Question 1

The best means of accounting for business combinations in most of the world is

Accepted Answer

A)  by disaggregating data by line of business. 
B)  by disaggregating data by geographic area. 
C)  consolidation of financial information. 
D)  through parent company statements only, except in Anglo-Saxon countries. 
A)  by disaggregating data by line of business. 
B)  by disaggregating data by geographic area. 
C)  consolidation of financial information. 
D)  through parent company statements only, except in Anglo-Saxon countries.

Question 2

The International Accounting Standards Board requires that brands

Accepted Answer

A)  be set up as an asset and amortized over its useful life. 
B)  be set up as an asset but not amortized. 
C)  be written off immediately. 
D)  The IASB has no standard relating to brands. 
A)  be set up as an asset and amortized over its useful life. 
B)  be set up as an asset but not amortized. 
C)  be written off immediately. 
D)  The IASB has no standard relating to brands.

Question 3

According to the 7th Directive of the EU,

Accepted Answer

A)  proportional consolidation is not permitted. 
B)  consolidation can only occur when one firm owns a majority of the shares with voting rights of another company. 
C)  the definition of a group is a good example of a compromise. 
D)  the Germans did not have to make many changes in their consolidation practices. 
A)  proportional consolidation is not permitted. 
B)  consolidation can only occur when one firm owns a majority of the shares with voting rights of another company. 
C)  the definition of a group is a good example of a compromise. 
D)  the Germans did not have to make many changes in their consolidation practices.

Question 4

All of the following are MNE consolidation methods except

Accepted Answer

A)  full consolidation 
B)  proportional consolidation 
C)  equity method 
D)  intangible elimination method 
A)  full consolidation 
B)  proportional consolidation 
C)  equity method 
D)  intangible elimination method

Question 5

In the UK merger accounting means

Accepted Answer

A)  purchase accounting 
B)  joint-venture accounting 
C)  pooling accounting 
D)  goodwill accounting 
A)  purchase accounting 
B)  joint-venture accounting 
C)  pooling accounting 
D)  goodwill accounting

Question 6

Major problems have occurred with joint ventures in Russia, Eastern Europe and China because of the accounting systems.

Accepted Answer

A) True 
 B)False

Question 7

IAS 7

Accepted Answer

A)  encourages the direct method 
B)  requires the direct method 
C)  encourages the indirect method 
D)  requires the indirect method 
A)  encourages the direct method 
B)  requires the direct method 
C)  encourages the indirect method 
D)  requires the indirect method

Question 8

Recognizing goodwill as an asset subject to annual impairment testing

Accepted Answer

A)  is subject to double-accounting 
B)  might have the asset appreciate in value 
C)  argues that goodwill does not always decline on a straight-line basis 
D)  is easy because all other accounts are fair value and therefore goodwill is a plug number 
A)  is subject to double-accounting 
B)  might have the asset appreciate in value 
C)  argues that goodwill does not always decline on a straight-line basis 
D)  is easy because all other accounts are fair value and therefore goodwill is a plug number

Question 9

Which of the following accurately reflects the accounting for non-consolidated subsidiaries in Japan?

Accepted Answer

A)  Cross-holdings of related companies makes it difficult to identify a parent company. 
B)  Japanese companies are not permitted to use the equity method. 
C)  Keiretsu relationships usually have a bank as the major shareholder in related companies. 
D)  Earnings and assets of Japanese companies tend to be overstated due to the inclusion of group members in consolidated financial statements. 
A)  Cross-holdings of related companies makes it difficult to identify a parent company. 
B)  Japanese companies are not permitted to use the equity method. 
C)  Keiretsu relationships usually have a bank as the major shareholder in related companies. 
D)  Earnings and assets of Japanese companies tend to be overstated due to the inclusion of group members in consolidated financial statements.

Question 10

International and US accounting standards recommend the indirect method of cash flow statements.

Accepted Answer

A) True 
 B)False

Question 11

A problem with joint-venture accounting

Accepted Answer

A)  includes an emphasis on a receipts and payments approach 
B)  includes an emphasis on an accruals approach 
C)  is the lack disclosure on contingencies 
D)  is the lack of a definition of what constitutes a joint venture 
A)  includes an emphasis on a receipts and payments approach 
B)  includes an emphasis on an accruals approach 
C)  is the lack disclosure on contingencies 
D)  is the lack of a definition of what constitutes a joint venture

Question 12

AT&T has a 60 percent equity interest in a joint venture with Marubeni Corporation in Japan to develop and market laptop notebook portable computers, notably the Safari notebook. Would you classify this operation as an

Accepted Answer

A)  implementor. 
B)  integrated player. 
C)  local innovator. 
D)  multidomestic operation. 
A)  implementor. 
B)  integrated player. 
C)  local innovator. 
D)  multidomestic operation.

Question 13

No company uses the pooling-of interests consolidation method because it is now prohibited throughout the world by standards.

Accepted Answer

A) True 
 B)False

Question 14

The trend of IASB accounting for combinations is becoming

Accepted Answer

A)  less restrictive 
B)  no trend is present 
C)  dependent on business cycles 
D)  more restrictive 
A)  less restrictive 
B)  no trend is present 
C)  dependent on business cycles 
D)  more restrictive

Question 15

Research and development costs

Accepted Answer

A)  are generally written off immediately to earnings in the United States. 
B)  are typically capitalized and amortized. 
C)  are not very significant due to the lack of R&D being done in the U.S. currently. 
D)  are split into two parts by the IASB. Research costs should be capitalized, whereas development costs should be written off. 
A)  are generally written off immediately to earnings in the United States. 
B)  are typically capitalized and amortized. 
C)  are not very significant due to the lack of R&D being done in the U.S. currently. 
D)  are split into two parts by the IASB. Research costs should be capitalized, whereas development costs should be written off.

Question 16

Cash flow statements

Accepted Answer

A)  are required by the EU 4th Directive. 
B)  are already required by most members of the EU, so it was not necessary to include a requirement for cash flow statements in the 4th Directive. 
C)  are required by IAS 7. 
D)  are not required by IOSCO. 
A)  are required by the EU 4th Directive. 
B)  are already required by most members of the EU, so it was not necessary to include a requirement for cash flow statements in the 4th Directive. 
C)  are required by IAS 7. 
D)  are not required by IOSCO.

Question 17

The MNE disclosure of cash flow statements

Accepted Answer

A)  is decreasing in favor of working capital funds statements 
B)  is increasing over time 
C)  is limited by a lack of a restrictive consolidation standard 
D)  helps the analysis of barter transactions 
A)  is decreasing in favor of working capital funds statements 
B)  is increasing over time 
C)  is limited by a lack of a restrictive consolidation standard 
D)  helps the analysis of barter transactions

Question 18

Analysts

Accepted Answer

A)  do not adjust corporate profits to exclude profit/losses from goodwill 
B)  do not consider the market as efficient 
C)  do not regard intangible accounting as full disclosure 
D)  do adjust corporate profits to exclude profit/losses from goodwill 
A)  do not adjust corporate profits to exclude profit/losses from goodwill 
B)  do not consider the market as efficient 
C)  do not regard intangible accounting as full disclosure 
D)  do adjust corporate profits to exclude profit/losses from goodwill

Question 19

DLT, a German firm, acquired a foreign corporation for a purchase price of $500 million. The book value of the net assets was stated at $350 million, but the fair market value of the net assets is $420 million. Assume the useful life of the goodwill to be 10 years. If the goodwill is systematically amortized over its useful life, what would be the amount per year?

Accepted Answer

A)  $15 million per year 
B)  $8 million per year 
C)  $7 million per year 
D)  Goodwill cannot be systematically amortized in Germany. 
A)  $15 million per year 
B)  $8 million per year 
C)  $7 million per year 
D)  Goodwill cannot be systematically amortized in Germany.

Question 20

With respect to business combinations resulting from mergers and acquisitions,

Accepted Answer

A)  British firms tend to use the purchase method, whereby assets are revalued to "fair values" at the date of acquisition. 
B)  merger accounting (pooling of interests) requires that firms revalue assets to "fair value." 
C)  the purchase method allows the acquiring firm to include prior years' profits from the acquired firm. 
D)  the pooling of interests method is widely used outside of the United States, especially in Japan and other Asian countries. 
A)  British firms tend to use the purchase method, whereby assets are revalued to "fair values" at the date of acquisition. 
B)  merger accounting (pooling of interests) requires that firms revalue assets to "fair value." 
C)  the purchase method allows the acquiring firm to include prior years' profits from the acquired firm. 
D)  the pooling of interests method is widely used outside of the United States, especially in Japan and other Asian countries.

The best means of accounting for business combinations in most of the world is

The International Accounting Standards Board requires that brands

According to the 7th Directive of the EU,

All of the following are MNE consolidation methods except

In the UK merger accounting means

Major problems have occurred with joint ventures in Russia, Eastern Europe and China because of the accounting systems.

IAS 7

Recognizing goodwill as an asset subject to annual impairment testing

Which of the following accurately reflects the accounting for non-consolidated subsidiaries in Japan?

International and US accounting standards recommend the indirect method of cash flow statements.

A problem with joint-venture accounting

AT&T has a 60 percent equity interest in a joint venture with Marubeni Corporation in Japan to develop and market laptop notebook portable computers, notably the Safari notebook. Would you classify this operation as an

No company uses the pooling-of interests consolidation method because it is now prohibited throughout the world by standards.

The trend of IASB accounting for combinations is becoming

Research and development costs

Cash flow statements

The MNE disclosure of cash flow statements

Analysts

With respect to business combinations resulting from mergers and acquisitions,

International Accounting and International Business

International Accounting Patterns, Culture and Development

Comparative International Financial Accounting I

Comparative International Financial Accounting II

International Financial Statement Analysis

International Transparency and Disclosure

International Accounting Standards and Global Convergence

International Segment Reporting

Foreign Currency Transactions and Translation

International Accounting for Price Changes

Corporate Governance and Control of Global Operations

Foreign Exchange Risk Management

International Budgeting and Performance Evaluation

International Auditing Issues

International Taxation Issues

Filters

Exam 8: International Business Combinations, Goodwill and Intangibles

The best means of accounting for business combinations in most of the world is

The International Accounting Standards Board requires that brands

According to the 7th Directive of the EU,

All of the following are MNE consolidation methods except

In the UK merger accounting means

Major problems have occurred with joint ventures in Russia, Eastern Europe and China because of the accounting systems.

IAS 7

Recognizing goodwill as an asset subject to annual impairment testing

Which of the following accurately reflects the accounting for non-consolidated subsidiaries in Japan?

International and US accounting standards recommend the indirect method of cash flow statements.

A problem with joint-venture accounting

AT&T has a 60 percent equity interest in a joint venture with Marubeni Corporation in Japan to develop and market laptop notebook portable computers, notably the Safari notebook. Would you classify this operation as an

No company uses the pooling-of interests consolidation method because it is now prohibited throughout the world by standards.

The trend of IASB accounting for combinations is becoming

Research and development costs

Cash flow statements

The MNE disclosure of cash flow statements

Analysts

With respect to business combinations resulting from mergers and acquisitions,

International Accounting and International Business

International Accounting Patterns, Culture and Development

Comparative International Financial Accounting I

Comparative International Financial Accounting II

International Financial Statement Analysis

International Transparency and Disclosure

International Accounting Standards and Global Convergence

International Segment Reporting

Foreign Currency Transactions and Translation

International Accounting for Price Changes

Corporate Governance and Control of Global Operations

Foreign Exchange Risk Management

International Budgeting and Performance Evaluation

International Auditing Issues

International Taxation Issues

Filters