Question 1

Which of the following correctly describes the accounting for assets and liabilities that were created from foreign currency transactions?

Accepted Answer

A) Foreign currency monetary assets and liabilities are measured using the current rate of exchange as of the date of the initial transaction. 
B) Foreign currency monetary assets and liabilities are measured using the current rate of exchange as of the balance sheet date. 
C) Foreign currency nonmonetary assets and liabilities are measured using the current rate of exchange as of the balance sheet date. 
D) Foreign currency nonmonetary assets and liabilities are measured using the average annual rate of exchange during the year. 
A) Foreign currency monetary assets and liabilities are measured using the current rate of exchange as of the date of the initial transaction. 
B) Foreign currency monetary assets and liabilities are measured using the current rate of exchange as of the balance sheet date. 
C) Foreign currency nonmonetary assets and liabilities are measured using the current rate of exchange as of the balance sheet date. 
D) Foreign currency nonmonetary assets and liabilities are measured using the average annual rate of exchange during the year.

Question 2

When trading securities are sold,the amount of the realized gain or loss is the selling price of the securities relative to the most recent fair value reflected in the financial statements.

Accepted Answer

A) True 
 B)False

Question 3

Pooling of interests method for accounting for business combinations has been criticized because it tends to allow recording of acquisitions

Accepted Answer

A) at artificially high amounts. 
B) at artificially low amounts. 
C) at exact amounts. 
D) at amounts equal to fair value. 
A) at artificially high amounts. 
B) at artificially low amounts. 
C) at exact amounts. 
D) at amounts equal to fair value.

Question 4

Beemer Company has provided the following information regarding its investment portfolios:
• Trading securities purchased for $150,000 during 2014 had a fair value of $165,000 as of December 31,2014 and a fair value of $154,300 as of December 31,2015.
• Available-for-sale securities purchased for $275,000 during 2014 had a fair value of $293,700 on December 31,2014 and a fair value of $301,900 on December 31,2015.
Required:
1.Determine the impact that the investment portfolios had on net income during 2015.
2.Determine the amount of the realized gain/loss to be recorded during 2016 if the trading securities were sold for $159,500.
3.Describe the difference in the financial accounting and reporting when comparing trading security portfolios to available-for-sale security portfolios.

Accepted Answer

1.The $10,700 ($154,300 - $165,000)unrea

Question 5

The parent company's investment account would include an element which is representative of

Accepted Answer

A) the unrecorded book value of the investor's assets. 
B) the recorded current value of the investee's assets. 
C) the unrecorded difference between fair value and book value of the investee's assets. 
D) the goodwill accrued since the purchase of the investee. 
A) the unrecorded book value of the investor's assets. 
B) the recorded current value of the investee's assets. 
C) the unrecorded difference between fair value and book value of the investee's assets. 
D) the goodwill accrued since the purchase of the investee.

Question 6

A minority active investment is accounted for by the

Accepted Answer

A) cost method. 
B) equity method. 
C) lower of cost or market method. 
D) speculative investment methoD. 
A) cost method. 
B) equity method. 
C) lower of cost or market method. 
D) speculative investment methoD.

Question 7

An investment of 30% of a company's voting shares must be accounted for using the equity method.

Accepted Answer

A) True 
 B)False

Question 8

Bond investments made to generate trading gains are classified as

Accepted Answer

A) available-for-sale securities. 
B) trading securities. 
C) held to maturity securities. 
D) minority securities. 
A) available-for-sale securities. 
B) trading securities. 
C) held to maturity securities. 
D) minority securities.

Question 9

Under IFRS,nonmarketable equity securities whose fair value can be determined are included in the trading portfolio.

Accepted Answer

A) True 
 B)False

Question 10

On December 1,2014,a U.S.company sold merchandise to a foreign company for 750,000 francs.The payment in francs is due on January 31,2015.The spot rate was as follows: $.20 per franc on December 1,2014;$.19 per franc on December 31,2014;and $.21 per franc on January 31,2015 when the payment was received.Which of the following incorrectly describes the accounting for this foreign currency transaction?

Accepted Answer

A) The receivable was recorded at $150,000 on December 1,2014. 
B) The receivable was recorded at $142,500 on December 31,2014 balance sheet. 
C) The foreign currency transaction gain included on the income statement for the year ending December 31,2014 was $7,500. 
D) The foreign currency transaction gain included on the income statement for the year ending December 31,2015 was $15,000. 
A) The receivable was recorded at $150,000 on December 1,2014. 
B) The receivable was recorded at $142,500 on December 31,2014 balance sheet. 
C) The foreign currency transaction gain included on the income statement for the year ending December 31,2014 was $7,500. 
D) The foreign currency transaction gain included on the income statement for the year ending December 31,2015 was $15,000.

Which of the following correctly describes the accounting for assets and liabilities that were created from foreign currency transactions?

When trading securities are sold,the amount of the realized gain or loss is the selling price of the securities relative to the most recent fair value reflected in the financial statements.

Pooling of interests method for accounting for business combinations has been criticized because it tends to allow recording of acquisitions

The parent company's investment account would include an element which is representative of

A minority active investment is accounted for by the

An investment of 30% of a company's voting shares must be accounted for using the equity method.

Bond investments made to generate trading gains are classified as

Under IFRS,nonmarketable equity securities whose fair value can be determined are included in the trading portfolio.

The Economic and Institutional Setting for Financial Reporting

Accrual Accounting and Income Determination

Additional Topics in Income Determination

Structure of the Balance Sheet and Statement of Cash Flows

Essentials of Financial Statement Analysis

The Role of Financial Information in Valuation and Credit Risk Assessment

The Role of Financial Information in Contracting

Receivables

Inventories

Long-Lived Assets

Financial Instruments As Liabilities

Financial Reporting for Leases

Income Tax Reporting

Pensions and Postretirement Benefits

Financial Reporting for Owners Equity

Statement of Cash Flows

Filters

Exam 16: Intercorporate Equity Investments

Which of the following correctly describes the accounting for assets and liabilities that were created from foreign currency transactions?

When trading securities are sold,the amount of the realized gain or loss is the selling price of the securities relative to the most recent fair value reflected in the financial statements.

Pooling of interests method for accounting for business combinations has been criticized because it tends to allow recording of acquisitions

The parent company's investment account would include an element which is representative of

A minority active investment is accounted for by the

An investment of 30% of a company's voting shares must be accounted for using the equity method.

Bond investments made to generate trading gains are classified as

Under IFRS,nonmarketable equity securities whose fair value can be determined are included in the trading portfolio.

The Economic and Institutional Setting for Financial Reporting

Accrual Accounting and Income Determination

Additional Topics in Income Determination

Structure of the Balance Sheet and Statement of Cash Flows

Essentials of Financial Statement Analysis

The Role of Financial Information in Valuation and Credit Risk Assessment

The Role of Financial Information in Contracting

Receivables

Inventories

Long-Lived Assets

Financial Instruments As Liabilities

Financial Reporting for Leases

Income Tax Reporting

Pensions and Postretirement Benefits

Financial Reporting for Owners Equity

Statement of Cash Flows

Filters