fa4j08 - CGA-CANADA FINANCIAL ACCOUNTING: CONSOLIDATIONS...

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EFA4J08 ©CGA-Canada, 2008 Page 1 of 9 CGA-CANADA FINANCIAL ACCOUNTING: CONSOLIDATIONS & ADVANCED ISSUES [FA4] EXAMINATION June 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. FIT Ltd. owned 20% of SAT Company for several years but did not have significant influence over SAT. FIT recently purchased an additional 10% of SAT and now has significant influence. How will this change be reported by FIT? 1) A cumulative effect of an accounting change is shown in the current income statement. 2) A cumulative effect of an accounting change is shown in the statement of retained earnings. 3) The equity method should be used starting from the date of the additional 10% acquisition. 4) Consolidated financial statements should be used starting from the date of the 10% acquisition. b. Which of the following best describes why a company would use the cost method rather than the equity method to record its investment in a non-wholly owned subsidiary? 1) It results in the same net income and retained earnings as the consolidated financial statements. 2) It is simpler and less costly to use. 3) It is required by the CICA Handbook . 4) It always presents more net income than the equity method. c. BOY Ltd. purchased the outstanding common shares of MAN Inc. in 3 steps, as follows: i) 60% on January 2, 2007 ii) 20% on July 1, 2007 iii) 10% on September 30, 2007 What is the non-controlling shareholders’ percentage ownership in MAN at December 31, 2007? 1) 10% 2) 20% 3) 60% 4) 90% Continued. ..
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EFA4J08 ©CGA-Canada, 2008 Page 2 of 9 d. Which of the following factors is not a required condition for a not-for-profit organization to record a contribution of materials in the financial statements? 1) The fair value of the materials can be reasonably estimated. 2) The materials are used in the normal course of the organization’s operations. 3)
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fa4j08 - CGA-CANADA FINANCIAL ACCOUNTING: CONSOLIDATIONS...

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