I need help with the following accounting questions.
1. When accounting for land transactions, a gain is reported by the ______ ______ of the land, even though the transaction occurred between related parties.
a. original buyer
b. original seller
c. escrow attorney
d. third party
e. parent company
2. The effects on equity of eliminating intercompany profit and losses on assets that remain within the group shall be allocated between the controlling interest and __________ _________ on the basis of their proportionate interest in the selling affiliate.
a. parent company concept
b. economic unit concept
c. proportionate unit company
d. noncontrolling interest
e. investor's interest
3. Safire Corp. recently acquired $500,000 of the bonds of Regency Co., one of its subsidiaries, paying more than the carrying value of the bonds. To whom would the loss probably be attributed?
a. To Regency because the bonds were issued by Regency.
b. The loss should be allocated between Safire and Regency based on the purchase price and the original face value of the debt.
c. The loss should be amortized over the life of the bonds and need not be attributed to either party.
d. The loss should be deferred until it can be determined to whom the attribution can be made.
e. To Safire because Safire is the controlling party in the business combination.
4. Which one of the following characteristics of preferred stock would make the stock resemble a liability?
a. The preferred stock is callable.
b. The preferred stock is convertible.
c. The preferred stock has warrants attached.
d. The preferred stock is noncumulative.
e. The preferred stock is nonparticipating
5. In the variable interest entity with an implied value that exceeds the fair market value of its net assets, how is the difference treated?
a. The difference is treated as Goodwill and must be recorded on the consolidated balance sheet.
b. The difference is treated as an intangible asset and must be recorded and amortized over a period no less than 5 years.
c. The difference is ignored. Since the VIE really has no "cost" associated with it, and Goodwill is only recorded when it is purchased, we would ignore the difference.
d. The difference is written off as an extraordinary loss by the VIE.
e. The difference is written off as an extraordinary loss by the primary beneficiary.
6. Which one of the following items of information are required to be included in interim reports for each operating segment?
a. Revenues from external customers
b. Intersegment Revenues
c. Revenues from internal customers
d. Segment Profit or Loss
e. Total assets, if there has been a material change from the last annual report
7. Which one of the following is a test for identifying operating segments for which separate disclosure is required?
a. Asset test
b. Liability test
c. Expense test
d. Gross profit test
e. Equity test
8. SFAS 14 required a company to disclose the following information for each reportable industry segment, except for
a. Identifiable liabilities
c. Operating profit and loss
d. Capital expenditures
e. Equity in net income from and investment in the net assets of equity investees
9. The foreign exchange rate for the immediate delivery of currencies exchanged is called the
a. Forward rate
b. Historical rate
c. Spot rate
d. Market rate
e. Swap rate
10. The exchange rate at which the option will be executed if the holder decides to exercise the option is the
a. Strike price
b. Intrinsic value
c. Spot rate
d. Forward rate
e. Option price
11. Using a forward contract to hedge a transaction that hasn't taken place yet, but like WILL take place (such as receiving an order for future delivery of goods from a customer) is
a. Not allowed by GAAP
b. Is called a Fair Value Hedge
c. Is called a Cash Flow Hedge
d. Is called a hedge of a firm commitment.
e. Is called a hedge of a future commitment.
12. Which of the following translation methods has as its basic assumption the premise that a company's net investment in a foreign operation is exposed to foreign exchange risk?
a. Current rate method
b. Average rate method
c. Current/Noncurrent method
d. Monetary/Nonmonetary method
e. Temporal method
13. The primary currency of the foreign entity's operating environment is known as the
a. Translation currency
b. Functional currency
c. Reporting currency
d. Temporal currency
e. Prime-Time currency
Chapter 11. Extra Credit Question (2 points)
14. Which is the most common accounting issue that requires adjustment when converting foreign financial statements to GAAP?
a. Pension costs
b. Depreciation and amortization
c. Business compensation
d. Employee compensation
e. Deferred taxes
The solution explains various multiple choice questions in accounting