Question: Which group has negotiated the greatest number

> Briefly describe the current requirement for companies in Mexico to account for the effect of inflation in their annual financial statements.

> Jefferson Company acquired equipment on January 2, Year 1, at a cost of $10 million. The equipment has a five-year life, no residual value, and is depreciated on a straight-line basis. On January 2, Year 3, Jefferson Company determines the fair value of

> Godfrey Company constructed a new, highly automated chemical plant in Year 1, which began production on January 1, Year 2. The cost to construct the plant was $5,000,000: $1,500,000 for the building and $3,500,000 for machinery and equipment. The useful

> Quick Company acquired a piece of equipment in Year 1 at a cost of $100,000. The equipment has a 10-year estimated life, zero salvage value, and is depreciated on a straight-line basis. Technological innovations take place in the industry in which the co

> Stevenson Corporation acquires a one-year-old building at a cost of $500,000 at the beginning of Year 2. The building has an estimated useful life of 50 years. However, based on reliable historical data, the company believes the carpeting will need to be

> In what way does the fair value model for investment property differ from the revaluation model for property, plant, and equipment?

> How are the Anglo and less developed Latin cultural areas expected to differ with respect to the accounting values of conservatism and secrecy?

> How is depreciation determined for an item of property, plant, and equipment that is comprised of significant parts, such as an airplane?

> In accounting for post-employment benefits, when are past service costs and actuarial gains and losses recognized in income?

> Steffen-Zweig Company exchanges two used printing presses with a total net book value of $24,000 ($40,000 cost less accumulated depreciation of $16,000) for a new printing press with a fair value of $24,000 and $3,000 in cash. The fair value of the two u

> What is the arm’s-length range of transfer pricing, and how does it affect the selection of a transfer pricing method?

> What is the significance of Bulletin A-8 of the Mexican Institute of Public Accountants?

> Why is there often a conflict between the performance evaluation and cost minimization objectives of transfer pricing?

> What are possible cost-minimization objectives that a multinational company might wish to achieve through transfer pricing?

> What are the various types of intercompany transactions for which a transfer price must be determined?

> What is a constructive obligation

> Were the EU directives effective in generating comparability of financial statements across companies located in member nations? Why or why not?

> To determine the amount at which inventory should be reported on the December 31, Year 1, balance sheet, Monroe Company compiles the following information for its inventory of Product Z on hand at that date: • Historical cost……………………………………………………………..$2

> How are convertible bonds measured initially on the balance sheet?

> What are the four classes of financial assets?

> How is an exchange of goods that are similar in nature and value accounted for?

> What is the accounting treatment for debt extinguishment costs? Debt modification costs?

> How are foreign branch income and foreign subsidiary income taxed differently by a company’s home country?

> How are costs associated with the issuance of bonds payable accounted for?

> What happens if a significant amount of held-to-maturity investments is reclassified as available- for-sale?

> How are deferred taxes classified on the balance sheet?

> What is the cutoff date for the occurrence of events after the reporting period requiring adjustment to the financial statements?

> What are the rules related to the recognition of a deferred tax asset?

> What is a gain on bargain purchase?

> As a result of a downturn in the economy, Optiplex Corporation has excess productive capacity. On January 1, Year 3, Optiplex signed a special order contract to manufacture custom-design generators for a new customer. The customer requests that the gener

> SKD Limited is a biotechnology company that prepares financial statements using internally developed accounting rules (referred to as SKD GAAP). To be able to compare SKD’s financial statements with those of companies in their home coun

> What are the types of differences that exist between IFRS and U.S. GAAP?

> How is goodwill measured in a business combination with a non-controlling interest?

> How does an individual taxpayer qualify for the foreign earned income exclusion?

> Which intangible assets are subject to annual impairment testing?

> What is the current treatment with respect to borrowing costs?

> As expressed in IAS 1, what is the overriding principle that should be followed in preparing IFRS-based financial statements?

> To what extent have IFRS been adopted by countries around the world?

> Under what conditions should a firm claim to prepare financial statements in accordance with IFRS?

> What are the alternative methods used internationally to present fixed assets on the balance sheet subsequent to acquisition?

> What is a provision, and when must a provision be recognized?

> When a previously recognized impairment loss is subsequently reversed, what is the maximum amount at which the affected asset may be carried on the balance sheet?

> Indicate whether each of the following describes an accounting treatment that is acceptable under IFRS, U.S. GAAP, both, or neither, by checking the appropriate box. Acceptable Under IFRS U.S. GAAP Both Neither • A company takes out a loan to finan

> What are the different ways in which financial statements differ across countries?

> What is the benefit provided to an individual taxpayer through the foreign earned income exclusion?

> What are the two most common methods used internationally for the order in which assets are listed on the balance sheet? Which of these two methods is most common in North America? In Europe?

> Why might a company want its stock listed on a stock exchange outside of its home country?

> What financial reporting issues arise as a result of making a foreign direct investment?

> What accounting issues arise for a company as a result of engaging in international trade (imports and exports)?

> U.S. Treasury Regulations require the use of one of five specified methods to determine the arm’s-length price in a sale of tangible property. Which of the following is not one of those methods? a. Cost-plus method. b. Market-based method. c. Profit spli

> Market-based transfer prices lead to optimal decisions in which of the following situations? a. When interdependencies between the related parties are minimal. b. When there is no advantage or disadvantage to buying and selling the product internally rat

> Which of the following is not a method commonly used for establishing transfer prices? a. Cost-based transfer price. b. Negotiated price. c. Market-based transfer price. d. Industry wide transfer price.

> Which of the following types of transaction is most likely to be audited? a. Sales of tangible property. b. Licenses of intangible property. c. Intercompany loans. d. Intercompany services.

> Bridget’s Bakery Inc. enters into a new operating lease for a 10-year term at a monthly rental of $2,500. To induce Bridget’s Bakery into the lease, the lessor agreed to a free-rent period for the first three months. Required: Determine the amount of le

> How are the estimated costs of removing and dismantling an asset handled upon initial recognition of the asset?

> Which international organization has developed transfer pricing guidelines that are used as the basis for transfer pricing laws in several countries? a. World Bank. b. Organization for Economic Cooperation and Development. c. United Nations. d. Internati

> Which of the following methods does U.S. tax law always require to be used in pricing intercompany transfers of tangible property? a. Comparable uncontrolled price method. b. Comparable profits method. c. Cost-plus method. d. Best method.

> Which of the following would be an acceptable transfer price under the comparable profits method? a. $700 b. $750 c. $795 d. $825

> Which of the following would be an acceptable transfer price under the cost plus method? a. $700 b. $750 c. $795 d. $825

> Which of the following would be an acceptable transfer price under the resale price method? a. $700 b. $750 c. $795 d. $825

> Which of the following objectives is not achieved through the use of lower transfer prices? a. Improving the competitive position of a foreign operation. b. Minimizing import duties. c. Protecting foreign currency cash flows from currency devaluation. d.

> Jordan Inc., a U.S. company, is required to translate the foreign income generated by its foreign operation. To determine U.S. taxable income, what must Jordan use to translate the income of its foreign branch into U.S. dollars? a. The exchange rate at t

> What are the two most common methods of eliminating the double taxation of income earned by foreign corporations? a. Exempting foreign source income and deducting all foreign taxes paid. b. Deducting all foreign taxes paid and providing a foreign tax cre

> Poole Corporation is a U.S. company with a branch in China. Income earned by the Chinese branch is taxed at the Chinese corporate income tax rate of 25 percent and at the rate of 35 percent in the United States. What is this an example of? a. Capital-exp

> Kerry is a U.S. citizen residing in Portugal. Kerry receives some investment income from Spain. Why might Kerry be expected to pay taxes on the investment income to the United States? a. The United States taxes its citizens on their worldwide income. b.

> In what way did both the domestic international sales corporation and the foreign sales corporation violate international trade agreements?

> This problem is comprised of three parts. Part A. Fields Company sells a building to Victory Finance Company. The selling price of the building is $500,000, which approximates its fair value, and the carrying amount is $400,000. Fields then leases the bu

> Why might companies have an incentive to finance their foreign operations with as much debt as possible? a. Interest payments are generally tax deductible. b. Withholding rates are lower for dividends. c. Withholding rates are lower for interest. d. Both

> Which of the following item(s) might provide an MNC with a tax-planning opportunity as it decides where to locate a foreign operation? a. Differences in corporate tax rates across countries. b. Differences in local tax rates across countries. c. Whether

> Which of the following items is not a tax benefit provided by Congress to U.S. citizens working abroad? a. Foreign earned income exclusion. b. Foreign tax credit. c. Dividend income exclusion. d. Foreign housing exclusion.

> Why might a company involved in international business find it beneficial to establish an operation in a tax haven? a. The OECD recommends the use of tax havens for corporate income tax avoidance. b. Tax havens never tax corporate income. c. Tax havens a

> In Year 3, how much excess foreign tax credit can Powell carry back? a. $7,500. b. $6,000. c. $1,000. d. $0.

> For Year 3, what is the net U.S. tax liability? a. $35,000. b. $0. c. $1,000. d. $6,000.

> For Year 1, Year 2, and Year 3, what is the foreign tax credit allowed in the United States? a. $7,500, $6,000, and $0. b. $18,750, $29,000, and $36,000. c. $75,000, $100,000, and $100,000. d. $18,750, $29,000, and $35,000.

> In deciding whether to establish a foreign operation, which factor(s) might a multinational corporation (MNC) consider? a. After-tax returns from competing investment locations. b. The tax treatments of branches versus subsidiaries. c. Withholding rates

> The functional currency of Garland Inc.’s Japanese subsidiary is the Japanese yen. Garland borrowed Japanese yen as a partial hedge of its investment in the subsidiary. How should the transaction gain on the foreign currency borrowing be reported in Garl

> What is treaty shopping?

> In accordance with U.S. generally accepted accounting principles (GAAP), which translation combination would be appropriate for a foreign operation whose functional currency is the U.S. dollar? Method Treatment of Translation Adjustment Temporal Te

> Atlanta Tours Company entered into a five-year lease on January 1, Year 1, with Duck Boats Inc. for a customized duck boat. Duck Boats Inc. will provide a vehicle to Atlanta Tours Company with the words “Gone with the Wind” carved into the sides. Followi

> Which method of translation maintains, in the translated financial statements, the underlying valuation methods used in the foreign currency financial statements? a. Current rate method; income statement translated at average exchange rate for the year.

> Which of the following best explains how a translation loss arises when the temporal method of translation is used to translate the foreign currency financial statements of a foreign subsidiary? a. The foreign subsidiary has more monetary assets than mon

> A foreign subsidiary of Wampoa Ltd. has one asset (inventory) and no liabilities. The subsidiary operates with a significant degree of autonomy from Wampoa and primarily uses the local currency (the won) in carrying out its transactions. Since the date t

> In translating the financial statements of a foreign subsidiary into the parent’s reporting currency under the current rate method, which of the following statements is true? a. Expenses are translated using a combination of current and historical exchan

> Which of the following items is normally translated the same way under both the current rate and temporal methods of translation? a. Inventory b. Equipment c. Sales revenue d. Depreciation expense

> What was the net impact on Keefer Company’s Year 2 income as a result of this fair value hedge of a firm commitment? a. $0. b. An $839.40 decrease in income. c. A $74,160.60 increase in income. d. A $76,200.00 increase in income.

> Assuming no forward contract was entered into, how much foreign exchange gain or loss should Reiter report on its Year 1 income statement with regard to this transaction? a. A $5,000 gain. b. A $3,000 gain. c. A $2,000 loss. d. A $1,000 loss.

> On December 1, Year 1, Tackett Company (a U.S.-based company) entered into a three-month forward contract to purchase 1 million Mexican pesos on March 1, Year 2. The following U.S. dollar per peso exchange rates apply: Tackett’s inc

> This is a continuation of problem 15. At December 31, Year 2, Beech Corporation still had the same three different products in its inventory. The following table provides updated information for the company’s products: Beech Corpora

> How does an entity account for a choice-of-settlement share-based payment transaction?

> Gracie Corporation had a Japanese yen receivable resulting from exports to Japan and a Brazilian real payable resulting from imports from Brazil. Gracie recorded foreign exchange gains related to both its yen receivable and real payable. Did the foreign

> What is the net impact on Black Lion Company’s Year 2 net income as a result of this hedge of a forecasted foreign currency purchase? Assume that the raw materials are consumed and become a part of cost of goods sold in Year 2. a. A $70,000 decrease in n

> Thurstone Company, a U.S.-based company, borrows 1,500,000 British pounds (£) on January 1, Year 1, at an interest rate of 4 percent to finance the construction of a new office building for its employees in England. Construction is expected to take six m

> Which of the following combinations correctly describes the relationship between foreign currency transactions, exchange rate changes, and foreign exchange gains and losses? Туре of Transaction Foreign Currency Foreign Exchange Gain or Loss Export

> Visit the New York Stock Exchange Web site (www.nyse.com). Required: Determine the number of companies listed on the NYSE from each of the five countries covered in this chapter.

> Which of the following is not a criterion that must be met to recognize revenue from the sale of goods? a. The amount of revenue can be measured reliably. b. The significant risks and rewards of ownership of the goods have been transferred to the buyer.

> Sandoval Company operates in a country in which distributed profits are taxed at 25 percent and undistributed profits are taxed at 30 percent. In Year 1, Sandoval generated pre-tax profit of $100,000 and paid $20,000 in dividends from its Year 1 earnings

> Which of the following types of share-based payment (SBP) transactions always results in the recognition of a liability? a. Equity-settled SBP transaction with employees. b. Equity-settled SBP transaction with nonemployees. c. Cash-settled SBP transactio

> When stock options are granted to employees, what is the basis for determining the amount of compensation cost that will be recognized as expense? a. The fair value of the service provided by the employees receiving the options at the grant date. b. The

> Past service cost related to non vested employees should be recognized as expense a. In the period the cost is incurred. b. Over the non vested employees’ remaining vesting period. c. Over the non vested employees’ estimated remaining working life. d. Ov

> How might an analyst obtain the most recent financial statements for a foreign company in which he or she is interested?