fa4j05 - CGA-CANADA FINANCIAL ACCOUNTING 4 EXAMINATION June...

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EFA4J05 ©CGA-Canada, 2005 Page 1 of 11 CGA-CANADA FINANCIAL ACCOUNTING 4 EXAMINATION June 2005 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. Stewardship reporting can be distinguished from reporting on performance evaluation. Which of the following relates to reporting on resource allocation decisions regarding performance evaluation, rather than stewardship reporting? 1) Providing evidence that managers have performed their duties in a responsible manner 2) Providing evidence on how managers have improved the firm and its earnings 3) Circulating and obtaining approval of corporate financial statements at the annual meeting 4) Reporting compliance with bank covenants b. An executive of BK Company recently requested that her company’s capital assets be written up to fair value. In explaining to her the appropriate treatment under generally accepted accounting principles (GAAP), which of the following concepts would not be useful? 1) Historical cost principle 2) Conservatism 3) Consistency 4) Going concern c. XL Company acquired 70% of the shares of QP Limited. Under generally accepted accounting principles, 100% of XL’s net book value should be combined with which of the following? 1) 70% of QP’s net book value and 70% of QP’s fair value increments 2) 70% of QP’s net book value and 100% of QP’s fair value increments 3) 100% of QP’s net book value and 100% of QP’s fair value increments 4) 100% of QP’s net book value and 70% of QP’s fair value increments Continued. ..
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EFA4J05 ©CGA-Canada, 2005 Page 2 of 11 Note: Use the following information to answer parts (d) and (e). BC Company began operations on January 1, 2003, and acquired $400,000 of furniture and fixtures on that day. It is amortizing the furniture and fixtures on a straight-line basis over 8 years (20% CCA rate for income tax purposes, subject to the half-year rule). BC also received tax exempt dividends of $15,000 from a related company and paid $8,000 in non-deductible golf membership dues.
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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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fa4j05 - CGA-CANADA FINANCIAL ACCOUNTING 4 EXAMINATION June...

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