Question 1

Under international accounting standards,cash received from interest (associated with interest revenue)can be shown on the statement of cash flows as an

Accepted Answer

A) operating activity only. 
B) operating or financing activity. 
C) operating or investing activity. 
D) investing or financing activity. 
A) operating activity only. 
B) operating or financing activity. 
C) operating or investing activity. 
D) investing or financing activity.

Question 2

Which of the following is NOT a short-term convergence topic that the IASB must address in order to eliminate the reconciliation of accounts prepared under different sets of standards of different countries?

Accepted Answer

A) Segment reporting 
B) Accounting for income taxes 
C) Accounting for impairments of assets 
D) Accounting for research and development costs 
A) Segment reporting 
B) Accounting for income taxes 
C) Accounting for impairments of assets 
D) Accounting for research and development costs

Question 3

The following financial information is for Pasha Company,a non-U.S.firm with shares listed on a U.S.stock exchange:
   
If Pasha Company were following U.S.GAAP,the minority interest would have been classified as a liability instead of as part of stockholders' equity.In addition,minority interest income of $5,000 for the year would have been excluded from the computation of net income.Under U.S.GAAP the investment securities would have been classified as trading securities and the interest on financing of self-constructed assets would have been capitalized rather than expensed.
Prepare reconciliations of Pasha's reported stockholders' equity and net income to U.S.GAAP.

Accepted Answer

The answer of The following financial information is for Pasha...

Question 4

Foreign currency translation adjustments arising from translation of the financial statements of a foreign subsidiary are reported in

Accepted Answer

A) stockholders' equity of the foreign subsidiary. 
B) revenue or expenses of the foreign subsidiary. 
C) consolidated net income of the parent company and the foreign subsidiary. 
D) stockholders' equity of the parent company. 
A) stockholders' equity of the foreign subsidiary. 
B) revenue or expenses of the foreign subsidiary. 
C) consolidated net income of the parent company and the foreign subsidiary. 
D) stockholders' equity of the parent company.

Question 5

Which of the following is correct regarding the treatment of short-term obligations expected to be refinanced?

Accepted Answer

A) If an obligation has actually been refinanced or a firm refinancing agreement is in place by the date financial statements are issued, then reclassify the short-term obligation as long-term 
B) Classify the short-term obligation as long-term if the obligation has been refinanced by the date the financial statements are issued 
C) Classify the short-term obligation as long-term if the obligation has been refinanced by the balance sheet date. 
D) There is no provision for reclassifying short-term obligations expected to refinanced as long-term obligations under international accounting standards. 
A) If an obligation has actually been refinanced or a firm refinancing agreement is in place by the date financial statements are issued, then reclassify the short-term obligation as long-term 
B) Classify the short-term obligation as long-term if the obligation has been refinanced by the date the financial statements are issued 
C) Classify the short-term obligation as long-term if the obligation has been refinanced by the balance sheet date. 
D) There is no provision for reclassifying short-term obligations expected to refinanced as long-term obligations under international accounting standards.

Question 6

Lunes Company,a U.S.company,owns a 100% interest in its subsidiary,Placido,S.A.,located in Italy.Placido,S.A.,began operations on January 1,2014.The subsidiary's operations consist of leasing space in an office building.The building,which cost one million euros,was financed primarily by Italian banks.All revenues and expenses are received and paid in euros.The subsidiary also maintains its accounting records in euros.In light of these facts,management of the U.S.parent has determined that the euro is the functional currency of the subsidiary.
The subsidiary's balance sheet at December 31,2014,and income statement for the year then ended,are presented below,in euros:

The following are relevant exchange rates for the year 2014:
€1 = $1.50 at the beginning of 2014,at which time the common stock
was issued and the land and building were financed by the mortgage.
€1 = $1.55 weighted average for 2014.
€1 = $1.58 at the date the dividends were declared and paid and
the unearned rent was received.
€1 = $1.62 at the end of 2014.
Required:
Prepare in U.S.dollars a balance sheet at December 31,2014,and an income statement for the year then ended.

Accepted Answer

The answer of Lunes Company,a U.S.company,owns a 100% interest in...

Question 7

DeGaulle Enterprises,a subsidiary of Clinton Company based in New York,reported the following information at the end of its first year of operations (all in French francs): assets--4,790,000; expenses--6,500,000; liabilities--2,950,000; capital stock--1,200,000,revenues--7,140,000.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) $1,287 debit adjustment 
B) $1,287 credit adjustment 
C) $6,080 debit adjustment 
D) $6,080 credit adjustment 
A) $1,287 debit adjustment 
B) $1,287 credit adjustment 
C) $6,080 debit adjustment 
D) $6,080 credit adjustment

Question 8

The SEC currently requires foreign companies that list shares on U.S.exchanges to provide

Accepted Answer

A) both complete U.S. GAAP financial statements and a reconciliation of their reported income under non-U.S. GAAP to the reported income under U.S. GAAP. 
B) complete U.S. GAAP financial statements or a reconciliation of their reported income under non-U.S. GAAP to reported income under U.S. GAAP. 
C) only complete U.S. GAAP financial statements; the SEC will not accept under any circumstances only a reconciliation of an entity's reported income under non-U.S. GAAP to reported income under U.S. GAAP. 
D) only a reconciliation of their reported income under non-U.S. GAAP to reported income under U.S. GAAP; the SEC will not accept under any circumstances only a complete set of U.S. GAAP financial statements. 
A) both complete U.S. GAAP financial statements and a reconciliation of their reported income under non-U.S. GAAP to the reported income under U.S. GAAP. 
B) complete U.S. GAAP financial statements or a reconciliation of their reported income under non-U.S. GAAP to reported income under U.S. GAAP. 
C) only complete U.S. GAAP financial statements; the SEC will not accept under any circumstances only a reconciliation of an entity's reported income under non-U.S. GAAP to reported income under U.S. GAAP. 
D) only a reconciliation of their reported income under non-U.S. GAAP to reported income under U.S. GAAP; the SEC will not accept under any circumstances only a complete set of U.S. GAAP financial statements.

Question 9

Which of the following is true regarding the accounting for property,plant,and equipment under international accounting standards?

Accepted Answer

A) Upward revaluations of property, plant, and equipment are not allowed. 
B) The option is available for an entity to adjust upward the carrying value of property, plant, and equipment to fair value. 
C) All entities must adjust upward the carrying value of property, plant, and equipment to fair value. 
D) An entity has the option to adjust upward the carrying value of property, plant, and equipment to fair value, with gains and losses being shown in other comprehensive income. 
A) Upward revaluations of property, plant, and equipment are not allowed. 
B) The option is available for an entity to adjust upward the carrying value of property, plant, and equipment to fair value. 
C) All entities must adjust upward the carrying value of property, plant, and equipment to fair value. 
D) An entity has the option to adjust upward the carrying value of property, plant, and equipment to fair value, with gains and losses being shown in other comprehensive income.

Question 10

Financial information for Pinnacle Enterprises at the end of 2014 is as follows:
   
Relevant exchange rates are as follows:
   
In addition,the computed retained earnings balance from the prior year's translated financial statements is $2,405,000 at the end of 2014.
Prepare a translated trial balance for Pinnacle Enterprises.

Accepted Answer

The answer of Financial information for Pinnacle Enterprises at the...

Question 11

Florence Enterprises,a subsidiary of Verona Company based in New York,reported the following information at the end of its first year of operations (all in euros): assets--1,320,000; expenses--340,000; liabilities--880,000; capital stock--80,000,revenues--400,000.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) $25,200 debit adjustment 
B) $34,800 debit adjustment 
C) $34,800 credit adjustment 
D) $25,200 credit adjustment 
A) $25,200 debit adjustment 
B) $34,800 debit adjustment 
C) $34,800 credit adjustment 
D) $25,200 credit adjustment

Question 12

Which of the following is the primary factor in determining the functional currency of a foreign subsidiary?

Accepted Answer

A) How the costs for the foreign entity's product are determined 
B) The denomination of the foreign entity's financing 
C) The location of the primary sales market that influences the price of the foreign entity's product 
D) Management's assessment of all relevant factors 
A) How the costs for the foreign entity's product are determined 
B) The denomination of the foreign entity's financing 
C) The location of the primary sales market that influences the price of the foreign entity's product 
D) Management's assessment of all relevant factors

Question 13

Under international accounting standards,remote contingent liabilities are

Accepted Answer

A) not disclosed. 
B) not disclosed unless a guarantee arrangement (e.G), cosigning the loan of another party) exists. 
C) disclosed if the amount of the contingent liability is reasonably estimable. 
D) treated the same as reasonable possible contingencies. 
A) not disclosed. 
B) not disclosed unless a guarantee arrangement (e.G), cosigning the loan of another party) exists. 
C) disclosed if the amount of the contingent liability is reasonably estimable. 
D) treated the same as reasonable possible contingencies.

Question 14

A translation adjustment resulting from the translation process is disclosed on the financial statements as

Accepted Answer

A) a separate component of stockholders' equity. 
B) a below-the-line item on the income statement. 
C) an adjustment to retained earnings. 
D) a part of income from operations on the income statement. 
A) a separate component of stockholders' equity. 
B) a below-the-line item on the income statement. 
C) an adjustment to retained earnings. 
D) a part of income from operations on the income statement.

Question 15

The primary purpose of the Security and Exchange Commission's Form 20-F is to

Accepted Answer

A) explain in detail the differences between the internal controls established under the accounting and auditing principles of a foreign country and those of the United States. 
B) determine the fee a foreign company must pay to register its financial statements with the Securities and Exchange Commission. 
C) explain in detail the differences between net income computed under the accounting principles of a foreign country and U.S. GAAP. 
D) explain in detail the differences between total assets measured using the accounting principles of a foreign country and U.S. GAAP. 
A) explain in detail the differences between the internal controls established under the accounting and auditing principles of a foreign country and those of the United States. 
B) determine the fee a foreign company must pay to register its financial statements with the Securities and Exchange Commission. 
C) explain in detail the differences between net income computed under the accounting principles of a foreign country and U.S. GAAP. 
D) explain in detail the differences between total assets measured using the accounting principles of a foreign country and U.S. GAAP.

Question 16

Under international accounting standards,the pension-related asset or liability is recognized on the balance sheet as the

Accepted Answer

A) net amount of the difference between the projected benefit obligation and plan assets and the deferred items (prior service cost, deferred pension gain/loss). 
B) difference between the projected benefit obligation and plan assets. 
C) difference between the accumulated benefit obligation and plan assets. 
D) difference between the vested benefit obligation and plan assets. 
A) net amount of the difference between the projected benefit obligation and plan assets and the deferred items (prior service cost, deferred pension gain/loss). 
B) difference between the projected benefit obligation and plan assets. 
C) difference between the accumulated benefit obligation and plan assets. 
D) difference between the vested benefit obligation and plan assets.

Question 17

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

Accepted Answer

A) Impairment losses cannot be subsequently reversed. 
B) Impairment losses can be subsequently reversed to the extent of the amount of the initial impairment loss. 
C) International accounting standards require a two-step test of impairment of a tangible asset. 
D) Accounting for impairments is not necessary since entities are required under international accounting standards to adjust the values of property, plant, and equipment to fair value at the end of each reporting period for which reports are prepared. 
A) Impairment losses cannot be subsequently reversed. 
B) Impairment losses can be subsequently reversed to the extent of the amount of the initial impairment loss. 
C) International accounting standards require a two-step test of impairment of a tangible asset. 
D) Accounting for impairments is not necessary since entities are required under international accounting standards to adjust the values of property, plant, and equipment to fair value at the end of each reporting period for which reports are prepared.

Question 18

Finnish Company converts its foreign subsidiary financial statements using the translation process.The company's subsidiary in Denmark reported the following for 2014: revenues and expenses of 95,000 and 63,000 kroner,respectively,earned or incurred evenly throughout the year,dividends of 43,000 kroner were paid during the year.The following exchange rates are available:
 
Translated net income for 2014 is

Accepted Answer

A) $86,400. 
B) $96,000. 
C) $(29,700). 
D) $(28,500). 
A) $86,400. 
B) $96,000. 
C) $(29,700). 
D) $(28,500).

Question 19

Which of the following is true regarding the application of lower-of-cost-or-market method under international accounting standards?

Accepted Answer

A) No lower-of-cost-or-market rule for inventory exists under international accounting standards. 
B) Inventory is recorded at the lower-of-cost-or-market value (defined as replacement cost of the inventory). 
C) Inventory is recorded at the lower-of-cost-or-market value defined as net-realizable value. 
D) Inventory is recorded at the lower-of-cost-or-market value defined as net-realizable value, minus the normal profit margin. 
A) No lower-of-cost-or-market rule for inventory exists under international accounting standards. 
B) Inventory is recorded at the lower-of-cost-or-market value (defined as replacement cost of the inventory). 
C) Inventory is recorded at the lower-of-cost-or-market value defined as net-realizable value. 
D) Inventory is recorded at the lower-of-cost-or-market value defined as net-realizable value, minus the normal profit margin.

Question 20

Under international accounting standards,cash received from dividends (associated with dividend revenue)can be shown on the statement of cash flows as

Accepted Answer

A) an operating or a financing activity 
B) a financing activity only. 
C) a financing or an investing activity. 
D) an investing activity only. 
A) an operating or a financing activity 
B) a financing activity only. 
C) a financing or an investing activity. 
D) an investing activity only.

Under international accounting standards,cash received from interest (associated with interest revenue)can be shown on the statement of cash flows as an

Which of the following is NOT a short-term convergence topic that the IASB must address in order to eliminate the reconciliation of accounts prepared under different sets of standards of different countries?

Foreign currency translation adjustments arising from translation of the financial statements of a foreign subsidiary are reported in

Which of the following is correct regarding the treatment of short-term obligations expected to be refinanced?

The SEC currently requires foreign companies that list shares on U.S.exchanges to provide

Which of the following is true regarding the accounting for property,plant,and equipment under international accounting standards?

Which of the following is the primary factor in determining the functional currency of a foreign subsidiary?

Under international accounting standards,remote contingent liabilities are

A translation adjustment resulting from the translation process is disclosed on the financial statements as

The primary purpose of the Security and Exchange Commission's Form 20-F is to

Under international accounting standards,the pension-related asset or liability is recognized on the balance sheet as the

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

Which of the following is true regarding the application of lower-of-cost-or-market method under international accounting standards?

Under international accounting standards,cash received from dividends (associated with dividend revenue)can be shown on the statement of cash flows as

Financial Reporting

A Review of the Accounting Cycle

The Balance Sheet and Notes to the Financial Statements

The Income Statement

Statement of Cash Flows and Articulation

Earnings Management

The Revenuereceivablescash Cycle

Revenue Recognition

Inventory and Cost of Goods Sold

Investments in Noncurrent Operating Assets-Acquisition

Investments in Noncurrent Operating Assets-Utilization and Retirement

Debt Financing

Equity Financing

Investments in Debt and Equity Securities

Leases

Income Taxes

Employee Compensation-Payroll,pensions, Other Compissues

Earnings Per Share

Derivatives, contingencies, business Segments, and Interim Reports

Accounting Changes and Error Corrections

Statement of Cash Flows Revisited

Analysis of Financial Statements

Filters

Exam 22: Accounting in a Global Market

Under international accounting standards,cash received from interest (associated with interest revenue)can be shown on the statement of cash flows as an

Which of the following is NOT a short-term convergence topic that the IASB must address in order to eliminate the reconciliation of accounts prepared under different sets of standards of different countries?

Foreign currency translation adjustments arising from translation of the financial statements of a foreign subsidiary are reported in

Which of the following is correct regarding the treatment of short-term obligations expected to be refinanced?

The SEC currently requires foreign companies that list shares on U.S.exchanges to provide

Which of the following is true regarding the accounting for property,plant,and equipment under international accounting standards?

Which of the following is the primary factor in determining the functional currency of a foreign subsidiary?

Under international accounting standards,remote contingent liabilities are

A translation adjustment resulting from the translation process is disclosed on the financial statements as

The primary purpose of the Security and Exchange Commission's Form 20-F is to

Under international accounting standards,the pension-related asset or liability is recognized on the balance sheet as the

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

Which of the following is true regarding the application of lower-of-cost-or-market method under international accounting standards?

Under international accounting standards,cash received from dividends (associated with dividend revenue)can be shown on the statement of cash flows as

Financial Reporting

A Review of the Accounting Cycle

The Balance Sheet and Notes to the Financial Statements

The Income Statement

Statement of Cash Flows and Articulation

Earnings Management

The Revenuereceivablescash Cycle

Revenue Recognition

Inventory and Cost of Goods Sold

Investments in Noncurrent Operating Assets-Acquisition

Investments in Noncurrent Operating Assets-Utilization and Retirement

Debt Financing

Equity Financing

Investments in Debt and Equity Securities

Leases

Income Taxes

Employee Compensation-Payroll,pensions, Other Compissues

Earnings Per Share

Derivatives, contingencies, business Segments, and Interim Reports

Accounting Changes and Error Corrections

Statement of Cash Flows Revisited

Analysis of Financial Statements

Filters