Question 1

Fish Corp. purchases a $100,000 face value bond which matures in two years. The coupon rate is 6% and the market rate is 6%. What is the premium or discount?

Accepted Answer

A) $0 
B) $1,808 
C) $98,192 
D) $100,000 
A) $0 
B) $1,808 
C) $98,192 
D) $100,000

Question 2

Amacon Corporation has the following investments at December 31, 2012:   If Amacon classifies its investment in DEF as available for sale, what amount will be reported in income for the three months ended December 31, 2012?

Accepted Answer

A) $0 
B) $3,000 loss 
C) $3,000 gain 
D) $5,000 gain 
A) $0 
B) $3,000 loss 
C) $3,000 gain 
D) $5,000 gain

Question 3

Which of the following statements is true about the equity method of accounting?

Accepted Answer

A) This method is used when the investor has no influence over the associate. 
B) This method is a condensed consolidation that shows the investor's share of the net assets and net income of the investee. 
C) This method record dividends from the associate as income from operations. 
D) This method has the same accounting impact as the amortized cost method. 
A) This method is used when the investor has no influence over the associate. 
B) This method is a condensed consolidation that shows the investor's share of the net assets and net income of the investee. 
C) This method record dividends from the associate as income from operations. 
D) This method has the same accounting impact as the amortized cost method.

Question 4

Amacon Corporation has the following investments at December 31, 2012:   If Amacon classifies its investment in Daisy as available for sale, what amount will be reported in other comprehensive income at September 30, 2012?

Accepted Answer

A) $1,500 gain 
B) $1,500 loss 
C) $3,000 gain 
D) $19,500 
A) $1,500 gain 
B) $1,500 loss 
C) $3,000 gain 
D) $19,500

Question 5

Explain the difference between a joint arrangement, joint control, joint operation and a joint venture.

Accepted Answer

A joint arrangement is a contractual arr

Question 6

Which statement is not correct about the equity method?

Accepted Answer

A) The investment account on the balance sheet equals the original cost plus the investor's share of the investee's post-acquisition changes in net assets. 
B) This method results in reflecting two legal entities as one economic unit for financial reporting purposes. 
C) Income is recognized equal to the investor's share of the investee's net income. 
D) Dividends from the investee are deducted from the investor's investment account. 
A) The investment account on the balance sheet equals the original cost plus the investor's share of the investee's post-acquisition changes in net assets. 
B) This method results in reflecting two legal entities as one economic unit for financial reporting purposes. 
C) Income is recognized equal to the investor's share of the investee's net income. 
D) Dividends from the investee are deducted from the investor's investment account.

Question 7

Philips has a 50% joint operation interest in Josef. Based on the following information, what amount will be presented for net income on Philips' proportionately consolidated income statement?

Accepted Answer

A) $200 
B) $550 
C) $750 
D) $1,150 
A) $200 
B) $550 
C) $750 
D) $1,150

Question 8

When there is no specific trading intention, what should an investment be classified as?

Accepted Answer

A) Held to maturity. 
B) Available for sale. 
C) Loans and receivables. 
D) Associate. 
A) Held to maturity. 
B) Available for sale. 
C) Loans and receivables. 
D) Associate.

Question 9

A bond has a maturity value of $500,000 payable in 3 years. These bonds have a 5% coupon rate payable annually, and the market yield was 2% when the bonds were purchased. How much will be recorded for the bond purchase (rounded)?

Accepted Answer

A) $43,257 
B) $543,257 
C) $500,000 
D) $500,001 
A) $43,257 
B) $543,257 
C) $500,000 
D) $500,001

Question 10

Which statement is correct about non-strategic investments?

Accepted Answer

A) IFRS carries AFS investments at fair value with only unrealized losses going to net income. 
B) ASPE carries AFS investments at fair value with only unrealized losses going to net income. 
C) IFRS carries AFS investments at fair value with unrealized gains and losses going to OCI. 
D) ASPE carries AFS investments at fair value with unrealized gains and losses going to OCI. 
A) IFRS carries AFS investments at fair value with only unrealized losses going to net income. 
B) ASPE carries AFS investments at fair value with only unrealized losses going to net income. 
C) IFRS carries AFS investments at fair value with unrealized gains and losses going to OCI. 
D) ASPE carries AFS investments at fair value with unrealized gains and losses going to OCI.

Question 11

Sheila Investment Company (SIC)began operations on January 1, 2012. It acquired the following investments:   SIC earned interest of $12,000 during 2012. Dividends of $16,000 were declared on the shares it owned during 2012. Of that amount, $9,000 was received in December 2012 and $7,000 was received in January 2013 (note that the ex-dividend date for these shares was prior to the end of the year). At what value would SIC's shares be recorded at in the balance sheet on December 31, 2012?

Accepted Answer

A) $145,000 
B) $136,000 
C) $129,000 
D) $115,000 
A) $145,000 
B) $136,000 
C) $129,000 
D) $115,000

Question 12

For financial reporting purposes, financial assets can be put into one of eight categories: subsidiaries, joint ventures, associates, held for trading, available for sale, held to maturity, joint operations, and loans and receivables. For each of the following items, identify the possible categories into which it can be placed. More than one category is possible for an item.

Accepted Answer

The answer of For financial reporting purposes, financial assets can...

Question 13

What factor is not important in classifying an investment as held for trading?

Accepted Answer

A) Whether the instrument is a debt, equity or derivative instrument. 
B) Whether the instrument has a set maturity date. 
C) What the intentions of management are. 
D) Whether the instrument generates dividends. 
A) Whether the instrument is a debt, equity or derivative instrument. 
B) Whether the instrument has a set maturity date. 
C) What the intentions of management are. 
D) Whether the instrument generates dividends.

Question 14

On January 1, 2013, a company pays $100,000 to purchase 100 Government of Canada bonds that have a maturity date of December 31, 2017 and an interest rate of 5%. At December 31, 2013, the bonds had a quoted price of $1,022 per bond.
Fill in the attached table assuming
a. Intention to trade
b. No Intention to trade

Accepted Answer

The answer of On January 1, 2013, a company pays...

Question 15

Which statement is correct about financial instruments?

Accepted Answer

A) A contract whose value changes according to a specified variable, requires little or no initial investment and is settled at a future date. 
B) A contract that gives the holder the residual interest in an entity after deducting all of its liabilities. 
C) Any contract that gives rise to a financial asset for one entity and a financial liability or equity instrument for another entity. 
D) Any contract that entitles the holder to joint interest in an entity after deducting all of its liabilities. 
A) A contract whose value changes according to a specified variable, requires little or no initial investment and is settled at a future date. 
B) A contract that gives the holder the residual interest in an entity after deducting all of its liabilities. 
C) Any contract that gives rise to a financial asset for one entity and a financial liability or equity instrument for another entity. 
D) Any contract that entitles the holder to joint interest in an entity after deducting all of its liabilities.

Question 16

Based on the following information, what amount will be presented for "equity" on the consolidated balance sheet of Investor for its wholly owned subsidiary?

Accepted Answer

A) $100 
B) $300 
C) $600 
D) $700 
A) $100 
B) $300 
C) $600 
D) $700

Question 17

Which statement is not correct about "associates"?

Accepted Answer

A) Holding 18% of the voting power of the investee may mean significant influence exists. 
B) The ability to exercise significant influence over the investee mitigates moral hazard. 
C) The ability to exercise significant influence over the investee mitigates adverse selection. 
D) Significant influence is not presumed if 20% of the voting power of the investee is held. 
A) Holding 18% of the voting power of the investee may mean significant influence exists. 
B) The ability to exercise significant influence over the investee mitigates moral hazard. 
C) The ability to exercise significant influence over the investee mitigates adverse selection. 
D) Significant influence is not presumed if 20% of the voting power of the investee is held.

Question 18

On January 1, 2011, Anny Marine Supplies purchased a Government of Canada bond at par for $12,000. The bond has an interest rate of 7% and matures in three years. By December 31, 2011, market interest rates had increased such that the fair value of the bond decreased to $11,600. The fair value of the bond decreased further to $11,200 on December 31, 2012 (two years after purchase).
Required:
Assume that Anny classifies the investment as held to maturity.
a. At what value should Anny report the bond on its December 31, 2011 balance sheet?
b. How much income or loss should Anny report in 2011 in relation to this bond?
c. How much other comprehensive income (OCI)should Anny report in 2011 in relation to this bond?

Accepted Answer

a. Anny should report the held-to-maturi

Question 19

Explain the difference between a joint arrangement, joint control, joint operation and a joint venture. Explain how each type of investment is accounted for under IFRS.

Accepted Answer

A joint arrangement is a contractual arr

Question 20

Super Control Group has the following investments:
   a)Explain how these investments will be classified and accounted for.
b)How much income will be recorded in 2012 by Super Group for its investment in VWX?
c)How much income will be recorded in 2012 by Super Group for its investment in ABC?

Accepted Answer

a)
 @#IMG-DLM&_TB2820_00 b)Super will record 80% o

Fish Corp. purchases a $100,000 face value bond which matures in two years. The coupon rate is 6% and the market rate is 6%. What is the premium or discount?

Amacon Corporation has the following investments at December 31, 2012: If Amacon classifies its investment in DEF as available for sale, what amount will be reported in income for the three months ended December 31, 2012?

Which of the following statements is true about the equity method of accounting?

Amacon Corporation has the following investments at December 31, 2012: If Amacon classifies its investment in Daisy as available for sale, what amount will be reported in other comprehensive income at September 30, 2012?

Explain the difference between a joint arrangement, joint control, joint operation and a joint venture.

Which statement is not correct about the equity method?

Philips has a 50% joint operation interest in Josef. Based on the following information, what amount will be presented for net income on Philips' proportionately consolidated income statement?

When there is no specific trading intention, what should an investment be classified as?

A bond has a maturity value of $500,000 payable in 3 years. These bonds have a 5% coupon rate payable annually, and the market yield was 2% when the bonds were purchased. How much will be recorded for the bond purchase (rounded)?

Which statement is correct about non-strategic investments?

What factor is not important in classifying an investment as held for trading?

Which statement is correct about financial instruments?

Based on the following information, what amount will be presented for "equity" on the consolidated balance sheet of Investor for its wholly owned subsidiary?

Which statement is not correct about "associates"?

Explain the difference between a joint arrangement, joint control, joint operation and a joint venture. Explain how each type of investment is accounted for under IFRS.

Super Control Group has the following investments: a)Explain how these investments will be classified and accounted for. b)How much income will be recorded in 2012 by Super Group for its investment in VWX? c)How much income will be recorded in 2012 by Super Group for its investment in ABC?

Fundamentals of Financial Accounting Theory

Conceptual Frameworks for Financial Reporting

Accrual Accounting

Revenue Recognition

Cash and Receivables

Inventories

Property, Plant, and Equipment

Intangible Assets, Goodwill, Mineral Resources, and Government Grants

Applications of Fair Value to Non-Current Assets

Filters

Exam 7: Financial Assets

Fish Corp. purchases a $100,000 face value bond which matures in two years. The coupon rate is 6% and the market rate is 6%. What is the premium or discount?

Amacon Corporation has the following investments at December 31, 2012: If Amacon classifies its investment in DEF as available for sale, what amount will be reported in income for the three months ended December 31, 2012?

Which of the following statements is true about the equity method of accounting?

Amacon Corporation has the following investments at December 31, 2012: If Amacon classifies its investment in Daisy as available for sale, what amount will be reported in other comprehensive income at September 30, 2012?

Explain the difference between a joint arrangement, joint control, joint operation and a joint venture.

Which statement is not correct about the equity method?

Philips has a 50% joint operation interest in Josef. Based on the following information, what amount will be presented for net income on Philips' proportionately consolidated income statement?

When there is no specific trading intention, what should an investment be classified as?

A bond has a maturity value of $500,000 payable in 3 years. These bonds have a 5% coupon rate payable annually, and the market yield was 2% when the bonds were purchased. How much will be recorded for the bond purchase (rounded)?

Which statement is correct about non-strategic investments?

What factor is not important in classifying an investment as held for trading?

Which statement is correct about financial instruments?

Based on the following information, what amount will be presented for "equity" on the consolidated balance sheet of Investor for its wholly owned subsidiary?

Which statement is not correct about "associates"?

Explain the difference between a joint arrangement, joint control, joint operation and a joint venture. Explain how each type of investment is accounted for under IFRS.

Super Control Group has the following investments: a)Explain how these investments will be classified and accounted for. b)How much income will be recorded in 2012 by Super Group for its investment in VWX? c)How much income will be recorded in 2012 by Super Group for its investment in ABC?

Fundamentals of Financial Accounting Theory

Conceptual Frameworks for Financial Reporting

Accrual Accounting

Revenue Recognition

Cash and Receivables

Inventories

Property, Plant, and Equipment

Intangible Assets, Goodwill, Mineral Resources, and Government Grants

Applications of Fair Value to Non-Current Assets

Filters