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EFA4J06 ©CGA-Canada, 2006 Page 1 of 11 CGA-CANADA FINANCIAL ACCOUNTING 4 EXAMINATION June 2006 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 Note: Use the following information to answer parts (a) and (b). On January 1, 2004, PJ Company acquired 30% of the common shares of SL Company for $510,000. The fair values of SL’s assets equalled book values except for production equipment, which had a fair value of $240,000 in excess of book value and a remaining useful life of 4 years. PJ’s share of goodwill on acquisition totalled $48,000. Goodwill impairment was nil in 2004 and 25% in 2005. For the years 2004 and 2005, SL reported the following: SL Reported 2004 2005 Net income $ 200,000 $ 320,000 Dividends declared and paid 80,000 100,000 a. On January 1, 2004, what was SL’s net book value of shareholders’ equity? 1) $ 900,000 2) $ 1,100,000 3) $ 1,300,000 4) $ 1,500,000 b. If PJ has significant influence over SL, how much investment income would PJ report from its investment in SL for 2005? 1) $30,000 2) $66,000 3) $78,000 4) $96,000 Continued. ..
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EFA4J06 ©CGA-Canada, 2006 Page 2 of 11 c. The CICA Handbook differentiates between primary and other sources of Canadian generally accepted accounting principles (GAAP). Which of the following is not a primary source of Canadian GAAP? 1) Italicized paragraphs of the CICA Handbook 2) Non-italicized paragraphs of the CICA Handbook 3) Accounting Guidelines 4) Financial Accounting Standards Board (FASB) pronouncements d. New standards for comprehensive income are being introduced as part of Canadian GAAP. Which of the following is not true regarding comprehensive income? 1) The introduction of comprehensive income helps to harmonize Canadian and U.S. GAAP. 2) Unrealized gains on available-for-sale financial assets affect comprehensive income. 3)
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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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