3. Under which of the following scenarios would an entity not be classified as a variable interest entity? (Points : 2) The equity investing firms do not have the obligation to absorb the expected losses of the variable interest entity if they occur. The investing firms do not have the right to receive the expected residual returns of the variable interest entity if they occur. The total equity investment at risk is sufficient to permit the variable interest entity to finance its activities without additional subordinated financial support from other parties. The equity investing firms do not have the direct or indirect ability to make decisions about the variable interest entitys activities through voting rights or similar rights.

Question 4. 4. When a foreign entity has the foreign currency as its functional currency, it uses which exchange rate to translate revenues and expenses in the income statement? (Points : 2)

Average exchange rate during the period End of the period exchange rate Historical exchange rate Exchange rate on the date the asset or liability was obtained

Question 5. 5. Playtime Corporation Assume that Playtime Corp. has agreed to construct a new playground for SurreyCounty for $2,450,000. Construction of the new playground will begin on March 17, 2012 and is expected to be completed in August 2013. At the signing of the contract Playtime Corp. estimates that the it will cost $1,750,000 to build the playground. At the end of 2012 Funtime provided the following information about the project: Costs incurred Estimated costs Year to date remaining 2012 $1,200,000 $600,000 If Playtime uses the percentage of completion to recognize revenue on the long-term contract how much gross margin should Playtime recognize in 2012? (Points : 2)

$389,200 $278,000 $556,000 $433,550