International Accounting 4th Edition

In what countries would one expect auditing standards to evolve based on the needs perceived by the auditing profession? A. Code law countries B. Members of the European Union C. Countries that follow common law D. Countries with strong accounting laws Answer: C. C. C. How does UK GAAP differ from IFRS with respect to goodwill?

Under U.S. GAAP, when new debt is issued for old debt: A. extinguishment costs are deferred and amortized over the term of the new debt. B. debt extinguishment costs are expensed as incurred. C. modification costs are amortized over the term of the old debt. D. old debt is not extinguished and

Which of the following is the role of a performance evaluation system in a multinational corporation? A. Monitor organizational effectiveness B. Identify areas that need improvement C. Assess how well division managers are doing D. All of the above Answer: D. D. D. In hedge accounting, which of the following exposure should be hedged by foreign

Which is NOT a common risk associated with local authorities' scrutiny of a company's transfer prices? A. Potential double taxation B. Uncertainty as to the group's worldwide tax burden C. Problems in relationships with local tax authorities D. Discovery of a tax treaty violation Answer: D. D. D. When a unit of a multinational corporation creates

What must large Japanese corporations report for years ending after 2004 due to recent amendments to the Japanese commercial code? A. Statement of changes in financial position B. Consolidated financial statements C. Retained earnings statement D. Cash flow statement Answer: B. B. B. What is the term used for intercompany transactions from a subsidiary to a

What is the basis for Morgan Stanley Dean Witter's "Apples to Apples" system for financial statement analysis? A. Adjustments needed to compare companies within a single country B. Adjustments needed to compare international companies within specific industries C. Adjustments needed to compare companies in specific countries to U.S. companies D. Adjustments needed

What is one thing that few companies tend to report on in their corporate social report disclosures? A. International disaster response B. The risk of legal action or business disruptions caused by climate issues C. The level of GHG reduction D. Community involvement Answer: B. B. B. The subsidiary of a U.S. corporation located in Country

What does G3 represent? A. An annual summit of countries committed to the reduction of GHGs B. The third type of GHG C. The United States, Canada and Mexico D. The third generation of the GRI's Sustainability Reporting Guidelines Answer: D. D. D. Under FASB ASC 830, Foreign Currency Matters, when the current rate method is

Under what condition does the IRS consider the resale price method acceptable as a transfer price? A. The subsidiary is a foreign controlled corporation. B. The related party is merely a distributor of finished goods. C. The divisions are part of a decentralized organization. D. There is no market price upon which

Blanco Chemical Company spent 15,000,000 in development efforts to create a fertilizer for which it was able to obtain a patent; however, the expected distribution costs make it infeasible to market the chemical in the foreseeable future. According to IAS 38 (Intangible Assets), how should Blanco Chemical Company record the

What is an advance pricing agreement? A. A transfer price that is negotiated between two divisions of a decentralized organization B. A transfer pricing method accepted by the IRS before an intercompany transaction is completed C. A contract between a parent company and a foreign subsidiary to complete a transaction at a

Auditors in the United Kingdom often include disclaimers of liability in their audit reports. According to the U.S. Securities and Exchange Commission, how effective is this approach to limiting civil liabilities? A. It will have no effect when included in the financial statements of U.S. companies. B. It effectively caps

Which of the following is NOT a factor influencing the probability that an auditor will detect an accounting error? A. Competence of the auditor B. Quality review and monitoring C. Financial reporting requirements D. Independence of the auditor Answer: D. D. D. Which of the following statements is true about applying the arm's-length standard for transfer

Why must the two-transaction perspective be used for recording foreign currency transactions under U.S. GAAP? A. The two-transaction perspective is required under IFRS. B. U.S. GAAP requires conservatism in financial reporting. C. All other methods are excessively complicated to use and therefore obscure the essence of the transaction. D. Management made two

What is the likely outcome of using performance measures that subsidiary managers perceive to be unachievable? A. Frustrated managers B. Diligent attention to operational efficiency C. Success D. Optimal decision-making Answer: A. A. A. What is another name by which corporate social reporting (CSR) is also known? A. Corporate integrity reporting B. Environmental, Social, and Governance

Which of the following statements is true about U.S. taxation of foreign subsidiaries? A. The U.S. income taxes income generated by subsidiaries incorporated in foreign countries. B. U.S. multinationals do not pay tax on their worldwide income if incorporated in the U.S. C. Transfer pricing will eliminate taxes by the U.S.

In following the international norm concerning tax jurisdiction, how would double taxation be eliminated? A. The subsidiary's home country would allow tax credits for taxes paid to the parent's home country. B. The parent company's home country would allow tax credits for taxes paid to the subsidiary's home country. C. The

The balanced scorecard includes non-financial measures of performance with the financial measures of performance traditionally used. Which of the following are included in the balanced scorecard? A. Customer satisfaction B. Internal business processes C. Innovation and learning D. All of the above Answer: D. D. D. Amazing Corporation, a U.S. enterprise, sold product to a customer

What is a key objective of a company's performance evaluation system? A. To determine how much to pay executives in bonuses and other compensation B. To ensure that the domestic and foreign operations are achieving their objectives C. To control foreign subsidiaries D. To assess the effect of foreign exchange rates on

Johnson Ltd. determined that the net present value of an investment in technological improvements at its plant in France would be 10,000,000 if pending litigation was resolved in the company's favor and would be 2,000,000 if the courts ruled against the company. Johnson's attorneys in France assessed the probability of

Privatization of Mexican businesses has been encouraged by: A. North American Free Trade Agreement (NAFTA). B. governmental attempts to improve long-term economic growth. C. loosening restrictions on foreign investment. D. All of the above Answer: D. D. D. What would be a logical first step that should be taken to restate foreign financial statements to conform

Which of the following statements is true about international transfer pricing? A. It is a violation of the Foreign Corrupt Practices Act. B. It is accomplished using guidelines set up by the FASB. C. It can be used to minimize the amount of worldwide taxes. D. It cannot be regulated by countries.

The Canadian Institute of Chartered Accountants (CICA) has taken a principles-based approach to auditor independence, whereas the Federation des Experts Comptables Europeens (FEE) has taken a conceptual approach. What is the difference? A. The principles-based approach has been effective, but the conceptual approach has not. B. The principles-based approach offers

Which of the following should NOT be included in implementing performance evaluation systems? A. Feedback and review B. Fair and achievable measures C. Understandability D. Changing systems annually Answer: D. D. D. How is a foreign subsidiary different from a foreign branch of a domestic corporation? A. Subsidiaries always generate more foreign source income than

According to legitimacy theory, corporate social reports: A. capture the impact of culture on the annual reports. B. is a means to deal with a firm's exposure to political, economic, and social pressures. C. is in response to the stakeholders demand for environmental and social information. D. should not vary country wise

What is a "greenfield" investment? A. Farm land held for speculation B. Foreign direct investment whereby a new facility is constructed abroad C. Purchasing an existing facility as a foreign direct investment D. A foreign investment that has been approved by the Environmental Protection Agency Answer: B. B. B. Which of the following is done when

Under IFRS 2, with respect to choice-of-settlement share-based payments, if the supplier chooses the cash settlement, the entity is deemed to have issued a compound financial instrument consisting of debt and equity. When cash is received, how does the supplier applies it? A. Only against the equity portion B. Apportioned

Under FASB ASC 830, Foreign Currency Matters, what group is responsible for determining the functional currency of a foreign subsidiary for many cases? A. Financial Accounting Standards Board B. International Accounting Standards Board C. Securities and Exchange Commission D. Parent company management Answer: D. D. D. Why is the validity and reliability of financial disclosures of