Question 1

Under international accounting standards,deferred tax assets and liabilities are classified as

Accepted Answer

A)  neither current or noncurrent but are disclosed in a separate section of the balance sheet.
B)  current and noncurrent.
C)  only current.
D)  only noncurrent. D

Question 2

Under international accounting standards,if a sale-leaseback results in an operating lease then

Accepted Answer

A)  any profit on the original sale is deferred and recognized over the life of the subsequent lease.
B)  any profit on the original sale is not recognized in the financial statements.
C)  any profit on the original sale is deferred and recognized over the life of the leased asset.
D)  assuming the original sale was clearly at fair value, any profit is recognized immediately even when the leaseback results in an operating lease. D

Question 3

The foreign currency translation adjustments amount is a(n)

Accepted Answer

A)  account in the parent company's general ledger.
B)  account in the foreign subsidiary's general ledger.
C)  balancing amount for translation.
D)  balancing amount for remeasurement. A

Question 4

Which of the following is the current group within the International Accounting Standard Board organization that interprets existing standards or provides guidance in areas for which no accounting formal standard exists?

Accepted Answer

A)  Standing Interpretations Committee
B)  International Accounting Standards Committee
C)  Emerging Issues Task Force
D)  International Financial Reporting Interpretations Committee

Question 5

Under international accounting standards,the standard for accounting for construction contracts

Accepted Answer

A)  allows only the completed-contract method.
B)  expresses a preference for the completed-contract method only in some circumstances.
C)  does not allow the completed-contract method.
D)  does not allow the percentage-of-completion method.

Question 6

Current generally accepted accounting principles require that the translation of a foreign subsidiary's accounting records should be accomplished by the

Accepted Answer

A)  monetary/nonmonetary method.
B)  current rate method.
C)  current/noncurrent method.
D)  functional currency method.

Question 7

The measurement of deferred tax liabilities and assets under international accounting standards requires the use of

Accepted Answer

A)  current-year tax rates; use of future-years' tax rates even though enacted is prohibited.
B)  currently-enacted tax rates for future years..
C)  currently-enacted tax rates for future years and future tax rates that have been announced by the government but have not yet been formally enacted into law
D)  tax rates in effect when the temporary difference originated.

Question 8

Sunrise Technological,Inc.,a U.S.multinational producer of computer hardware,has subsidiaries located throughout the world.Sunrise Technology purchased Einstein Technology Company,a Swiss producer of computer hardware components,on January 1,2013.Einstein's financial statements are prepared and submitted in Swiss francs to Sunrise's headquarters.Einstein's adjusted trial balance at December 31,2014,is presented below:
Einstein Technology Company
Adjusted Trial Balance
December 31,2014
(in Swiss Francs)  
Relevant exchange rates for 2014 and 2013 are as follows:
  
The statement of retained earnings for the year ended December 31,2013,is as follows (in U.S.dollars):
  
Required:
Prepare a translated statement of income and retained earnings,and a translated statement of financial position in U.S.dollars for Einstein Technology for 2014.

Accepted Answer

The answer of Sunrise Technological,Inc.,a U.S.multinational producer of computer hardware,has...

Question 9

Which of the following is correct regarding international accounting standards for the impairment of intangible assets?

Accepted Answer

A)  Goodwill impairments may not be reversed.
B)  Goodwill impairments may be reversed.
C)  No impairment losses may be reversed.
D)  A distinction is made between impairment procedures for intangibles with finite and indefinite lives.

Question 10

Spirit Leatherworks,Inc.,purchased Brechner Leather Products,a Canadian company,on January 4,2014.On the date of purchase,the exchange rate for 1 Canadian dollar was U.S.$0.97.Brechner Leather Products balance sheet on the date of purchase is shown below:
Brechner Leather Products
Balance Sheet
January 4,2014
  
Required:
Prepare a translated balance sheet as of January 4,2014.

Accepted Answer

The answer of Spirit Leatherworks,Inc.,purchased Brechner Leather Products,a Canadian company,on...

Question 11

According to FASB ASC Topic 830 (Foreign Currency Matters - Translation of Financial Statements),the appropriate method of restatement from a foreign currency to the U.S.dollar for each of the following is

Accepted Answer

The answer of According to FASB ASC Topic 830 (Foreign...

Question 12

Global Trading Company.converts its foreign subsidiary financial statements using the translation process.The company's Swiss subsidiary reported the following for 2014: revenues and expenses of 13,220,000 and 6,672,000 Swiss francs,respectively,earned or incurred evenly throughout the year,dividends of 2,000,000 Swiss francs were paid during the year.The following exchange rates are available:

Translated net income for 2014 is

Accepted Answer

A)  $891,408.
B)  $809,544.
C)  $1,283,408.
D)  $1,165,544.

Question 13

Under international accounting standards,cash paid for dividends can be shown on the statement of cash flows as

Accepted Answer

A)  a financing activity only.
B)  an investing activity only.
C)  a financing or an operating activity.
D)  should not be shown on the statement of cash flows but rather on the income statement.

Question 14

Which of the following statements most accurately reflects the approach the FASB and IASB have identified for reaching convergence of U.S.and international accounting standards?

Accepted Answer

A)  Convergence will be achieved primarily by modifying FASB standards to conform with IASB standards.
B)  Convergence will be achieved primarily by modifying IASB standards to conform with FASB standards.
C)  FASB and IASB will create new standards rather than trying to eliminate differences between standards that are in need of significant improvement.
D)  FASB and IASB will try to eliminate differences between standards by eliminating differences between existing standards of the two standard-setting bodies that can be easily resolved and will then work jointly on more complex issues.

Question 15

Which of the following is true regarding the accounting for research and development costs under international accounting standards?

Accepted Answer

A)  All research and development costs of any type are expensed.
B)  All ordinary research and development costs are expensed, but development costs related to computer software are capitalized.
C)  All ordinary research and development costs are expensed, but both research and development costs related to computer software are capitalized.
D)  All development costs of any nature are capitalized.

Question 16

Complete the following statement by choosing the best response:
If the functional currency of a foreign subsidiary is the local currency of the country in which the foreign subsidiary operates,then

Accepted Answer

A)  only retained earnings must be remeasured into U.S. dollars.
B)  the foreign subsidiary's financial statements must be remeasured into U.S. dollars.
C)  only the foreign subsidiary's assets and liabilities must be remeasured into U.S. dollars
D)  the foreign subsidiary's financial statements are translated into U.S. dollars.

Question 17

Pilsner Company.converts its foreign subsidiary financial statements using the translation process.The company's subsidiary in the Czech Republic reported the following for 2014: revenues and expenses of 25,000,000 and 18,500,000 koruna,respectively,earned or incurred evenly throughout the year,dividends of 1,500,000 koruna were paid during the year.The following exchange rates are available:

Translated net income for 2014 is

Accepted Answer

A)  $148,500.
B)  $227,500.
C)  $175,000.
D)  $195,000.

Question 18

Which of the following statements is correct?

Accepted Answer

A)  Capital stock of a foreign subsidiary is translated at the historical rate, that is, the rate prevailing on the date the subsidiary was acquired.
B)  Dividends are translated at the average exchange rate for the year.
C)  Retained earnings are translated at the average exchange rate for the year.
D)  Assets and liabilities are translated at the historical rate prevailing when the subsidiary was acquired.

Question 19

Windsor Enterprises,a subsidiary of Kennedy Company based in New York,reported the following information at the end of its first year of operations (all in British pounds): assets--338,000; expenses--360,000; liabilities--101,000; capital stock--80;000,revenues--517,000.Relevant exchange rates are as follows:

As a result of the translation process,what amount is recorded on the financial statements as the translation adjustment?

Accepted Answer

A)  $26,280 debit adjustment
B)  $26,280 credit adjustment
C)  $6,280 credit adjustment
D)  $6,280 debit adjustment

Question 20

Under international accounting standards,cash paid for income taxes (associated with income tax expense)can be shown on the statement of cash flows as an

Accepted Answer

A)  operating activity only.
B)  operating activity, or may be split between operating, investing, and financing activities depending on the nature of the transaction giving rise to the tax payment.
C)  operating activity, or may be split between operating and investing activities depending on the transaction giving rise to the tax payment.
D)  operating activity, or may be split between investing and financing activities depending on the transaction giving rise to the payment.

Exam 22: Accounting in a Global Market