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fa4d04 - CGA-CANADA FINANCIAL ACCOUNTING 4 EXAMINATION...

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EFA4D04 ©CGA-Canada, 2004 Page 1 of 10 CGA-CANADA FINANCIAL ACCOUNTING 4 EXAMINATION December 2004 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. 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. On which accounting record(s) is the purchase price discrepancy recorded? 1) In the general journal of both the parent and subsidiary companies 2) In the general journal of the parent company and on the consolidated worksheet 3) In the general journal of both the parent and subsidiary companies and on the consolidated worksheet 4) Only on the consolidated worksheet b. What is the most efficient and effective way to document the support for consolidated financial statements? 1) By using one general ledger for the combined activities of both the parent and subsidiary 2) By using a general ledger for the parent and an Excel spreadsheet for the subsidiary 3) By using separate general ledgers for the parent and the subsidiary and using an Excel spreadsheet to combine the trial balances for the two companies 4) By using a general ledger for the subsidiary and an Excel spreadsheet for the parent Continued...
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EFA4D04 ©CGA-Canada, 2004 Page 2 of 10 Note: Use the following information to answer parts (c) through (e). On July 1, 2003, Xeon Co. acquired 100% of the common shares of Yale Inc. for A$1 million (Australian dollars). At that time, the net book value and fair value of Yale’s patent were zero and A$50,000, respectively. The patent had an estimated useful life of 5 years. Exchange rates were as follows: Date Exchange Rate July 1, 2003 A$1 = C$1.10 June 30, 2004 A$1 = C$1.14 Average for year A$1 = C$1.11 c. Assuming that Yale is a self-sustaining subsidiary, what is the portion of the translation adjustment relating to the patent in the Canadian dollar consolidated financial statements for Xeon for the year ended June 30, 2004? 1) $1,500 2) $1,600 3) $1,700 4) $2,000 d. Assuming that Yale is a self-sustaining subsidiary, how will the translation adjustment be reported on the financial statements for the year ended June 30, 2004?
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