Question: Aaron Company’s books show current earnings

> Which of the following is not a reason for establishing international accounting standards? a. Some countries do not have the resources to develop accounting standards on their own. b. Comparability of financial reporting is needed between companies oper

> What are QTIP trusts, GRATs, and charitable remainder trusts?

> What is a testamentary trust?

> What is an inter vivos trust?

> On January 1, Tesco Company spent a total of $4,384,000 to acquire control over Blondel Company. This price was based on paying $424,000 for 20 percent of Blondel’s preferred stock and $3,960,000 for 90 percent of its outstanding common stock. At the acq

> Why have trust funds become especially popular in recent years?

> What is a trust fund?

> When should a company begin gathering information about differences between IFRS and its existing GAAP to assist in its first time adoption of IFRS?

> What does the term incorporation by reference mean? a. The legal incorporation of a company in more than one state. b. Filing information with the SEC by indicating that the information is already available in another document. c. A reference guide indic

> What is the purpose of the charge and discharge statement that the executor of an estate issues?

> In the initial accounting for an estate, why does the executor record only the assets?

> What is the alternate date for valuing the assets of an estate? When should this alternate date be used?

> What transactions are normally viewed as changes in the principal of an estate? What transactions are normally viewed as changes in the income of an estate?

> Which of the following is not a potential problem caused by differences in financial reporting practices across countries? a. Consolidation of financial statements by firms with foreign operations is more difficult. b. Firms incur additional costs when a

> In accounting for an estate or trust, how is the distinction between principal and income determined?

> Other than financial considerations, why should individuals consider preparing a valid will?

> What deductions are allowed in computing estate income taxes?

> Why is the establishment of a credit shelter trust fund considered a good estate planning technique?

> Many companies make annual reports available on their corporate website, often under an Investors tab. Annual reports also can be accessed through the SEC’s EDGAR system at www.sec.gov (under Filings, click Company Filings Search, type in Company Name, a

> Pesto Company possesses 80 percent of Salerno Company’s outstanding voting stock. Pesto uses the initial value method to account for this investment. On January 1, 2014, Pesto sold 9 percent bonds payable with a $10 million face value (maturing in 20 yea

> Which of the following must be provided to every potential buyer of a new security? a. A letter of comments. b. A deficiency letter. c. A prospectus. d. A Form S–16.

> What is a taxable gift?

> What was the impact of the American Taxpayer Relief Act of 2012 on the conveyance of property?

> How is the federal estate tax computed?

> What is the purpose of the process of abatement? How does the executor of an estate utilize this process?

> Describe the four types of legacies, and give examples of each.

> Which of the following historical reasons for accounting diversity could explain why accounting standards would be more detailed in some countries than in others? a. Different rates of inflation across countries. b. Different legal systems across countri

> What are the differences between a devise, a legacy, and a bequest?

> What are homestead and family allowances?

> What is a cram down? a. An agreement about the total amount of money to be reserved to pay creditors who have priority. b. The bankruptcy court’s confirmation of a reorganization even though a class of creditors or stockholders did not accept it. c. The

> What claims against an estate have priority?

> How does an executor discover the claims against an estate?

> In what ways does the IASB differ from the IASC?

> If an asset of an estate has no readily ascertainable fair value, how should it be presented/valued on the charge/discharge statement?

> Redfield Company reports current earnings of $420,000 while declaring $52,000 in cash dividends. Snedeker Company earns $147,000 in net income and declares $13,000 in dividends. Redfield has held a 70 percent interest in Snedeker for several years, an in

> A local citizen gives a not-for-profit entity a cash donation that is restricted for research activities. The money should be recorded in a. Unrestricted Net Assets. b. Temporarily Restricted Net Assets. c. Permanently Restricted Net Assets. d. Deferred

> A private not-for-profit health care entity provides its patients with services that would normally be charged at $1 million. However, it estimates a $200,000 reduction because of contractual adjustments. It expects another $100,000 reduction because of

> What is a contractual adjustment? a. An increase in a patient’s charges caused by revisions in the billing process utilized by a health care entity. b. A year-end journal entry to recognize all of a health care entity’s remaining receivables. c. A reduct

> Mercy for America, a private not-for-profit health care facility located in Durham, North Carolina, charged a patient $8,600 for services. It actually billed this amount to the patient’s third-party payor. The third-party payor submitted a check for $7,9

> Even if all companies in the world were to use IFRS, what are two obstacles to the worldwide comparability of financial statements?

> Which of the following statements is true? a. The Securities Exchange Act of 1934 regulates intrastate stock offerings made by a company. b. The Securities Act of 1933 regulates the subsequent public trading of securities through brokers and markets. c.

> Many companies make annual reports available on their corporate website, often under an Investors tab. Annual reports also can be accessed through the SEC’s EDGAR system at www.sec.gov (under Filings, click Company Filings Search, type in Company Name, a

> In the accounting for health care providers, what are third-party payors? a. Doctors who reduce fees for indigent patients. b. Charities that supply medicines to hospitals and other health care providers. c. Friends and relatives who pay the medical cost

> Southwest is a private not-for-profit entity. It acquires Northeast, another private not-for-profit. The acquisition value is $980,000. Northeast has two assets (and no liabilities): equipment with a net book value of $120,000 but a fair value of $150,00

> What was the significance of the controversy in 1977 over the appropriate accounting principles to be used by oil- and gas-producing companies? a. Several major lawsuits resulted. b. Companies refused to follow the SEC’s dictates. c. Partners of a major

> BC and OP are both private not-for-profit entities. They are combined to create MN, a private not-for-profit with an entirely new board of directors. BC has land with a book value of $300,000 and a fair value of $400,000. OP has land with a book value of

> AB is a private not-for-profit entity. It acquires YZ, another private not-for-profit entity. The acquisition value is $1 million. YZ has net assets with a book value of $600,000 but a fair value of $700,000. Officials for AB expect that YZ will be predo

> A private not-for-profit entity receives two gifts. One is $80,000 and is restricted for paying salaries of teachers who help children learn to read. The other is $110,000, which is restricted for purchasing playground equipment. Both amounts are properl

> Pel Museum is a private not-for-profit entity. If it receives a contribution of historical artifacts, it need not recognize the contribution if the artifacts are to be sold and it will use the proceeds to a. Support general museum activities. b. Acquire

> In many cases, EPS is computed based on the parent’s portion of consolidated net income and parent company shares and convertibles. However, a different process must be used for some business combinations. When is this alternative approach required?

> What is an inherent limitation of the statement of financial affairs? a. Many of the amounts reported are only estimates that might prove to be inaccurate. b. The statement is applicable only to a Chapter 11 bankruptcy. c. The statement covers only a sho

> The Jones family lost its home in a fire. On December 25, 2017, a philanthropist sent money to the Amer Benevolent Society, a private not-for-profit entity, specifically to purchase furniture for the Jones family. During January 2018, Amer purchased furn

> A not-for-profit medical center performs services in the current year at a charge of $1 million. Of this amount, $200,000 is viewed as charity services because no collection was expected at the time of the work. The direct costs of that work were $80,000

> What are two differences between IFRS and U.S. GAAP with respect to the classification of financial statement items?

> A not-for-profit medical center performs services in the current year at a charge of $1 million. Officials expect bad debts to be $94,000. Another $200,000 is viewed as charity care services because no collection was expected at the time of the work. Wha

> Which of the following is a registration statement used by large companies that already have a significant following in the stock market? a. Form 8–K b. Form 10–K c. Form S–1 d. Form S–3

> Charity A and Charity B are affiliated entities. An accountant for Charity B is paid $10,000 per month, which is equal to the fair value of the services rendered. Charity A loses its accountant and the accountant from Charity B is sent to work with Chari

> On December 25, 2017, Mr. Jones gives Charity A 1,000 shares of stock that he bought originally for $9,000. No restrictions were placed on this donation. The governing board does not want to speculate on investments. Thus, it has a policy to sell all don

> On December 30, 2017, Leigh Museum, a not-for-profit entity, received a $7,000,000 donation of Day Co. common stock shares with donor-stipulated requirements as follows: The museum is to sell shares valued at $5,000,000 and use the proceeds to erect a pu

> The financial reporting for private not-for-profit entities primarily focuses on a. Basic information for the organization as a whole. b. Standardization of fund information reported. c. Inherent differences of various not-for-profit entities that impact

> To send a mailing, a private not-for-profit charity spends $100,000. The mailing solicits donations and provides educational and other information about the charity. Which of the following is true? a. No part of the $100,000 can be reported as a program

> Which of the following is not an expected function of a bankruptcy trustee? a. Filing a plan of reorganization. b. Recovering all property belonging to a company. c. Liquidating noncash assets. d. Distributing assets to the proper claimants.

> A private not-for-profit entity has the following activities performed by volunteers who work at no charge. In which case should no contribution be reported? a. A carpenter builds a porch on the back of one building so that patients can sit outside. b. A

> A private not-for-profit university charges its students tuition of $1 million. However, financial aid grants total $220,000. In addition, the school receives a $100,000 grant restricted for faculty salaries. Of this amount, $30,000 is spent appropriatel

> Mattoon, Inc., owns 80 percent of Effingham Company. For the current year, this combined entity reported consolidated net income of $500,000. Of this amount $465,000 was attributable to Mattoon’s controlling interest while the remaining $35,000 was attri

> A donor gives Charity 1 $50,000 in cash that it must convey to Charity 2. However, the donor can reconsider and revoke the gift at any time prior to its conveyance to Charity 2. Which of the following statements is true? a. Charity 1 should report a cont

> What are three difference between IFRS and U.S. GAAP with respect to the measurement of financial statement items?

> What is a registration statement? a. A statement that must be filed with the SEC before a company can begin an initial offering of securities to the public. b. A required filing with the SEC before a large amount of stock can be obtained by an inside par

> Under what circumstances is a company exempt from filing a registration statement with the SEC prior to the issuance of securities?

> A private not-for-profit entity receives three large cash donations: One gift of $70,000 is unrestricted. One gift of $90,000 is restricted to pay the salary of the organization’s workers. One gift of $120,000 is restricted forever with the income to be

> Which of the following statements is true? I. Private not-for-profit universities must report depreciation expense. II. Public universities must report depreciation expense. a. Neither I nor II is true. b. Both I and II are true. c. Only I is true. d. On

> A large private not-for-profit entity’s statement of activities should report the net change for net assets that are __Unrestricted _________Permanently Restricted a. Yes ……………………………………………………………………. Yes b. Yes …………………………………………………………………….. No c. No ………………

> Prior to filing a voluntary Chapter 7 bankruptcy petition, Haynes Company pays a supplier $13,000 to satisfy an unsecured claim. Haynes was insolvent at the time. Subsequently, the trustee appointed to oversee this liquidation forces the return of the $1

> A private not-for-profit health care entity has the following account balances: Revenue from newsstand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 50,000 Amounts charged to patients . . . . . . . . . . . . . . . . . . . . . . . . . .

> A voluntary health and welfare entity receives a gift of new furniture having a fair value of $2,100. The group then gives the furniture to needy families following a flood. How should the charity record receipt and distribution of this donation? a. Make

> A group of high school seniors performs volunteer services for patients at a nearby nursing home. The nursing home would not otherwise provide these services, such as wheeling patients in the park and reading to them. At the minimum wage rate, these serv

> Belwood University is a private not-for-profit school that has tax-exempt status. Which of the following is most likely to be the type of tax-exempt status that Belwood holds? a. 501(c)(3) b. 501(c)(4) c. 501(c)(5) d. 501(c)(6)

> Which of these forms must most tax-exempt organizations file annually with the Internal Revenue Service? a. 990 b. 1203 c. 501 d. 501(c)(3)

> Theresa Johnson does volunteer work for a local not-for-profit entity as a community service. She replaces without charge an administrator who would have otherwise been paid $31,000. Which of the following statements is true? a. The charity should recogn

> Dane, Inc., owns Carlton Corporation. For the current year, Dane reports net income (without consideration of its investment in Carlton) of $185,000 and the subsidiary reports $105,000. The parent had a bond payable outstanding on January 1, with a carry

> Which of the following is not a way by which the Sarbanes–Oxley Act attempts to ensure auditor independence from an audit client? a. The auditing firm must be appointed by the client’s audit committee. b. Audit fees must be approved by the Public Company

> What are three differences between IFRS and U.S. GAAP with respect to the recognition of financial statement items?

> What is a contractual adjustment? How does a health care organization account for a contractual adjustment?

> How are anticipated administrative expenses reported on a statement of financial affairs? a. As a footnote until actually incurred. b. As a liability with priority. c. As a partially secured liability. d. As an unsecured liability.

> Millager Company is a U.S.-based multinational corporation with the U.S. dollar (USD) as its reporting currency. To prepare consolidated financial statements for 2017, the company must translate the accounts of its subsidiary in Mexico, Cadengo S.A. On D

> The following account balances are for the Agee Company as of January 1, 2017, and December 31, 2017. All amounts are denominated in kroner (Kr). Additional Information ∙ Agee issued additional shares of common stock during the year o

> Board Company has a foreign subsidiary that began operations at the start of 2017 with assets of 132,000 kites (the local currency unit) and liabilities of 54,000 kites. During this initial year of operation, the subsidiary reported a profit of 26,000 ki

> Lancer, Inc. (a U.S.-based company), establishes a subsidiary in a foreign country on January 1, 2016. The following account balances for the year ending December 31, 2017, are stated in kanquo (KQ), the local currency: Sales . . . . . . . . . . . . . .

> Zugar Company is domiciled in a country whose currency is the dinar. Zugar begins 2017 with three assets: cash of 20,000 dinars, accounts receivable of 80,000 dinars, and land that cost 200,000 dinars when acquired on April 1, 2016. On January 1, 2017, Z

> Rolfe Company (a U.S.-based company) has a subsidiary in Nigeria where the local currency unit is the naira (NGN). On December 31, 2016, the subsidiary had the following balance sheet (amounts are in thousands (000’s)): The subsidiary

> Refer to the information in problem 26. Prepare a statement of cash flows in pounds for Sullivan’s Island Company’s foreign subsidiary and then translate these amounts into U.S. dollars. In problem 26 Sullivan’s Island Company began operating a subsidia

> Sullivan’s Island Company began operating a subsidiary in a foreign country on January 1, 2017, by investing capital in the amount of 60,000 pounds. The subsidiary immediately borrowed 140,000 pounds on a five-year note with 10 percent interest payable a

> Opus, Incorporated, owns 90 percent of Bloom Company. On December 31, 2017, Opus acquires half of Bloom’s $500,000 outstanding bonds. These bonds had been sold on the open market on January 1, 2015, at a 12 percent effective rate. The bonds pay a cash in

> The Isle of Palms Company (IOP), a U.S.-based entity, has a wholly owned subsidiary in Israel that has been determined as having the Israeli shekel (ILS) as its functional currency. On October 1, 2016, the Israeli subsidiary borrowed 500,000 Swiss francs

> On December 18, 2017, Stephanie Corporation acquired 100 percent of a Swiss company for 4.0 million Swiss francs (CHF), which is indicative of book and fair value. At the acquisition date, the exchange rate was $1.00 = CHF 1. On December 18, 2017, the bo

> The following accounts are denominated in rubles as of December 31, 2017. For reporting purposes, these accounts need to be stated in U.S. dollars. For each account, indicate the exchange rate that would be used to translate the ruble balance into U.S. d

> On January 1, Narnevik Corporation formed a subsidiary in a foreign country. On April 1, the subsidiary purchased inventory on account at a cost of 250,000 local currency units (LCU). One-fifth of this inventory remained unsold on December 31, while 30 p

> What amount of foreign exchange gain or loss should be reflected in McCarthy’s 2017 consolidated net income? a. $8,000 loss. b. $10,000 loss. c. $2,000 gain. d. $5,000 gain. McCarthy, Inc.’s Brazilian subsidiary borro

> At what amount should the Brazilian subsidiary’s euro note payable be reported on McCarthy’s December 31, 2017, consolidated balance sheet? a. $84,000. b. $86,000. c. $92,000. d. $128,800. McCarthy, Inc.â€&

> The functional currency of Bertrand, Inc.’s Irish subsidiary is the euro. Bertrand borrowed euros as a partial hedge of its investment in the subsidiary. Since then, the euro has decreased in value. Bertrand’s negative translation adjustment on its inves