ca_exm_fa4_2006-09 - CGA-CANADA FINANCIAL ACCOUNTING 4...

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EFA4S06 ©CGA-Canada, 2006 Page 1 of 12 CGA-CANADA FINANCIAL ACCOUNTING 4 EXAMINATION September 2006 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 requested. 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 a. FarmSafe is a not-for-profit organization involved in educating farmers how to cope with crop disease outbreaks. During the past year, it received $500,000 of unrestricted donations plus pledges of $100,000, of which 70% is expected to be collected. Which of the following should be reported on FarmSafe’s financial statements for the year? 1) $500,000 donation revenue 2) $570,000 donation revenue 3) $600,000 donation revenue 4) $600,000 donation revenue and $30,000 bad debt expense b. Which of the following is an acceptable way for a not-for-profit organization to account for a donation of $50,000 that is restricted for the purchase of office equipment, assuming the restricted fund method of accounting for contributions is used? 1) Revenues in the operating fund 2) Deferred revenues in the capital fund 3) Revenues in the capital fund 4) Direct increase in net assets in the capital fund c. Which of the following is a more authoritative source of GAAP in Canada? 1) Accounting guideline issued by the Accounting Standards Board of CICA 2) Abstract issued by the Emerging Issues Committee of CICA 3) Exposure draft issued by the Accounting Standards Board of CICA 4) Pronouncement issued by the Financial Accounting Standards Board in the United States Continued. ..
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EFA4S06 ©CGA-Canada, 2006 Page 2 of 12 Note: Use the following information to answer parts (d) and (e). KAM Communications Inc. is a Canadian public company with its head office located in Kamloops, B.C. Its common shares are listed on both the Toronto and Frankfurt stock exchanges. KAM has a wholly-owned subsidiary in Germany. The subsidiary uses accounting principles consistent with Canadian GAAP except for 1 item. It sets up a reserve account for the cost of expected future maintenance by debiting maintenance expense and crediting reserve for maintenance, a liability. The maintenance expense is reported on the income statement and is deductible for income tax purposes in Germany. Under
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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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ca_exm_fa4_2006-09 - CGA-CANADA FINANCIAL ACCOUNTING 4...

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