CGA Exams - CGA-CANADA FINANCIAL ACCOUNTING 4 EXAMINATION...

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EFA4S05 ©CGA-Canada, 2005 Page 1 of 9 CGA-CANADA FINANCIAL ACCOUNTING 4 EXAMINATION September 2005 Marks Time: 4 Hours Notes: 1. All calculations must be shown in an orderly manner to obtain part marks. 2. Round all calculations to the nearest dollar. 3. Narratives for journal entries are not required unless specifically asked for. 4. Assume a December 31 fiscal year-end unless specifically stated otherwise. 5. Assume all amounts are material unless directed otherwise. 6. Assume all companies are public companies unless otherwise noted. 7. Assume no companies use differential reporting unless otherwise noted. 30 Question 1 Select the best answer for each of the following unrelated items. Answer each of these items in your examination booklet by giving the number of your choice. For example, if the best answer for item (a) is (1), write (a)(1) in your examination booklet. If more than one answer is given for an item, that item will not be marked. Incorrect answers will be marked as zero. Marks will not be awarded for explanations. Note: 2 marks each Note: Use the following information to answer parts (a) and (b). On January 1, 2004, PL Ltd. purchased 25% of the outstanding common shares of SK Inc. and thereby obtained significant influence over the policy decisions of SK. On September 1, 2004, PL purchased another 35% of SK’s outstanding common shares and thereby obtained control over the policy decisions of SK. PL accounts for this investment using the cost method and reported net income of $300,000. SK reported net income of $120,000 for the year ended December 31, 2004. This income was earned evenly throughout the year. Neither company paid any dividends during the year. a. What is consolidated net income for the year ended December 31, 2004? 1) $324,000 2) $334,000 3) $344,000 4) $372,000 b. When preparing the consolidated balance sheet as at December 31, 2004, how should noncontrolling interest be calculated? 1) By taking 75% of SK’s income for the first 8 months of the year 2) By taking 65% of SK’s income for the last 4 months of the year 3) By taking 40% of SK’s income for the last 4 months of the year 4) By taking 40% of SK’s shareholders’ equity at the end of the year Continued. ..
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EFA4S05 ©CGA-Canada, 2005 Page 2 of 9 c. The International Accounting Standards Board (IASB) has issued more than 40 accounting standards. Which of the following statements is false with respect to these standards? 1) These standards focus on harmonization. 2) Member countries must comply with these standards. 3) Some of the standards allow a choice in accounting methods as long as the chosen method is disclosed. 4) These standards often represent little more than a compilation of the acceptable accounting alternatives from the majority of member countries. Note:
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This note was uploaded on 05/08/2010 for the course BUSINESS AIT 707 taught by Professor Raminrezaeinia during the Spring '09 term at Seneca.

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CGA Exams - CGA-CANADA FINANCIAL ACCOUNTING 4 EXAMINATION...

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