Questions and Answers of International Financial Reporting And Analysis

Cinnamon, Inc. recorded a total deferred tax asset in Year 3 of $$12$,301, off set by a $$12$,301 valuation allowance. Cinnamon most likely:A . fully utilized the deferred tax asset in Year 3.B .
A reduction in the statutory tax rate would m ost likely benefi t the company’s:A . income statement and balance sheet.B . income statement but not the balance sheet.C . balance sheet but not the
If the valuation allowance had been the same in Year 3 as it was in Year 2, the company would have reported $115 h igher:A . net income.B . deferred tax assets.C . income tax expense.
Compared to the provision for income taxes in Year 3, the company’s cash tax payments were:A . lower.B . higher.C . the same.
In Year 3, the company’s net income (loss) was c losest to:A . ($217,000).B . ($329,000).C . ($556,000).
Th e $357,000 adjustment in Year 3 m ost likely resulted in:A . an increase in deferred tax assets.B . an increase in deferred tax liabilities.C . no change to deferred tax assets and liabilities.
A company issues $1,000,000 face value of 10-year bonds on January 1, 2015 when the market interest rate on bonds of comparable risk and terms is 5%. Th e bonds pay 6% interest annually on December
Midland Brands issues three-year bonds dated January 1, 2015 with a face value of $5,000,000. Th e market interest rate on bonds of comparable risk and term is 3%. If the bonds pay 2.5% annually on
A fi rm issues a bond with a coupon rate of 5.00% when the market interest rate is 5.50% on bonds of comparable risk and terms. One year later, the market interest rate increases to 6.00%. Based on
A company issues €10,000,000 face value of 10-year bonds dated January 1, 2015 when the market interest rate on bonds of comparable risk and terms is 6%. Th e bonds pay 7% interest annually on
A company issues $30,000,000 face value of fi ve-year bonds dated January 1, 2015 when the market interest rate on bonds of comparable risk and terms is 5%. Th e bonds pay 4% interest annually on
Lesp Industries issues fi ve-year bonds dated January 1, 2015 with a face value of $$2$,000, 000 and 3% coupon rate paid annually on December 31. Th e market interest rate on bonds of comparable
For a bond issued at a premium, using the eff ective interest rate method, the:A . carrying amount increases each year.B . amortization of the premium increases each year.C . premium is evenly
Comte Industries issues $3,000,000 worth of three-year bonds dated January 1, 2015.Th e bonds pay interest of 5.5% annually on December 31. Th e market interest rate on bonds of comparable risk and
A company redeems $$1$,000,000 face value bonds with a carrying value of $$990$,000. If the call price is 104 the company will:A . reduce bonds payable by $$1$,000,000.B . recognize a loss on
Which of the following is an example of an affi rmative debt covenant? Th e borrower is:A . prohibited from entering into mergers.B . prevented from issuing excessive additional debt.C . required to
Regarding a company’s debt obligations, which of the following is most likely presented on the balance sheet?A . Eff ective interest rate.B . Maturity dates for debt obligations.C . Th e portion of
Compared with a fi nance lease, an operating lease:A . is similar to renting an asset.B . is equivalent to the purchase of an asset.C . term is for the majority of the economic life of the asset.
Under US GAAP, which of the following would require the lessee to classify a lease as a capital lease?A . Th e term is 60% of the useful life of the asset.B . Th e lease contains an option to
A lessee that enters into a fi nance lease will report the:A . lease payable on its balance sheet.B . full lease payment on its income statement.C . full lease payment as an operating cash fl ow.
A company enters into a fi nance lease agreement to acquire the use of an asset for three years with lease payments of €19,000,000 starting next year. Th e leased asset has a fair market value of
Which of the following best describes reporting and disclosure requirements for a company that enters into an operating lease as the lessee? Th e operating lease obligation is:A . reported as a
Th e following presents selected fi nancial information for a company:Th e fi nancial leverage ratio is closest to:A . 0.113.B . 0.277.C . 2.452. Short-term borrowing Current portion of long-term
An analyst evaluating three industrial companies calculates the following ratios:Th e company with both the lowest fi nancial leverage and the greatest ability to meet interest payments is:A .
An analyst evaluating a company’s solvency gathers the following information:Th e company’s debt-to-assets ratio is closest to:A . 0.18.B . 0.27.C . 0.37. Short-term interest-bearing debt $
Th e following information is associated with a company that off ers its employees a defi ned benefi t plan:Based on this information, the company’s balance sheet will present a net pension:A .
In contrast to earnings quality, fi nancial reporting quality most likely pertains to:A . sustainable earnings.B . relevant information.C . adequate return on investment.
Earnings that result from non-recurring activities most likely indicate:A . lower-quality earnings.B . biased accounting choices.C . lower-quality fi nancial reporting.
Which attribute of fi nancial reports would most likely be evaluated as optimal in the fi nancial reporting spectrum?A . Conservative accounting choices B . Sustainable and adequate returns C .
When earnings are increased by deferring research and development (R&D) investments until the next reporting period, this choice is considered:A . non-compliant accounting.B . earnings management as
A high-quality fi nancial report may refl ect:A . earnings smoothing.B . low earnings quality.C . understatement of asset impairment.
Which of the following is most likely to be considered a potential benefi t of accounting conservatism?A . A reduction in litigation costs B . Less biased fi nancial reporting C . An increase in
Which of the following concerns would most likely motivate a manager to make conservative accounting choices?A . Attention to future career opportunities B . Expected weakening in the business
Which of the following conditions best explains why a company’s manager would obtain legal, accounting, and board level approval prior to issuing low-quality fi nancial reports?A . Motivation B .
Which of the following situations represents a motivation, rather than an opportunity, to issue low-quality fi nancial reports?A . Poor internal controls B . Search for a personal bonus C .
Which technique most likely increases the cash fl ow provided by operations?A . Stretching the accounts payable credit period B . Applying all non-cash discount amortization against interest
An analyst reviewing a fi rm with a large reported restructuring charge to earnings should:A . view expenses reported in prior years as overstated.B . disregard it because it is solely related to
In 2018, if Cinnamon is deemed to have control over Cambridge, it will most likely account for its investment in Cambridge using:A. the equity method.B. the acquisition method.C. proportionate
At December 31, 2018, Cinnamon’s total shareholders’ equity on its balance sheet would most likely be:A. highest if Cinnamon is deemed to have control of Cambridge.B. independent of the
In 2018, Cinnamon’s net profi t margin would be highest if:A. it is deemed to have control of Cambridge.B. it had not increased its stake in Cambridge.C. it is deemed to have signifi cant infl
At December 31, 2018, assuming control and recognition of goodwill, Cinnamon’s reported debt to equity ratio will most likely be highest if it accounts for its investment in Cambridge using the:A.
Compared to Cinnamon’s operating margin in 2017, if it is deemed to have control of Cambridge, its operating margin in 2018 will most likely be:A. lower.B. higher.C. the same.
At December 31, 2018, Zimt’s total assets balance would most likely be:A. highest if Zimt is deemed to have control of Oxbow.B. highest if Zimt is deemed to have signifi cant infl uence over
Based on Gelblum’s estimates, if Zimt is deemed to have signifi cant infl uence over Oxbow, its 2018 net income (in € millions) would be closest to:A. €75.B. €109.C. €143.
Based on Gelblum’s estimates, if Zimt is deemed to have joint control of Oxbow, and Zimt uses the proportionate consolidation method, its December 31, 2018 total liabilities(in € millions) will
Based on Gelblum’s estimates, if Zimt is deemed to have control over Oxbow, its 2018 consolidated sales (in € millions) will be closest to:A. €1,700.B. €2,375.C. €3,050.
Based on Gelblum’s estimates, Zimt’s net income in 2018 will most likely be:A. highest if Zimt is deemed to have control of Oxbow.B. highest if Zimt is deemed to have signifi cant infl uence over
Th e balance sheet carrying value of Confabulated’s investment portfolio (in € thousands) at December 31, 2018 is closest to:A. 112,000.B. 115,000.C. 118,000.
Th e balance sheet carrying value of Confabulated’s investment portfolio at December 31, 2018 would have been higher if which of the securities had been reclassifi ed as FVPL security?A. Bugle.B.
Compared to Confabulated’s reported interest income in 2018, if Dumas had been classifi ed as FVPL, the interest income would have been:A. lower.B. the same.C. higher.
Based on Ohalin’s estimates, the amount of joint venture revenue (in $ millions) included on BetterCare’s consolidated 2018 fi nancial statements should be closest to:A. $0.B. $715.C. $1,430.
Based on Ohalin’s estimates, the amount of the joint venture’s December 31, 2018 total assets (in $ millions) that will be included on Supreme Healthcare’s consolidated fi nancial statements
Based on Ohalin’s estimates, the amount of joint venture shareholders’ equity at December 31, 2018 included on the consolidated fi nancial statements of each venturer will most likely be:A.
If Supreme Healthcare sells its receivables to the SPE, its consolidated fi nancial results will most likely show:A. a higher revenue for 2018.B. the same cash balance at December 31, 2018.C. the
NinMount’s current ratio on December 31, 2018 most likely will be highest if the results of the acquisition are reported using:A. the equity method.B. consolidation with full goodwill.C.
NinMount’s long-term debt to equity ratio on December 31, 2018 most likely will be lowest if the results of the acquisition are reported using:A. the equity method.B. consolidation with full
Based on Byron’s forecast, if NinMount deems it has acquired control of Boswell, Nin-Mount’s consolidated 2019 depreciation and amortization expense (in £ millions) will be closest to:A. 102.B.
Based on Byron’s forecast, NinMount’s net profi t margin for 2019 most likely will be highest if the results of the acquisition are reported using:A. the equity method.B. consolidation with full
Based on Byron’s forecast, NinMount’s 2019 return on beginning equity most likely will be the same under:A. either of the consolidations, but diff erent under the equity method.B. the equity
Based on Byron’s forecast, NinMount’s 2019 total asset turnover ratio on beginning assets under the equity method is most likely:A. lower than if the results are reported using consolidation.B.
Th e carrying value reported on the balance sheet of Topmaker’s investment in Blanca’s debt securities at December 31, 2018 is:A. $10,940,000.B. $11,000,000.C. $12,000,000.
Based on Exhibit 1 and Blanca’s plans to borrow against its fi nancial receivables, the consolidated balance sheet will show total assets of:A. $50,000,000.B. $140,000,000.C. $150,000,000.
Topmaker’s infl uence on Rainer’s business activities can be best described as:A. signifi cant.B. controlling.C. shared control.
Based on Exhibit 2, the goodwill included in Topmaker’s purchase of Rainer is:A. $21 million.B. $60 million.C. $99 million.
Based on Exhibit 2, the carrying value of Topmaker’s investment in Rainer at the end of 2018 is closest to:A. $282 million.B. $317 million.C. $321 million.
Which of the following statements regarding the sale of inventory by Rainer to Topmaker is correct?A. Th e sale represents a downstream sale.B. Topmaker’s unrealized profi ts are initially
Based on Exhibit 3, Topmaker’s impairment loss under IFRS is:A. $120 million.B. $300 million.C. $400 million.
Th e value of the minority interest at the acquisition date of January 1, 2020 is:A. $300 million.B. $400 million.C. $500 million.
Which of the following best describes the role of fi nancial statement analysis?A. To provide information about a company’s performance.B. To provide information about a company’s changes in fi
Th e role of fi nancial statement analysis is best described as:A. providing information useful for making investment decisions.B. evaluating a company for the purpose of making economic decisions.C.
A company’s profi tability for a period would b est be evaluated using the:A. balance sheet.B. income statement.C. statement of cash fl ows.
Th e fi nancial statement that presents a shareholder’s residual claim on assets is the:A. balance sheet.B. income statement.C. cash fl ow statement.
A company’s profi tability over a period of time is b est evaluated using the:A. balance sheet.B. income statement.C. cash fl ow statement.
Th e income statement is b est used to evaluate a company’s:A. fi nancial position.B. sources of cash fl ow.C. fi nancial results from business activities.
Which of the following best describes why the notes that accompany the fi nancial statements are required? Th e notes:A. permit fl exibility in statement preparation.B. standardize fi nancial
An auditor determines that a company’s fi nancial statements are prepared in accordance with applicable accounting standards except with respect to inventory reporting. Th is exception is most
An independent audit report is m ost likely to provide:A. absolute assurance about the accuracy of the fi nancial statements.B. reasonable assurance that the fi nancial statements are fairly
Interim fi nancial reports released by a company are m ost likely to be:A. monthly.B. unaudited.C. unqualifi ed.
Which of the following sources of information used by analysts is found outside a company’s annual report?A. Auditor’s report.B. Peer company analysis.C. Management’s discussion and analysis.
Which phase in the fi nancial statement analysis framework is most likely to involve producing updated reports and recommendations?A. Follow-up.B. Analyze/interpret the processed data.C. Develop and
A company previously expensed the incremental costs of obtaining a contract. All else being equal, adopting the May 2014 IASB and FASB converged accounting standards on revenue recognition makes the
A company chooses to change an accounting policy. The is change requires that, if practical, the company restate its financial statements for:A. all prior periods.B. current and future periods.C.
For its fi scal year-end, Calvan Water Corporation (CWC) reported net income of $$12$ million and a weighted average of 2,000,000 common shares outstanding. Th e company paid $$800$,000 in
A company with no debt or convertible securities issued publicly traded common stock three times during the current fi scal year. Under both IFRS and US GAAP, the company’s:A . basic EPS equals its
Laurelli Builders (LB) reported the following fi nancial data for year-end December 31:Which statement about the calculation of LB’s EPS is most accurate?A . LB’s basic EPS is $1.12.B . LB’s
For its fiscal year-end, Sublyme Corporation reported net income of $$200$ million and a weighted average of 50,000,000 common shares outstanding. There are 2,000,000 convertible preferred shares
When calculating diluted EPS, which of the following securities in the capital structure increases the weighted average number of common shares outstanding without aff ecting net income available to
Which statement is m ost accurate? A common-size income statement:A . restates each line item of the income statement as a percentage of net income.B . allows an analyst to conduct cross-sectional
Selected year-end fi nancial statement data for Workhard are shown below.Workhard’s comprehensive income for the year:A . is $$18$ million.B . is increased by the derivatives accounted for as
When preparing an income statement, which of the following items would most likely be classifi ed as other comprehensive income?A . A foreign currency translation adjustment.B . An unrealized gain on
Equity equals:A. Assets − Liabilities.B. Liabilities − Assets.C. Assets + Liabilities.
Shareholders’ equity reported on the balance sheet is m ost likely to differ from the market value of shareholders’ equity because:A. historical cost basis is used for all assets and
Th e information provided by a balance sheet item is limited because of uncertainty regarding:A. measurement of its cost or value with reliability.B. the change in current value following the end of
Which of the following is most likely classified as a current liability?A. Payment received for a product due to be delivered at least one year after the balance sheet date.B. Payments for
The most likely company to use a liquidity-based balance sheet presentation is a:A. bank.B. computer manufacturer holding inventories.C. software company with trade receivables and payables.
The most likely costs included in both the cost of inventory and property, plant, and equipment are:A. selling costs.B. storage costs.C. delivery costs.
An example of a contra asset account is:A . depreciation expense.B . sales returns and allowances.C . allowance for doubtful accounts.
A company has total liabilities of £35 million and total stockholders’ equity of £55 million.Total liabilities are represented on a vertical common-size balance sheet by a percentage closest to:A
Using the information presented in Exhibit 4, the quick ratio for SAP Group at 31 December 2017 is closest to:A . 1.00.B . 1.07.C . 1.17.
Using the information presented in Exhibit 14, the fi nancial leverage ratio for SAP Group at December 31, 2017 is c losest to:A . 1.50.B . 1.66.C . 2.00.

Showing 100 - 200 of 363