ca_exm_fa3_2009-12 - CGA-CANADA FINANCIAL ACCOUNTING:...

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EFA3D09 ©CGA-Canada, 2009 Page 1 of 6 CGA-CANADA FINANCIAL ACCOUNTING: LIABILITIES & EQUITIES [FA3] EXAMINATION December 2009 Marks Time: 3 Hours Notes: 1. All calculations must be shown in an orderly manner to obtain part marks. 2. Round all calculations to the nearest dollar, except for EPS and financial ratios where two decimal places should be used. 3. Unless otherwise indicated, use straight-line amortization. 4. Assume a December 31 fiscal year end for all questions, unless otherwise indicated. 5. If a test of materiality is required, use 5%. 6. Narratives for journal entries are not required. When preparing journal entries, be careful to select account titles that clearly indicate where the item will appear in the financial statements. For example, if something is to be on the income statement, it should be labelled as a revenue, expense, or extraordinary item. 20 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. A company received an investment tax credit on its purchase of a capital asset. How should the investment tax credit be recorded? 1) As a credit to income tax expense 2) As a credit to income tax payable 3) As a credit to the related capital asset 4) As a credit to retained earnings b. Which of the following situations is likely to cause share price to increase? 1) A company changes the useful life of its capital assets 2) A company increases its revenues by obtaining more long-term customers 3) A company changes its warranty liability estimates 4) A company’s cost of operations increases c. RGT Corporation issued $200,000, 10 year, 6% bonds. Interest is payable semi-annually. The market rate at the time of issue was 8%. What proceeds will RGT receive on the bond issue? 1) $172,819 2) $183,778 3) $200,000 4) $232,444 d. Which of the following is not a financial instrument? 1) Inventory 2) Accounts receivable 3) Accounts payable 4) Common shares Continued. ..
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EFA3D09 ©CGA-Canada, 2009 Page 2 of 6 e. When a company issues convertible bonds that are convertible at the issuer’s option into a variable number of shares at some future date, how should the bonds be classified on the balance sheet? 1) Liability 2) Equity 3) Allocated between liability and equity 4) Asset f. A company contracts to deliver 200 common shares of Investco Ltd., a public company, for $50 per share in 90 days. The transaction takes place through a broker and the company is required to have cash on hand for any potential margins. This is an example of what type of derivative? 1) Option
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This note was uploaded on 06/10/2011 for the course ACCT 1204 taught by Professor Chang during the Spring '11 term at Nanjing University.

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ca_exm_fa3_2009-12 - CGA-CANADA FINANCIAL ACCOUNTING:...

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