Select Transactions

Question 1

How should an acquirer recognize a bargain purchase in a business acquisition?

Answer 1

As a gain in earnings at the acquisition date

Question 2

Classification that refers to the merging of two enterprises into a newly established enterprise

Answer 2

Statutory consolidation

Question 3

When translating capital accounts of a subsidiary what exchange rate is used for the capital stock account and APIC?

Answer 3

Historical exchange rate

Question 4

What exchange rate should be used when converting income statement to US dollars at year-end?

Answer 4

Current rate

Question 5

Capitalize or expense R&D costs?

Answer 5

Expense as incurred

Question 6

Where is the effect of changing prices reported in the FS?

Answer 6

Supplementary information to the financial statements

Question 7

A finance lease meets any of the following (POETS)

Answer 7

1. P - Present value equals or exceeds FV
2. O - Option to purchase
3. E - Lease term is major part of economic life
4. T - Transfer of ownership
5. S - Specialized in nature - i.e. no alternative use to Lessor at end of lease

Question 8

How to calculate Projected Benefit obligation?

Answer 8

Beg Balance PBO + Interest on PBO + Current service costs - Benefits Paid

Question 9

How to calculate Net Periodic Pension Cost (SIRPAT)

Answer 9

\+ Service Cost
\+ Interest on PBO
- Expected return on plan assets
\+ Prior Service Cost Amort
- Actuarial Gain or + Loss
- Transition Asset or + Obligation

Question 10

Calculation to determine if a benefit plan is over or underfunded?

Answer 10

PBO - Plan assets

Question 11

Convert Revenue from Cash to Accrual Basis formula (SPEAR -BAR)

Answer 11

Sales (i.e. customer pmts)
+Ending AR
-Beginning AR

Question 12

Convert COGS from Cash to Accrual Basis formula (CRAP-I)

Answer 12

Cash Remitted (paid)
+Increase in AP
-Increase in Inventory