ca_exm_fa4_2011-06 - CGA-CANADA FINANCIAL ACCOUNTING:...

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EFA4J11 ©CGA-Canada, 2011 Page 1 of 9 CGA-CANADA FINANCIAL ACCOUNTING: CONSOLIDATIONS & ADVANCED ISSUES [FA4] EXAMINATION June 2011 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. 8. Assume companies apply new CICA Handbook sections related to Business Combinations; that is, sections 1582, 1601, and 1602. 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 January 1, 2010, PAR Ltd. purchased 60% of SUB Ltd. for $240,000. The carrying amount of SUB’s identifiable net assets was $400,000. During 2010 SUB reported net earnings of $70,000 and paid dividends of $25,000. PAR has been using the cost method to account for its investment in SUB, but on December 31, 2010, management wants to change to the equity method. What amount should PAR add to its “Investment in SUB Ltd.” account to make this change? 1) $17,000 2) $27,000 3) $42,000 4) $45,000 b. Declan Ltd. has income before tax of $100,000 for the year ended December 31, 2010. Included in the company’s 2010 expenses were $10,000 in non-deductible golf club fees and pension expense of $62,000. The company made a $54,000 contribution to its defined benefit pension plan during 2010. Capital cost allowance was equal to depreciation expense in 2010. Declan’s enacted tax rate at December 31, 2010 was 25%. What is Declan’s current income tax expense for 2010? 1) $25,000 2) $27,500 3) $29,500 4) $43,000 Continued. ..
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EFA4J11 ©CGA-Canada, 2011 Page 2 of 9 c. The fair value of AL Inc.’s available-for-sale investments increased by $35,000 during the year ended December 31, 2010. These investments were still held by AL at December 31, 2010. How will the gain be reflected on the financial statements for the year ended December 31, 2010? 1) A gain on the income statement 2) An adjustment to retained earnings 3) An increase in cash 4) A gain in other comprehensive income Note: Use the following information to answer parts (d) and (e). Cheung Ltd. paid $7,452 to purchase 6,000 stock options on the shares of Schultze Inc.
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ca_exm_fa4_2011-06 - CGA-CANADA FINANCIAL ACCOUNTING:...

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