Question :
111. Which of the following is/are true? A. An employer must recognize changes : 1245816
111. Which of the following is/are true? A. An employer must recognize changes in the funded status of a defined benefit retirement plan on its balance sheet each period. B. U.S. GAAP and IFRS do not require the employer to recognize changes in the funded status of a defined benefit retirement plan immediately in net income. C. Changes in the net funded status of a defined benefit retirement plan because investment performance differs from expectations, or because of changes in actuarial assumptions, or in the retirement benefit formula, initially affect other comprehensive income. D. Firms amortize the amounts in Other Comprehensive Income over the expected period of benefit as an adjustment to retirement plan cost. E. all of the above
112. Income before taxes for financial reporting usually differs from taxable income reported to tax authorities. Which of the following is/are true? A. Some of the differences may arise because of permanent differences (items that affect income for financial reporting but never affect taxable income, or vice versa).B. Some of the differences may arise because of temporary differences (items that affect income for financial reporting in a different period than for tax reporting). C. The difference between income tax expense and income tax payable represents the tax effects of temporary differences: either the firm will receive future benefits (deferred tax assets) or it must pay future taxes (deferred tax liabilities).D. U.S. GAAP and IFRS require firms to measure income tax expense based on income for financial reporting (excluding permanent differences) and the income tax authorities impose taxes on taxable income. E. all of the above
113. Income before taxes for financial reporting usually differs from taxable income reported to tax authorities. Which of the following is/are not true? A. Some of the differences may arise because of permanent differences (items that affect income for financial reporting but never affect taxable income, or vice versa).B. Some of the differences may arise because of temporary differences (items that affect income for financial reporting in a different period than for tax reporting). C. The difference between income tax expense and income tax payable represents the tax effects of permanent differences: either the firm will receive future benefits (deferred tax assets) or it must pay future taxes (deferred tax liabilities).D. U.S. GAAP and IFRS require firms to measure income tax expense based on income for financial reporting (excluding permanent differences) and the income tax authorities impose taxes on taxable income. E. all of the above
114. Firms must designate each derivative as a hedging instrument, or else accounting views the derivative as a nonhedging instrument. Furthermore, firms must designate each hedging instrument as either a fair value hedge or a cash flow hedge. The accounting for fair value hedges A. remeasures both the hedged item and the derivative to fair value each period and recognize any unrealized gains and losses in net income. B. remeasures the derivative to fair value each period and include the unrealized gain or loss in other comprehensive income to the extent that the derivative instrument is effective in neutralizing risk. When the firm settles the hedged item, transfer the previously unrealized gain or loss from other comprehensive income to net income. C. remeasures the derivative to fair value each period and include the unrealized gain or loss in net income. D. all of the aboveE. none of the above
115. Firms must designate each derivative as a hedging instrument, or else accounting views the derivative as a nonhedging instrument. Furthermore, firms must designate each hedging instrument as either a fair value hedge or a cash flow hedge. The accounting for cash flow hedges A. remeasures both the hedged item and the derivative to fair value each period and recognize any unrealized gains and losses in net income. B. remeasures the derivative to fair value each period and include the unrealized gain or loss in other comprehensive income to the extent that the derivative instrument is effective in neutralizing risk. When the firm settles the hedged item, transfer the previously unrealized gain or loss from other comprehensive income to net income. C. remeasures the derivative to fair value each period and include the unrealized gain or loss in net income. D. all of the aboveE. none of the above
116. Firms must designate each derivative as a hedging instrument, or else accounting views the derivative as a nonhedging instrument. Furthermore, firms must designate each hedging instrument as either a fair value hedge or a cash flow hedge. The accounting for nonhedging derivatives A. remeasures both the hedged item and the derivative to fair value each period and recognize any unrealized gains and losses in net income. B. remeasures the derivative to fair value each period and include the unrealized gain or loss in other comprehensive income to the extent that the derivative instrument is effective in neutralizing risk. When the firm settles the hedged item, transfer the previously unrealized gain or loss from other comprehensive income to net income. C. remeasures the derivative to fair value each period and include the unrealized gain or loss in net income. D. all of the aboveE. none of the above
117. A firm that can exert significant influence over another entity accounts for its intercorporate investment using the A. lower of cost or market method.B. equity method. C. liability method.D. consolidation method.E. acquisition cost method.
118. A firm that can exert significant influence over another entity accounts for its intercorporate investment by A. using the equity method. B. recognizes its share of the net income or net loss of the investee, after eliminating any intercompany income items, and increases (in the case of net income) or decreases (in the case of net loss) its investment account in an equal amount. C. comparing the acquisition cost of the investment to determine whether it exceeds the investor’s interest in the net assets of the investee at the time of the acquisition, the investor must decide if the excess relates to assets or liabilities of the investee with a limited life. D. decreasing the investment account for dividends received.E. all of the above.
119. Which of the following is/are true? A. A firm that controls another entity prepares consolidated financial statements with that entity. B. The consolidated financial statements reflect the results of the legally separate entities as if they were a single entity.C. The consolidated financial statements eliminate intercompany balance sheet and income statement accounts and intercompany profit or loss on transactions between the entities. D. Consolidated balance sheets consolidate all of the assets and liabilities of the controlled entity and then show the claim of noncontrolling shareholders against consolidated net assets as part of shareholders’ equity. E. all of the above
120. Which of the following is/are true regarding the classification of redeemable preferred shares on the balance sheet? A. The classification of redeemable preferred shares on the balance sheet depends on the conditions for redemption. B. If only the issuing firm has the option to redeem, then the preferred shares are part of its shareholders’ equity. C. If the issuing firm must redeem the preferred shares (so-called “mandatory redemption”), either at a specified time or upon a specified condition certain to occur, the issuing firm treats the preferred shares as a liability. D. If the preferred shareholders have the option to require redemption, then the preferred shares appear between liabilities and shareholders’ equity under U.S. GAAP and as a liability under IFRS. E. all of the above
