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fa4s03 - CGA-CANADA FINANCIAL ACCOUNTING 4 EXAMINATION...

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CGA-CANADA FINANCIAL ACCOUNTING 4 EXAMINATION September 2003 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. 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 (1) is the best answer for item (a), 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. No account will be taken of any explanations you offer. Note: 2 marks each a. Section 1701 of the CICA Handbook , on Segment Disclosures, requires that public companies disclose certain information about operating segments and their major customers. Which of the following financial statement concepts can be used to support this practice? 1) Economic entity concept 2) Historical cost measurement assumption 3) Reliability 4) Full disclosure principle b. Which of the following is an objective of financial reporting from the perspective of the preparer? 1) Cash flow prediction 2) Contract compliance 3) Performance evaluation 4) Income tax deferral c. On January 1, 2000, Bronze Corporation acquired 90% of the common shares of Diamond Inc. for $1,000,000. The fair value of Diamond’s net identifiable assets was $800,000 on the date of acquisition. Neither Bronze nor Diamond had any goodwill recorded on their separate entity financial statements on the date of acquisition. The value of Diamond’s goodwill has increased by 10% per year since 2000. If Diamond adopted push-down accounting, what value would be reported for goodwill on its balance sheet at December 31, 2002? 1) $ 0 2) $200,000 3) $280,000 4) $372,680 Continued... EFA4S03 ©CGA-Canada, 2003 Page 1 of 9
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d. Which of the following reporting objectives for not-for-profit organizations is consistent with users determining whether restricted funds were spent in accordance with the intended purpose? 1) Cash flow prediction 2) Stewardship 3) Performance evaluation 4) Measuring the cost of services rendered e. Which of the following statements is true about the use of GAAP in financial reporting? 1) A public company incorporated under the Canada Business Corporations Act can use U.S. dollars as the unit of measurement for its general purpose financial statements. 2) The CICA Handbook section on differential reporting allows a qualifying private company to report an investment in a wholly owned subsidiary at market value.
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