.GAAP does not require reporting of segment liabilities. 
D) U)S.GAAP explicitly includes intangibles in the definition of long-lived assets for geographic disclosures. 
A) There are no differences as the two pronouncements represent total convergence in segment reporting. 
B) U)S.GAAP says that segment assets must be 5% or greater of the total combined assets to be separately disclosed. 
C) U)S.GAAP does not require reporting of segment liabilities. 
D) U)S.GAAP explicitly includes intangibles in the definition of long-lived assets for geographic disclosures.

Question 17

Canto Ltd,a Spanish corporation,acquired 100% interest in Bevo,Inc.,a U.S.corporation for $50,000,000. The net assets of Bevo had a book value of $35,000,000 and a fair value of $56,000,000. How should Canto record the business combination?

Accepted Answer

A) Entry A 
B) Entry B 
C) Entry C 
D) Entry D 
A) Entry A 
B) Entry B 
C) Entry C 
D) Entry D

Question 18

Since 2003,what method for supplemental disclosure of inflation-adjusted financial statements is required of all companies affected by the IASB standards?

Accepted Answer

A) No rule is currently in place that generally requires inflation-adjusted financial statements. 
B) General purchasing power method must be used. 
C) Current replacement cost method must be used. 
D) Companies have the option of using current cost or historical cost. 
A) No rule is currently in place that generally requires inflation-adjusted financial statements. 
B) General purchasing power method must be used. 
C) Current replacement cost method must be used. 
D) Companies have the option of using current cost or historical cost.

Question 19

How is accounting for a pooling of interests different from a purchase when business entities combine?

Accepted Answer

A) Assets and liabilities are not revalued when the pooling of interests is used. 
B) Goodwill arises only when the pooling of interests method is used for business combinations. 
C) Pooling of interests is used for international consolidations but never for domestic consolidations. 
D) The purchase method is used only when less than 100% of an entity's voting shares are acquired. 
A) Assets and liabilities are not revalued when the pooling of interests is used. 
B) Goodwill arises only when the pooling of interests method is used for business combinations. 
C) Pooling of interests is used for international consolidations but never for domestic consolidations. 
D) The purchase method is used only when less than 100% of an entity's voting shares are acquired.

Question 20

IFRS 3,issued in 2004,eliminated the use of which concept for reporting assets and liabilities of an acquired company on the parent company's consolidated financial statements?

Accepted Answer

A) parent company concept 
B) economic concept 
C) entity concept 
D) All of the above 
A) parent company concept 
B) economic concept 
C) entity concept 
D) All of the above

Under IFRS 3,which concept must be used to report the assets and liabilities of an acquired company on the parent company financial statements?

According to IFRS 3,how should companies account for Goodwill arising from business combinations?

What is a "holding gain?"

Why do financial analysts and other readers of financial statements want segmented information?

Which of the following countries requires companies to use current replacement cost accounting to prepare primary financial statements?

What term is used to refer to presenting the financial statements for a group of enterprises as if it was a single entity?

Which method of dealing with inflation in financial reporting updates assets by applying inflation rates to historical costs?

Under U.S.GAAP and IASB standards,the threshold for determining "significant influence" in an associate enterprise is:

Since 2001,which method of accounting for a business combination is required under U.S.GAAP?

Which method of dealing with inflation in financial reporting reflects current replacement cost of specific assets?

Canto Ltd,a Spanish corporation,acquired 100% interest in Bevo,Inc.,a U.S.corporation for $50,000,000. The net assets of Bevo had a book value of $35,000,000 and a fair value of $46,000,000. How should Canto record the business combination?

Under ARB 51,"controlling financial interest "is:

Mega Corporation acquired 65% of the voting shares of Forko Ltd for €10 billion and used the purchase method of accounting for the merger. Mega Corporation's interest in Forko Ltd had a restated value of €950 million. How should Mega account for the difference?

How must Goodwill resulting from business combinations be treated under U.S.GAAP?

Under both IFRS 8 and U.S.GAAP which of the following entity-wide disclosures is NOT required?

One difference that exists between IFRS 8 and U.S.GAAP is:

Canto Ltd,a Spanish corporation,acquired 100% interest in Bevo,Inc.,a U.S.corporation for $50,000,000. The net assets of Bevo had a book value of $35,000,000 and a fair value of $56,000,000. How should Canto record the business combination?

Since 2003,what method for supplemental disclosure of inflation-adjusted financial statements is required of all companies affected by the IASB standards?

How is accounting for a pooling of interests different from a purchase when business entities combine?

IFRS 3,issued in 2004,eliminated the use of which concept for reporting assets and liabilities of an acquired company on the parent company's consolidated financial statements?

Introduction to International Accounting

Worldwide Accounting Diversity

International Convergence of Financial Reporting

International Financial Reporting Standards: Part I

International Financial Reporting Standards: Part II

Comparative Accounting

Foreign Currency Transactions and Hedging Foreign Exchange Risk

Translation of Foreign Currency Financial Statements

Analysis of Foreign Financial Statements

International Taxation

International Transfer Pricing

Strategic Accounting Issues in Multinational Corporations

Comparative International Auditing and Corporate Governance

International Corporate Social Reporting

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Exam 9: Additional Financial Reporting Issues

Under IFRS 3,which concept must be used to report the assets and liabilities of an acquired company on the parent company financial statements?

According to IFRS 3,how should companies account for Goodwill arising from business combinations?

What is a "holding gain?"

Why do financial analysts and other readers of financial statements want segmented information?

Which of the following countries requires companies to use current replacement cost accounting to prepare primary financial statements?

What term is used to refer to presenting the financial statements for a group of enterprises as if it was a single entity?

Which method of dealing with inflation in financial reporting updates assets by applying inflation rates to historical costs?

Under U.S.GAAP and IASB standards,the threshold for determining "significant influence" in an associate enterprise is:

Since 2001,which method of accounting for a business combination is required under U.S.GAAP?

Which method of dealing with inflation in financial reporting reflects current replacement cost of specific assets?

Canto Ltd,a Spanish corporation,acquired 100% interest in Bevo,Inc.,a U.S.corporation for $50,000,000. The net assets of Bevo had a book value of $35,000,000 and a fair value of $46,000,000. How should Canto record the business combination?

Under ARB 51,"controlling financial interest "is:

Mega Corporation acquired 65% of the voting shares of Forko Ltd for €10 billion and used the purchase method of accounting for the merger. Mega Corporation's interest in Forko Ltd had a restated value of €950 million. How should Mega account for the difference?

How must Goodwill resulting from business combinations be treated under U.S.GAAP?

Under both IFRS 8 and U.S.GAAP which of the following entity-wide disclosures is NOT required?

One difference that exists between IFRS 8 and U.S.GAAP is:

Canto Ltd,a Spanish corporation,acquired 100% interest in Bevo,Inc.,a U.S.corporation for $50,000,000. The net assets of Bevo had a book value of $35,000,000 and a fair value of $56,000,000. How should Canto record the business combination?

Since 2003,what method for supplemental disclosure of inflation-adjusted financial statements is required of all companies affected by the IASB standards?

How is accounting for a pooling of interests different from a purchase when business entities combine?

IFRS 3,issued in 2004,eliminated the use of which concept for reporting assets and liabilities of an acquired company on the parent company's consolidated financial statements?

Introduction to International Accounting

Worldwide Accounting Diversity

International Convergence of Financial Reporting

International Financial Reporting Standards: Part I

International Financial Reporting Standards: Part II

Comparative Accounting

Foreign Currency Transactions and Hedging Foreign Exchange Risk

Translation of Foreign Currency Financial Statements

Analysis of Foreign Financial Statements

International Taxation

International Transfer Pricing

Strategic Accounting Issues in Multinational Corporations

Comparative International Auditing and Corporate Governance

International Corporate Social Reporting

Filters