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MULTIPLEl CHOICE.l Choosel thel onel alternativel thatl bestl completesl thel statementl orl answersl thel question.
1) WhichloflthelfollowingltypesloflsharelinvestmentldoeslNOTlqualifylaslalstrategiclinvestment?
A) Controlledlinvestments. B)l JointlControllinvestments.
C)lInvestmentslwithoutlsignificantlinfluence. D)lSignificantlinfluencelinvestments.
Answer:l C
2) Alsignificantlinfluencelinvestmentlislonelthat:
A) allowslthelinvestorltolexerciselsignificantlinfluenceloverlthelstrategiclandloperatinglpoliciesloflthel
Associate.
B) allowslthelinvestorltolexerciselsignificantlinfluenceloverlthelstrategicloperatinglandlfinancinglpoli
ciesloflthelAssociate.
C) allowslthelinvestorltolexerciselsignificantlinfluenceloverlonlyltheloperatinglpoliciesloflthelAss
ociate.
D) allowslthelinvestorltolexerciselsignificantlinfluenceloverlonlylthelfinancinglpoliciesloflthelAss
ociate.
Answer:l B
3) Whatlisltheldominantlfactorlusedltoldistinguishlportfoliolinvestmentslfromlsignificantlinfluencelinv
estments?
A) Thelpercentageloflequitylheldlbylthelinvestor.
B) UseloflthelEquitylMethodltolaccountlforlandlreportlthelinvestment.
C) Thelinvestor'slintentionltolestablishlorlmaintainlallong-
termloperatinglrelationshiplwithlthelinvestee.
D) UseloflthelCostlMethodltolaccountlforlandlreportlthelinvestment.
Answer:l C
4) WhichloflthelfollowinglstatementslislTRUElunderlIFRSl9?
A) OtherlComprehensivelIncomel(OCI)lislincludedlinlRetainedlEarnings.
B) UnrealizedlgainslandllosseslonlequitylinvestmentslmaylbelincludedlinlOtherlComprehensivelInc
omel(OCI)lonlyliflaldecisionltoldolsolislmadelwhenlthelinvestmentlislacquired.
C) AlllunrealizedlgainslandllosseslonlequitylinvestmentslflowlthroughlOtherlComprehensivelInc
omel(OCI).
D) Unrealizedlgainslandllosseslonlfairlvaluelthroughlprofitlandllossl(FVTPL)lsecuritieslarelincl
udedlinlOtherlComprehensivelIncome.
Answer:l B
5) Gainslandllosseslonlfairlvaluelthroughlprofitlorllossl(FVTPL)lsecurities:
A) arelincludedlinlnetlincomelonlylwhenlrealized.
B) arelneverlrecordedluntillthelsecuritieslarelsold.
C) arelincludedlinlnetlincome,lregardlessloflwhetherltheylarelrealizedlorlnot.
D) arelincludedlinlnetlincomelonlylwhenlthelinvestmentlhaslbecomelpermanentlylimpaired.
Answer:l C
1
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6) HowlarelrealizedlgainslfromlthelsaleloflinvestmentslaccountedlforlatlfairlvaluelthroughlOtherlCom
prehensivelIncomel(FVTOCI)laccountedlforlunderlIFRSl9?
A) TheylareltransferredltolRetainedlEarningslwithoutlgoinglthroughlnetlincome.
B) Theylareltransferredltolnetlincomelinlthelperiodloflthelsale.
C) TheylremainlinlAccumulatedlOtherlComprehensivelIncome.
D) TheylareltransferredltolContributedlSurplus.
Answer:l A
7) Whenlusinglthelcostlmethodloflaccounting,lwhichlmethodlshouldlbelusedltoldeterminelthelcarryinglvalu
eloflshareslsoldlwhenlalportionloflthelshareslmakingluplanlinvestmentlislsold?
A) Specificlcost. B)l Lastlin,lfirstlout. C)lAveragelcost. D)lFirstlin,lfirstlout.
Answer:l C
8) Whatlpercentageloflownershiplislusedlaslalguidelineltoldeterminelthatlsignificantlinfluencelexistslunde
rlIASl28lInvestmentslinlAssociateslandlJointlVentures?
A) 20%lorlmore. B)l Betweenl20%landl50%.
C)l25%lorlmore. D)lLesslthanl20%.
Answer:l B
9) Whichloflthelfollowinglmethodsluseslprocedureslclosestltolthoselusedlinlpreparinglconsolidatedlfina
nciallstatements?
A) Fairlvaluelthroughlprofitlorllossl(FVTPL).
B) Thelequitylmethod.
C) Fairlvaluelthroughlotherlcomprehensivelincome.
D) Thelcostlmethod.
Answer:l B
10) WhichloflthelfollowinglislNOTlalpossiblelindicatorloflsignificantlinfluence?
A) ThelAssociate'slnewlCEOlwaslpreviouslylCEOloflthelinvestorlcompany.
B) ThelinvestorlhaslthelabilityltolelectlmembersltolthelBoardloflDirectors.
C) ThelinvestorlhaslengagedlinlnumerouslintercompanyltransactionslwithlthelAssociate.
D) Thelinvestorlhaslthelrightltolparticipatelinlthelpolicy-makinglprocess.
Answer:l A
11) WhichloflthelfollowinglstatementslislCORRECT?
A) Anlownershiplinterestlbetweenl0landl10%lcanlneverlimplylsignificantlinfluence.
B) Anlownershiplinterestlbetweenl20%landl50%lalwayslimplieslsignificantlinfluence.
C) SignificantlinfluencelislstilllpossibleliflthelInvestorlownsllesslthanl20%loflthelvotinglsharesloflthelA
ssociate.
D) ControllislonlylpossibleliflthelInvestorlownslmorelthanl50%loflthelvotinglsharesloflthelAsso
ciate.
Answer:l C
2
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12) Theldifferencelbetweenlthelinvestor'slcostlandlthelinvestor'slpercentageloflthelcarryinglvalueloflthelnetlid
entifiablelassetsloflthelassociatelislknownlas:
A) thelAcquisitionlDifferential. B)l Goodwill.
C) thelExcesslBooklValue. D)lthelFairlValuelIncrement.
Answer:l A
13) Anylunallocatedlpositivelacquisitionldifferentiallislnormally:
A) expensedlduringlthelyearlfollowinglthelacquisition.
B) chargedltolRetainedlEarnings.
C) pro-ratedlacrosslthelAssociate'slidentifiablelnetlassets.
D) recordedlaslGoodwill.
Answer:l D
14) Whenlarelgainslonlintercompanyltransfersloflassetslbetweenlanlinvestorlandlalsignificantlinfluencelinves
tmentlrecognizedlaslpartloflthelinvestmentlincomelaccountedlforlbylthelparentlunderlthelequitylmethod?
A) Theylarelneverlrecognized.
B) Inlthelperiod(s)lwhenlthelassetslarelsoldltolthirdlpartieslorlconsumed.
C) Inlthelperiodlwhenlthelintercompanyltransferltakeslplace.
D) Theylarelrecognizedlonlylwhenlthelinvestmentlislsold.
Answer:l B
15) The
investmentlmustlbelshownlaslalcurrentlasset,lwhereaslthelotherlinvestmentslcouldlbelcurrentlorlnon-
current,ldependinglonlmanagement'slintention.
A) FVTPL B)l costlmethod C)lFVTOCI D)l equitylmethod
Answer:l A
16) Whenlanalyzinglandlinterpretinglfinanciallstatements,lalthoughlthelreportinglmethodslshowldifferentlva
lueslforlliquidity,lsolvency,landlprofitability,lthelrealleconomiclsituationlis
forlthelfourldifferentlmethods.
A) completelyldifferent
B) exactlylthelsame
C) almostlsimilarlexceptlforlthelfairlvaluelmethods
D) almostlsimilarlexceptlforlthelequitylmethod
Answer:l B
17) ReportinginlaccordancelwithlthelAccountinglStandardslforlPrivatelEnterprisesl(ASPE)lislpermittedlinlc
ertainlinstanceslfor:
A) alllCanadianlcompanies.
B) privatelylheldlcompanies.
C) publiclylheldlcompanies.
D) Canadianlcompanieslconsolidatingltheirlforeignlsubsidiaries.
Answer:l B
3
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l l l l l l l l l l l
n Hilton l
MULTIPLEl CHOICE.l Choosel thel onel alternativel thatl bestl completesl thel statementl orl answersl thel question.
1) WhichloflthelfollowingltypesloflsharelinvestmentldoeslNOTlqualifylaslalstrategiclinvestment?
A) Controlledlinvestments. B)l JointlControllinvestments.
C)lInvestmentslwithoutlsignificantlinfluence. D)lSignificantlinfluencelinvestments.
Answer:l C
2) Alsignificantlinfluencelinvestmentlislonelthat:
A) allowslthelinvestorltolexerciselsignificantlinfluenceloverlthelstrategiclandloperatinglpoliciesloflthel
Associate.
B) allowslthelinvestorltolexerciselsignificantlinfluenceloverlthelstrategicloperatinglandlfinancinglpoli
ciesloflthelAssociate.
C) allowslthelinvestorltolexerciselsignificantlinfluenceloverlonlyltheloperatinglpoliciesloflthelAss
ociate.
D) allowslthelinvestorltolexerciselsignificantlinfluenceloverlonlylthelfinancinglpoliciesloflthelAss
ociate.
Answer:l B
3) Whatlisltheldominantlfactorlusedltoldistinguishlportfoliolinvestmentslfromlsignificantlinfluencelinv
estments?
A) Thelpercentageloflequitylheldlbylthelinvestor.
B) UseloflthelEquitylMethodltolaccountlforlandlreportlthelinvestment.
C) Thelinvestor'slintentionltolestablishlorlmaintainlallong-
termloperatinglrelationshiplwithlthelinvestee.
D) UseloflthelCostlMethodltolaccountlforlandlreportlthelinvestment.
Answer:l C
4) WhichloflthelfollowinglstatementslislTRUElunderlIFRSl9?
A) OtherlComprehensivelIncomel(OCI)lislincludedlinlRetainedlEarnings.
B) UnrealizedlgainslandllosseslonlequitylinvestmentslmaylbelincludedlinlOtherlComprehensivelInc
omel(OCI)lonlyliflaldecisionltoldolsolislmadelwhenlthelinvestmentlislacquired.
C) AlllunrealizedlgainslandllosseslonlequitylinvestmentslflowlthroughlOtherlComprehensivelInc
omel(OCI).
D) Unrealizedlgainslandllosseslonlfairlvaluelthroughlprofitlandllossl(FVTPL)lsecuritieslarelincl
udedlinlOtherlComprehensivelIncome.
Answer:l B
5) Gainslandllosseslonlfairlvaluelthroughlprofitlorllossl(FVTPL)lsecurities:
A) arelincludedlinlnetlincomelonlylwhenlrealized.
B) arelneverlrecordedluntillthelsecuritieslarelsold.
C) arelincludedlinlnetlincome,lregardlessloflwhetherltheylarelrealizedlorlnot.
D) arelincludedlinlnetlincomelonlylwhenlthelinvestmentlhaslbecomelpermanentlylimpaired.
Answer:l C
1
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,DOWNLOAD THE Test Bank for Modern Advanced Accounting in Canada 8thEditio
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6) HowlarelrealizedlgainslfromlthelsaleloflinvestmentslaccountedlforlatlfairlvaluelthroughlOtherlCom
prehensivelIncomel(FVTOCI)laccountedlforlunderlIFRSl9?
A) TheylareltransferredltolRetainedlEarningslwithoutlgoinglthroughlnetlincome.
B) Theylareltransferredltolnetlincomelinlthelperiodloflthelsale.
C) TheylremainlinlAccumulatedlOtherlComprehensivelIncome.
D) TheylareltransferredltolContributedlSurplus.
Answer:l A
7) Whenlusinglthelcostlmethodloflaccounting,lwhichlmethodlshouldlbelusedltoldeterminelthelcarryinglvalu
eloflshareslsoldlwhenlalportionloflthelshareslmakingluplanlinvestmentlislsold?
A) Specificlcost. B)l Lastlin,lfirstlout. C)lAveragelcost. D)lFirstlin,lfirstlout.
Answer:l C
8) Whatlpercentageloflownershiplislusedlaslalguidelineltoldeterminelthatlsignificantlinfluencelexistslunde
rlIASl28lInvestmentslinlAssociateslandlJointlVentures?
A) 20%lorlmore. B)l Betweenl20%landl50%.
C)l25%lorlmore. D)lLesslthanl20%.
Answer:l B
9) Whichloflthelfollowinglmethodsluseslprocedureslclosestltolthoselusedlinlpreparinglconsolidatedlfina
nciallstatements?
A) Fairlvaluelthroughlprofitlorllossl(FVTPL).
B) Thelequitylmethod.
C) Fairlvaluelthroughlotherlcomprehensivelincome.
D) Thelcostlmethod.
Answer:l B
10) WhichloflthelfollowinglislNOTlalpossiblelindicatorloflsignificantlinfluence?
A) ThelAssociate'slnewlCEOlwaslpreviouslylCEOloflthelinvestorlcompany.
B) ThelinvestorlhaslthelabilityltolelectlmembersltolthelBoardloflDirectors.
C) ThelinvestorlhaslengagedlinlnumerouslintercompanyltransactionslwithlthelAssociate.
D) Thelinvestorlhaslthelrightltolparticipatelinlthelpolicy-makinglprocess.
Answer:l A
11) WhichloflthelfollowinglstatementslislCORRECT?
A) Anlownershiplinterestlbetweenl0landl10%lcanlneverlimplylsignificantlinfluence.
B) Anlownershiplinterestlbetweenl20%landl50%lalwayslimplieslsignificantlinfluence.
C) SignificantlinfluencelislstilllpossibleliflthelInvestorlownsllesslthanl20%loflthelvotinglsharesloflthelA
ssociate.
D) ControllislonlylpossibleliflthelInvestorlownslmorelthanl50%loflthelvotinglsharesloflthelAsso
ciate.
Answer:l C
2
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, DOWNLOAD THE Test Bank for Modern Advanced Accounting in Canada 8thEditio
l l l l l l l l l l l
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12) Theldifferencelbetweenlthelinvestor'slcostlandlthelinvestor'slpercentageloflthelcarryinglvalueloflthelnetlid
entifiablelassetsloflthelassociatelislknownlas:
A) thelAcquisitionlDifferential. B)l Goodwill.
C) thelExcesslBooklValue. D)lthelFairlValuelIncrement.
Answer:l A
13) Anylunallocatedlpositivelacquisitionldifferentiallislnormally:
A) expensedlduringlthelyearlfollowinglthelacquisition.
B) chargedltolRetainedlEarnings.
C) pro-ratedlacrosslthelAssociate'slidentifiablelnetlassets.
D) recordedlaslGoodwill.
Answer:l D
14) Whenlarelgainslonlintercompanyltransfersloflassetslbetweenlanlinvestorlandlalsignificantlinfluencelinves
tmentlrecognizedlaslpartloflthelinvestmentlincomelaccountedlforlbylthelparentlunderlthelequitylmethod?
A) Theylarelneverlrecognized.
B) Inlthelperiod(s)lwhenlthelassetslarelsoldltolthirdlpartieslorlconsumed.
C) Inlthelperiodlwhenlthelintercompanyltransferltakeslplace.
D) Theylarelrecognizedlonlylwhenlthelinvestmentlislsold.
Answer:l B
15) The
investmentlmustlbelshownlaslalcurrentlasset,lwhereaslthelotherlinvestmentslcouldlbelcurrentlorlnon-
current,ldependinglonlmanagement'slintention.
A) FVTPL B)l costlmethod C)lFVTOCI D)l equitylmethod
Answer:l A
16) Whenlanalyzinglandlinterpretinglfinanciallstatements,lalthoughlthelreportinglmethodslshowldifferentlva
lueslforlliquidity,lsolvency,landlprofitability,lthelrealleconomiclsituationlis
forlthelfourldifferentlmethods.
A) completelyldifferent
B) exactlylthelsame
C) almostlsimilarlexceptlforlthelfairlvaluelmethods
D) almostlsimilarlexceptlforlthelequitylmethod
Answer:l B
17) ReportinginlaccordancelwithlthelAccountinglStandardslforlPrivatelEnterprisesl(ASPE)lislpermittedlinlc
ertainlinstanceslfor:
A) alllCanadianlcompanies.
B) privatelylheldlcompanies.
C) publiclylheldlcompanies.
D) Canadianlcompanieslconsolidatingltheirlforeignlsubsidiaries.
Answer:l B
3
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