A U.S. company has many foreign subsidiaries and wants to convert its consolidated
financial statements from U.S. GAAP to IFRS. Which of the following items is not one
of the likely accounting issues to resolve for the opening IFRS balance sheet?
A.Inventory valuation.
B.Capitalizing development costs.
C.Classifying deferred taxes as current or noncurrent.
D.Acquisition value for a subsidiary.
E.Liability for restructuring charges.
Cleary, Wasser, and Nolan formed a partnership on January 1, 2012, with investments
of $100,000, $150,000, and $200,000, respectively. For division of income, they agreed
to (1) interest of 10% of the beginning capital balance each year, (2) annual
compensation of $10,000 to Wasser, and (3) sharing the remainder of the income or loss
in a ratio of 20% for Cleary, and 40% each for Wasser and Nolan. Net income was
$150,000 in 2012 and $180,000 in 2013. Each partner withdrew $1,000 for personal use
every month during 2012 and 2013.
What was Nolan’s capital balance at the end of 2013?
A.$139,420.
B.$246,000.
C.$276,540.
D.$279,440.
E.$304,040.
Which one of the following forms is used when no other form is prescribed?
A.S-4.
B.S-3.
C.S-11.
D.S-8.
E.S-1.
Which of the following are not authoritative pronouncements of International Financial
Reporting Standards (IFRSs)?
1) International Financial Reporting Standards issued by the IASB
2) International Accounting Standards issued by the IASC and adopted by the IASB
3) Interpretations originated by the International Financial Reporting Interpretations
Committee (IFRIC)
4) U.S. Generally Accepted Accounting Principles
A.4 only.
B.3 and 4
C.1, 3, and 4
D.2, 3, and 4
E.1, 2, 3, and 4
A U.S. company has many foreign subsidiaries and wants to convert its consolidated
financial statements from U.S. GAAP to IFRS. Which of the following items is not one
of the likely accounting issues to resolve for the opening IFRS balance sheet?
A.Measuring asset impairment.
B.Classifying extraordinary items.
C.Sale and leaseback gain recognition.
D.Measuring salaries expense.
Stinespring Company was founded in 2012. It acquired $35,000 cash by issuing stock
to investors and an additional $20,000 cash by borrowing from creditors. During 2012 it
received $15,000 cash revenues and paid $22,000 in cash expenses. The company then
went out of business.
Required:
a) Explain the term, “business liquidation.”
b) What amount of cash should Stinespring Company have had on hand immediately
before going out of business?
c) What amount of cash will Stinespring’s creditors receive?
d) What amount of cash will Stinespring’s stockholders receive?
The Ruiz Corporation, which owns a chain of specialty shops, has recently begun to
accept credit cards. On March 1, 2014, Ruiz made a credit card sale of $5,200 to a
customer. The credit card company charges a fee of 3%.
Which of the following is not an advantage of accepting credit cards from retail
customers?
A.The acceptance of credit cards tends to increase sales.
B.There are fees charged for the privilege of accepting credit cards.
C.The credit card company performs credit worthiness assessments.
D.The credit card company assumes the cost of slow collections and write-offs.
The following information pertains to inventory held by a company on December 31,
2013.
As a result of inventory loss, what is the difference in income between reporting using
U.S. GAAP and IFRS?
A.U.S. GAAP income is $3,000 higher.
B.U.S. GAAP income is $10,000 lower.
C.IFRS income is $8,400 higher.
D.IFRS income is $3,000 lower.
E.IFRS income is $5,400 higher.
What is Form 10-K?
A.a quarterly report filed with the SEC.
B.an annual report filed with the SEC.
C.a semiannual report filed with the SEC.
D.a form filed with the SEC before the company issues stock for the first time.
E. a form filed with the SEC before issuing stocks to acquire another company.
Which statement is false regarding the acceptance and confirmation of a reorganization
plan?
A.The plan must be voted on by the creditors and the stockholders of the company.
B.A separate vote is required of each class of stockholders.
C.Any class of creditors that is not damaged by a reorganization is assumed to have
accepted the plan without voting.
D.Even if creditors and stockholders approve of the plan, the court can reject the plan.
E.Acceptance of the plan requires the approval of two-thirds in number of claims and
one-half in dollar amount of creditors that cast votes.
Information required in proxy statements includes all except which of the following?
A.listing of company directors and executive officers.
B.description of the business activities including principal products and sources and
availability of raw materials.
C.market price of the company’s common stock for each quarterly period within the two
most recent fiscal years.
D.five-year summary of operations including sales, total assets, income from continuing
operations, and cash dividends per share.
E. two-year summary of industry segments, export sales, and foreign and domestic
operations.
What are the four different ways IFRS can be used by a country?
What are the four interconnected goals that the SEC has tried to achieve?
Hampton Company is trying to decide whether to seek liquidation or reorganization.
Hampton has provided the following balance sheet:
Additional information is as follows:
– The investments are currently worth $13,000.
– It is estimated that $32,000 of the accounts receivable are collectible.
– The inventory can be sold for $74,000.
– The prepaid expenses and the intangible assets have no net realizable value.
– The land and building are currently valued at $250,000.
– The equipment can be sold for $60,000.
– Administrative expenses (not yet recorded) are estimated to be $12,500.
– Accrued expenses include $17,000 of salaries payable ($11,000 to one employee and
$3,000 each to two other employees).
– Accrued expenses include $7,000 of unpaid payroll taxes.
Compute the amount of assets available for unsecured creditors after payment of
liabilities with priority.
Indicate how each event affects the elements of financial statements. Use the following
letters to record your answer in the box shown below each element. You do not need to
enter amounts.
Rodriguez Co. borrowed $20,000 cash from Century Bank.
Why does each country have its own unique set of financial reporting practices?