Questions and Answers of Modern Advanced Accounting

What accounting is made for professional fees incurred during a bankruptcy reorganization?a. They must be expensed immediately.b. They must be capitalized and written off over 180 months or less.c.
Which of the following is not a reorganization item for purposes of reporting a company’s income statement during a Chapter 11 bankruptcy?a. Professional feesb. Interest revenuec. Interest
The New England Company has a debt to a bank of $55,000. The company is being liquidated, and officials believe that between $12,000 and $20,000 will be paid on that debt. According to the
When a company applies the liquidation basis of accounting, what reporting is appropriate for its assets?a. At cost less accumulated depreciationb. At the estimated amount of cash to be receivedc. At
What financial statements must a company report when applying the liquidation basis of accounting?a. Statement of activities and a statement of financial positionb. Income statement and balance
When does the liquidation basis of accounting first have to be applied to financial statements to be viewed as in conformity with U.S. GAAP?a. When an involuntary bankruptcy petition is approved by
Which of the following is the minimum limitation necessary for filing an involuntary bankruptcy petition in connection with a company that has 57 unsecured creditors?a. The signature of 12 creditors
Which of the following is not a liability that has priority in a liquidation?a. Administrative expenses incurred during the liquidationb. Salary payable of $1,250 per person owed to 26 employeesc.
An order for relief creates an automatic stay. This automatic staya. Prohibits creditors from taking action to collect from an insolvent company without court approval.b. Calls for the immediate
An involuntary bankruptcy petition must be filed bya. The insolvent company’s attorney.b. The holders of the insolvent company’s debenture bonds.c. Unsecured creditors with total debts of at
The Jackston Company is to be liquidated as a result of bankruptcy. Until the liquidation occurs, on what basis are its assets reported?a. Present value calculated using an appropriate effective
In a bankruptcy case, which of the following statements is true?a. An order for relief results only from a voluntary petition.b. Creditors entering an involuntary petition must have debts totaling at
A company’s management has uncovered events that indicate that substantial doubt exists that the company can pay its debts as they come due over the following year. Management studies the plans
A company’s management has monitored recent events that indicate that substantial doubt exists that the company can pay its debts as they come due over the following year. What should management do
How is goodwill computed if fresh start accounting is applied to a company emerging from bankruptcy reorganization?
When a company uses fresh start accounting, how does it report assets and liabilities?
Under what conditions must a company emerging from a bankruptcy reorganization apply fresh start accounting?
What accounting is made of the professional fees incurred during a reorganization?
While a company goes through a bankruptcy reorganization, how should its assets and liabilities be reported?
In following the liquidation basis of accounting, what financial statements must be presented?
If a company is not required to follow U.S. GAAP, a statement of realization and liquidation can be prepared during liquidation. What information can interested parties gain from this statement?
What federal legislation governs most bankruptcy proceedings?
What does the term insolvent mean?
Which of the following is not exempt from registration with the SEC under the Securities Act of 1933?a. Securities issued by a nonprofit religious organizationb. Securities issued by a government
What was the purpose of creating the EDGAR system?
What is the difference between a Form 10-K and a Form 10-Q?
What are blue sky laws?
How does the SEC generate revenues?
Under what law is a registration statement filed?
What does the Securities Exchange Act of 1934 cover?
What are some of the major divisions and offices within the SEC?
What is covered by Regulation S-X?
What is covered by Regulation S-K?
What is the SEC’s relationship to the Public Company Accounting Oversight Board?
The IFRS Foundation and IASB maintain a website at www.ifrs.org. Go to this website and access “Use of IFRS Standards by jurisdiction” (click on the “Around the World” tab). Select a country
Vitous Ltd. began operations on January 1, 2018, and uses IFRS to prepare its consolidated financial statements. Although not required to do so, to facilitate comparisons with companies in the United
A company located in a foreign country is preparing for a listing of its common shares on the New York Stock Exchange in the United States. The company must decide whether to use U.S. GAAP or IFRS in
Hirsch Company acquired equipment at the beginning of 2020 at a cost of $135,000. The equipment has a five-year life with no expected salvage value and is depreciated on a straight-line basis. At
Trecek Corporation incurs research and development costs of $650,000 in 2020, 30 percent of which relate to development activities subsequent to IAS 36 criteria having been met that indicate an
Parnell Company acquired construction equipment on January 1, 2020, at a cost of $78,400. The equipment was expected to have a useful life of six years and a residual value of $10,000 and is being
Harrington Company was sued by an employee in late 2020. General counsel concluded that there was an 80 percent probability that the company would lose the lawsuit. The range of possible loss is
Tapatio S.A. de C.V. acquired a new piece of manufacturing equipment on January 1, 2019, for a cash price of 500,000 pesos. The equipment was expected to have a useful life of 10 years and no
Sapporo K.K. was sued by a competitor in late 2020, and company management concluded that there was a 55 percent probability that the company would lose the lawsuit. The best estimate of the loss on
Llungby AB spent 1,000,000 krone in 2020 on the development of a new product. The company determined that 25 percent of this amount was incurred after the criteria in IAS 36 for capitalization as an
Mikkeli OY acquired a brand name with an indefinite life in 2021 for 40,000 markkas. At December 31, 2020, the brand name could be sold for 35,000 markkas, with zero costs to sell. Expected cash
On January 1, 2020, Xiamen Company made amendments to its defined benefit pension plan that resulted in 60,000 yuan of past service cost. The plan has 5,000 active employees with an average expected
Surat Limited paid cash to acquire an aircraft on January 1, 2020, at a cost of 30,000,000 rupees. The aircraft has an estimated useful life of 40 years and no salvage value. The company has
Izmir A.S. issued convertible bonds at their face value of 100,000 lira on December 31, 2020. The bonds have a 10-year life with interest of 10 percent payable annually. At the date of issue, the
In which of the following areas does the IASB not allow firms to choose between two acceptable treatments?a. Measuring property, plant, and equipment subsequent to acquisition.b. Measuring
Under IFRS, when an entity chooses the revaluation model as its accounting policy for measuring property, plant, and equipment, which of the following statements is correct?a. When an asset is
Which companies are required to provide a U.S. GAAP reconciliation in their annual report filed with the SEC?a. All foreign companies listed on a U.S. securities exchangeb. Foreign companies listed
Which of the following statements is true for a foreign company registered with the U.S. SEC to list its stock on the New York Stock Exchange?a. The company must file an annual report with the SEC
Which of the following best describes the extent to which the SEC requires or permits the use of IFRS by U.S. public companies?a. U.S. public companies are required to use IFRS.b. U.S. public
What was the so-called Norwalk Agreement?a. An agreement between the FASB and SEC to allow foreign companies to use IFRS in their filing of financial statements with the SECb. An agreement between
Which of the following statements is correct with respect to the IFRS accounting policy hierarchy in situations where a specifically relevant IASB standard dealing with an accounting issue does not
A company must prepare IFRS financial statements for the first time on December 31, 2022. According to IFRS 1, what is the date of transition to IFRS for this company?a. January 1, 2020b. January 1,
For which of the following does IFRS for SMEs not provide a simplification of full IFRS?a. Goodwillb. Borrowing costsc. Development costsd. Inventory
For which of the following types of companies is IFRS for SMEs intended?a. Private companiesb. Publicly traded companiesc. Multinational corporationsd. Foreign companies
According to the IFRS Foundation, approximately how many countries either require or permit the use of IFRS by publicly traded companies?a. 40 countriesb. 80 countriesc. 130 countriesd. 195 countries
Which of the following countries uses IFRS?a. Canada.b. Mexico.c. Brazil.d. All of these answer choices are correct.
According to the IASB, IFRS comprise interpretations issued by the SIC and IFRIC, anda. International financial reporting standards issued by the IASB only.b. International accounting standards
Which of the following is not a potential problem caused by differences in financial reporting practices across countries?a. Consolidation of financial statements by firms with foreign operations is
Which of the following historical reasons for accounting diversity could explain why accounting standards would be more detailed in some countries than in others?a. Different rates of inflation
What are two differences between IFRS and U.S. GAAP with respect to the recognition of financial statement items?
What are two differences between IFRS and U.S. GAAP with respect to the measurement of financial statement items?
How are IFRS currently used in the United States?
Was the IASB–FASB convergence process successful?
What are two countries that do not allow domestic publicly traded companies to use IFRS to prepare consolidated financial statements?
What are the different ways a country might use IFRS?
What authoritative pronouncements make up International Financial Reporting Standards (IFRS)?
Historically, what factors contributed to the diversity of accounting systems worldwide?
On January 1, 2019, Parker, Inc., a U.S.-based firm, acquired 100 percent of Suffolk PLC located in Great Britain for consideration paid of 52,000,000 British pounds (£), which was equal to fair
Charles Edward Company established a subsidiary in a foreign country on January 1, 2020, by investing FC 3,200,000 when the exchange rate was $0.50/FC. Charles Edward negotiated a bank loan of FC
Many companies make annual reports (sometimes on Form 10-K) available on their corporate website. Access the annual report indicated for each of the following U.S.-based multinational corporations to
Millager Company is a U.S.-based multinational corporation with the U.S. dollar (USD) as its reporting currency. To prepare consolidated financial statements for 2020, the company must translate the
Diekmann Company, a U.S.-based company, acquired a 100 percent interest in Rakona A.S. in the Czech Republic on January 1, 2019, when the exchange rate for the Czech koruna (Kčs) was
On January 1, 2019, Cayce Corporation acquired 100 percent of Simbel Company for consideration transferred with a fair value of $126,000. Cayce is a U.S.-based company headquartered in Buffalo, New
Sendelbach Corporation is a U.S.-based organization with operations throughout the world. One of its subsidiaries is headquartered in Toronto. Although this wholly owned company operates primarily in
The following account balances are for the Agee Company as of January 1, 2020, and December 31, 2020. All amounts are denominated in kroner (Kr).Additional InformationAgee issued additional shares of
Livingston Company is a wholly owned subsidiary of Rose Corporation. Livingston operates in a foreign country with financial statements recorded in pounds (P), the company’s functional currency.
Kingsfield establishes a subsidiary operation in a foreign country on January 1, 2020. The country’s currency is the rial (R). To start this business, Kingsfield invests 10,000 rials. Of this
Christina Company (a U.S.-based company) has a subsidiary in Canada that began operations at the start of 2020 with assets of 132,000 Canadian dollars (CAD) and liabilities of CAD 54,000. During this
Lancer, Inc. (a U.S.-based company), establishes a subsidiary in Croatia on January 1, 2019. The following account balances for the year ending December 31, 2020, are stated in kuna (K), the local
Zugar Company is domiciled in a country whose currency is the dinar. Zugar begins 2020 with three assets: Cash of 20,000 dinars, Accounts receivable of 80,000 dinars, and Land that cost 200,000
Rolfe Company (a U.S.-based company) has a subsidiary in Nigeria, where the local currency unit is the naira (NGN). On December 31, 2019, the subsidiary had the following balance sheet (amounts are
Refer to the information in problem 26. Prepare a statement of cash flows in pounds for Sullivan’s Island Company’s foreign subsidiary, and then translate this statement into U.S. dollars.Data
Sullivan’s Island Company began operating a subsidiary in a foreign country on January 1, 2020, by investing capital in the amount of 60,000 pounds. The subsidiary immediately borrowed 140,000
The Isle of Palms Company (IOP), a U.S.-based entity, has a wholly owned subsidiary in Israel that has been determined as having the Israeli shekel (ILS) as its functional currency. On October 1,
On December 18, 2020, Stephanie Corporation acquired 100 percent of a Swiss company for 4.0 million Swiss francs (CHF), which is indicative of book and fair value. At the acquisition date, the
The following accounts are denominated in rubles as of December 31, 2020. For reporting purposes, these accounts need to be stated in U.S. dollars. For each account, indicate the exchange rate that
What amount of foreign exchange gain or loss should be reflected in McCarthy’s 2020 consolidated net income?a. $8,000 loss.b. $10,000 loss.c. $2,000 gain.d. $5,000 gain.McCarthy, Inc.’s Brazilian
At what amount should the Brazilian subsidiary’s euro note payable be reported on McCarthy’s December 31, 2020, consolidated balance sheet?a. $84,000.b. $86,000.c. $92,000.d. $128,800.McCarthy,
The functional currency of Bertrand, Inc.’s Irish subsidiary is the euro. Bertrand borrowed euros as a partial hedge of its investment in the subsidiary. Since then, the euro has decreased in
A foreign subsidiary’s functional currency is its local currency, which has not experienced significant inflation. The current exchange rate at the balance sheet date is the appropriate exchange
Charleston Corporation operates a branch operation in a foreign country. Although this branch operates in euros, the U.S. dollar is its functional currency. Thus, a remeasurement is necessary to
A U.S. company’s foreign subsidiary had these amounts in local currency units (LCU) in 2020:Cost of goods sold . . . . . . . . . . . . . . . . . . . . . LCU 5,000,000Beginning inventory . . . . . .
Assume that the U.S. dollar is the subsidiary’s functional currency. What balances does a consolidated balance sheet report as of December 31, 2020?a. Marketable equity securities = $16,000 and
Assume that the won is the subsidiary’s functional currency. What balances does a consolidated balance sheet report as of December 31, 2020?a. Marketable equity securities = $16,000 and Inventory =
What amount does Newberry’s consolidated income statement report for cost of goods sold for the year ending December 31, 2021?a. $16,000b. $17,000c. $18,000d. $19,000Newberry, Inc., whose reporting
What amount does Newberry’s consolidated balance sheet report for this inventory at December 31, 2020?a. $16,000b. $17,000c. $18,000d. $19,000Newberry, Inc., whose reporting currency is the U.S.

Showing 600 - 700 of 1393