Fa4m08 - CGA-CANADA FINANCIAL ACCOUNTING CONSOLIDATIONS ADVANCED ISSUES[FA4 EXAMINATION March 2008 Marks Time 4 Hours Notes 1 2 3 4 5 6 7 All

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EFA4M08 ©CGA-Canada, 2008 Page 1 of 9 CGA-CANADA FINANCIAL ACCOUNTING: CONSOLIDATIONS & ADVANCED ISSUES [FA4] EXAMINATION March 2008 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. In 2004, an 80%-owned subsidiary sold land to the parent at a gain of $50,000. The parent still owns this land at the end of 2007. Which of the following consolidation adjustments is appropriate for the 2007 consolidated financial statements? 1) Decrease gain on sale of land by $50,000 2) Decrease non-controlling interest on the income statement by $10,000 3) Increase non-controlling interest on the balance sheet by $10,000 4) Decrease land by $50,000 b. An acquired entity has a long-term operating lease for an office building used for central management. The terms of the lease are very favourable relative to current market rates. However, the lease prohibits subleasing or any other transfer of rights. How should the acquiring firm report the value assigned to the lease contract in its consolidated financial statements? 1) As a part of goodwill 2) As an intangible asset separate from goodwill 3) As a lease expense 4) As a fair value adjustment to the building c. On January 1, 2005, SIP Ltd. issued 100,000 cumulative preferred shares for $1,000,000. The dividend rate on the preferred shares is $0.50 per share per year. No dividends were declared on the preferred shares until December 31, 2007 when a total of $500,000 was declared and paid to common and preferred shareholders. PIL Inc. owns 80% of SIP’s common shares but none of their preferred shares. What amount of SIP’s 2007 dividends will be received by PIL? 1) $280,000 2) $320,000 3) $360,000 4) $400,000 Continued. ..
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EFA4M08 ©CGA-Canada, 2008 Page 2 of 9 d. What is the effect of reclassifying preferred shares with a mandatory redemption requirement from equity to noncurrent liabilities? 1)
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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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Fa4m08 - CGA-CANADA FINANCIAL ACCOUNTING CONSOLIDATIONS ADVANCED ISSUES[FA4 EXAMINATION March 2008 Marks Time 4 Hours Notes 1 2 3 4 5 6 7 All

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