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Unformatted text preview: EFA4D01 CGA-Canada, 2001 Page 1 of 9 CGA-CANADA FINANCIAL ACCOUNTING 4 EXAMINATION December 2001 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. PER owns 60% of the common shares of SAM and 80% of the cumulative preferred shares of SAM. SAM reported income of $1,000,000 and paid dividends of $800,000, of which $200,000 went to the common shareholders and $600,000 went to the preferred shareholders. The dividend to the preferred shareholders included $150,000 for the current year and $450,000 for 3 years in arrears. How much income should PER recognize for its investment in preferred shares of SAM under the equity method? 1) $120,000 2) $360,000 3) $480,000 4) $800,000 b. PAR owns 60% of the voting shares of BAR and 15% of the voting shares of CAR. BAR owns 70% of the voting shares of CAR. Which of the following represents the appropriate accounting treatment for PARs investment in BAR and CAR? Investment in BAR CAR 1) Equity Cost 2) Consolidation Cost 3) Consolidation Equity 4) Consolidation Consolidation Continued... EFA4D01 CGA-Canada, 2001 Page 2 of 9 c. Which of the following financial statement concepts primarily supports the preparation of consolidated financial statements? 1) Reliability 2) Relevance 3) Unit-of-measure assumption 4) Matching principle d. Which of the following objectives of financial reporting applies to a not-for-profit organization but does not apply to a profit-oriented company? 1) To predict the entitys ability to generate cash flows 2) To predict the entitys ability to meet its obligations 3) To appraise managements ability to use assets and comply with contracts 4) To assess the efficiency and effectiveness of operations e. Queens College, a not-for-profit organization, received $100,000 cash from an alumnus. The donor specified that the money was to be used to buy some land on which the organization plans to build a new campus. How should the $100,000 contribution be accounted for, assuming that Queens College uses the deferral method?...
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