fa4m02 - CGA-CANADA FINANCIAL ACCOUNTING 4 EXAMINATION...

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EFA4M02 ©CGA-Canada, 2002 Page 1 of 9 CGA-CANADA FINANCIAL ACCOUNTING 4 EXAMINATION March 2002 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. 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), then 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. One of the key qualitative characteristics of financial information provided by financial statements is reliability. Which of the following statements is most indicative of reliable financial information? 1) It provides feedback on the past. 2) It is consistent from year to year. 3) It is neutral. 4) It helps assess management stewardship. b. What is the preferred method of reporting convertible bonds for financial statement purposes, assuming that sufficient information is available to preparers? 1) The predominant component approach 2) The proportional approach 3) The incremental approach 4) Any method, as long as it is accompanied by full disclosure c. If the substance of cumulative preferred shares indicates that they are debt instruments, and the dividends are in arrears, how should the dividends be accounted for? 1) They should be accrued each year and included in the statement of retained earnings. 2) They should be accrued and included in the statement of retained earnings, but only if declared. 3) They should be accrued each year and included in the income statement. 4) They should be accrued and included in the income statement, but only if declared. Continued. ..
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EFA4M02 ©CGA-Canada, 2002 Page 2 of 9 d. LJ, a public company, purchased a capital asset for $12,000 on January 1, 2000. For accounting purposes, the asset is amortized over 6 years on a straight-line basis with a residual value of zero. For tax purposes, CCA has been deducted at a 30% declining balance, with one-half deductible in the year of acquisition. As of December 31, 2002, under CICA Handbook requirements, this capital asset would give rise to which of the following? 1) A taxable temporary difference of $1,002 2) A deductible temporary difference of $1,002 3) A taxable temporary difference of $142 4) A deductible temporary difference of $142 Note: Use the following information to answer parts (e) and (f). HL paid $40,000 to acquire 20% of the outstanding common shares of DK on January 1, 2002. DK’s net
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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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fa4m02 - CGA-CANADA FINANCIAL ACCOUNTING 4 EXAMINATION...

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