Study Guide Exam 2
There will be 30 Multiple Choice questions. Some will require calculations. You can bring one sheet of notes and a calculator. You are allowed to use scratch paper at the testing center during the exam.
Concentrate your studying on the following areas:
- Calculation of noncontrolling interest in subsequent years.
- Calculation of noncontrolling interest share of income for year of purchase and subsequent years.
- Calculation of noncontrolling interest when noncontrolling shares are not actively traded.
- Value of assets to be recorded on consolidated balance sheet if there is a noncontrolling interest.
- Calculation of consolidated net income attributable to the controlling interest.
- Calculating income when purchase is made mid-year.
- Consolidated revenues and cost of goods sold when downstream inventory sales occur.
- Effects of intra-entity sale of land on the Income Statement.
- If there are intra-entity inventory sales, when are gains realized.
- Recording of assets and liabilities after acquisition of a company when book value and fair value are not the same.
- Adjusting entries necessary at the acquisition of a company when book value and fair value of assets and liabilities are not the same.
- Adjusting entries necessary subsequent to acquisition of a company when book value and fair value of assets and liabilities are not the same.
- Worksheet entries for sale of inventory between parent and subsidiary.
- Effect of multiple purchases of stock on the parent, subsidiary and noncontrolling interest.
- Compare the effects of upstream and downstream transfers of inventory on income under the initial value method.
- Effect of sale of inventory to a foreign company denominated in US $.
- Definition and characteristics of a foreign currency option and forward exchange contract.
- If a US company sells merchandise to a foreign company denominated in the foreign currency, what happens if the foreign currency appreciates or depreciates.
- Calculate foreign exchange gain or loss on purchase from foreign company when exchange rate changes.
- Valuation of accounts payable, foreign exchange gain or loss, payment amount when purchase supplies from foreign company and exchange rate changes.
- Valuation of forward exchange contract on date of contract, at year end and at date of payment.
- Calculate gain/loss on forward contract on date of contract at year end and at date of payment.