CGA practice exam
CGA-CANADA
FINANCIAL ACCOUNTING 4 EXAMINATION
December 2005
Marks
Time: 4 Hours
Notes:
1.
2.
3.
4.
5.
6.
7.
30
All calculations must be shown in an orderly manner to obtain part marks.
Round all calculations to the nearest dollar.
Narratives for journal entries are not required unless specifically requested.
Assume a December 31 fiscal year-end unless specifically stated otherwise.
Assume all amounts are material unless directed otherwise.
Assume all companies are public companies unless otherwise noted.
Assume no companies use differential reporting unless otherwise noted.
Question 1
Select the best answer for each of the following unrelated items. Answer each of these items in your examination booklet by giving the number of your choice. For example, if the best answer for item (a) is (1), write (a)(1) in your examination booklet. If more than one answer is given for an item, that item will not be marked. Incorrect answers will be marked as zero. Marks will not be awarded for explanations.
Note:
2 marks each
Note:
Use the following information to answer parts (a) and (b).
On December 31, 2004, CHL Inc. purchased 70% of the common shares of WAC for $700,000. On the date of acquisition, WAC’s shareholders’ equity was as follows:
Preferred shares, 6%, cumulative with 3 years in arrears, callable at 102
Common shares, no par value, 20,000 shares outstanding
Retained earnings
Total
$ 200,000
100,000
300,000
$ 600,000
Any purchase price discrepancy is allocated to land. During 2005, WAC reported net income of $150,000 and paid dividends of $100,000 in total to common and preferred shareholders.
a.
What will CHL report as investment income for 2005 on its nonconsolidated financial statements, assuming that it accounts for its investment in WAC under the cost method?
1)
2)
3)
4)
$ 36,400
$ 44,800
$ 70,000
$105,000
b. What will CHL report as investment income for 2005 on its nonconsolidated
FINANCIAL ACCOUNTING 4 EXAMINATION
December 2005
Marks
Time: 4 Hours
Notes:
1.
2.
3.
4.
5.
6.
7.
30
All calculations must be shown in an orderly manner to obtain part marks.
Round all calculations to the nearest dollar.
Narratives for journal entries are not required unless specifically requested.
Assume a December 31 fiscal year-end unless specifically stated otherwise.
Assume all amounts are material unless directed otherwise.
Assume all companies are public companies unless otherwise noted.
Assume no companies use differential reporting unless otherwise noted.
Question 1
Select the best answer for each of the following unrelated items. Answer each of these items in your examination booklet by giving the number of your choice. For example, if the best answer for item (a) is (1), write (a)(1) in your examination booklet. If more than one answer is given for an item, that item will not be marked. Incorrect answers will be marked as zero. Marks will not be awarded for explanations.
Note:
2 marks each
Note:
Use the following information to answer parts (a) and (b).
On December 31, 2004, CHL Inc. purchased 70% of the common shares of WAC for $700,000. On the date of acquisition, WAC’s shareholders’ equity was as follows:
Preferred shares, 6%, cumulative with 3 years in arrears, callable at 102
Common shares, no par value, 20,000 shares outstanding
Retained earnings
Total
$ 200,000
100,000
300,000
$ 600,000
Any purchase price discrepancy is allocated to land. During 2005, WAC reported net income of $150,000 and paid dividends of $100,000 in total to common and preferred shareholders.
a.
What will CHL report as investment income for 2005 on its nonconsolidated financial statements, assuming that it accounts for its investment in WAC under the cost method?
1)
2)
3)
4)
$ 36,400
$ 44,800
$ 70,000
$105,000
b. What will CHL report as investment income for 2005 on its nonconsolidated