fa4s07 - CGA-CANADA FINANCIAL ACCOUNTING 4 EXAMINATION...

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EFA4S07 ©CGA-Canada, 2007 Page 1 of 9 CGA-CANADA FINANCIAL ACCOUNTING 4 EXAMINATION September 2007 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. Which of the following statements related to consolidated net income is true? 1) Consolidated net income will be different depending on whether the parent company uses the cost method or equity method on its separate entity financial statements. 2) Consolidated net income is equal to the parent’s separate entity net income calculated under the cost method. 3) Consolidated net income will be the same regardless of whether or not the subsidiary declares a dividend during the year. 4) Consolidated net income decreases when the parent company pays a dividend. b. Under current GAAP, the parent company theory is normally used when consolidating a non-wholly owned subsidiary. Which of the following values would be included in the consolidated balance sheet at the date of acquisition if the entity theory (as proposed in the exposure draft on Business Combinations) were adopted? 1) Book values of parent and book values of subsidiary 2) Book values of parent and fair values of subsidiary 3) Fair values of parent and book values of subsidiary 4) Fair values of parent and fair values of subsidiary c. Which of the following statements related to foreign exchange gains/losses is false ? 1) Exchange gains/losses do not occur for items translated at the historical rate. 2) Exchange gains/losses on unhedged monetary assets and liabilities are reported in income. 3) Exchange gains/losses on translation of integrated foreign operations are reported in income. 4) Exchange gains/losses on forward exchange contracts accounted for as fair value hedges are reported in other comprehensive income. Continued. ..
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EFA4S07 ©CGA-Canada, 2007 Page 2 of 9 d. AB Co. owns a 40% interest in JV Ltd., a joint venture. Information for these 2 entities for the year ended July 31, 2007 is as follows: AB Co. JV Ltd. Accounts receivable
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fa4s07 - CGA-CANADA FINANCIAL ACCOUNTING 4 EXAMINATION...

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