Question
9Turkey Corporation purchased an investment in 2020 (an equity investment without significant influence). The purchase price of $ 94,000 included transaction costs of $ 1,000.
9Turkey Corporation purchased an investment in 2020 (an equity investment without significant influence). The purchase price of $ 94,000 included transaction costs of $ 1,000. Assuming the transaction costs were capitalized and Turkey follows IFRS, which accounting method did Turkey use to account for this investment?
| a. | fair value through net income (FVNI) | |
| b. | fair value through other comprehensive income (FVOCI)
| |
| c. | amortized cost
| |
| d. | equity |
On January 2, 2020, Former Corp. purchased 200 of the 1,000 outstanding common shares of Ryder Ltd. for $ 60,000. During 2020, Ryder declared total cash dividends of $ 10,000 and reported net income for the year of $ 40,000. If Former uses the equity method of accounting for its investment in Ryder, Formers Investment in Ryder Ltd. account at December 31, 2020 should be
| a. | $ 60,000.
| |
| b. | $ 58,000. | |
| c. | $ 66,000.
| |
| d. | $ 68,000.
|
Jenson Inc. owns 35% of Hoover Corp., and has significant influence over Hoover. During the calendar year 2020, Hoover reported net income of $ 300,000 and paid dividends of $ 30,000. Jenson mistakenly recorded these transactions using the cost method rather than the equity method of accounting. What effect would this have on Jensons investment account, net income, and retained earnings, respectively?
| a. | overstate, understate, understate
| |
| b. | understate, overstate, overstate
| |
| c. | understate, understate, understate | |
| d. | overstate, overstate, overstate |
Feather Ltd. has 35 employees who work 8-hour days and are paid hourly. On January 1, 2020, the company began a program of granting its employees 10 days paid vacation each year. Vacation days earned in 2020 may be taken starting on January 1, 2021. Information relative to these employees is as follows:
Hourly Vacation Days Earned Vacation Days Used
Year Wages by Each Employee by Each Employee
2020 $ 12.90 10 0
2021 13.50 10 8
2022 14.25 10 10
Feather has chosen to accrue the liability for compensated absences (vacation pay) at the current rates of pay in effect when the vacation pay is earned.
What is the amount of vacation pay expense that should be reported on Feathers income statement for 2020?
| a. | $ 34,440
| |
| b. | $ 36,120
| |
| c. | $ 37,800
| |
| d. | $ 0 |
On January 2, 2020, Former Corp. purchased 200 of the 1,000 outstanding common shares of Ryder Ltd. for $ 60,000. During 2020, Ryder declared total cash dividends of $ 10,000 and reported net income for the year of $ 40,000. If Former uses the equity method of accounting for its investment in Ryder, Formers Investment in Ryder Ltd. account at December 31, 2020 should be
| a. | $ 60,000.
| |
| b. | $ 58,000. | |
| c. | $ 66,000.
| |
| d. | $ 68,000.
|
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CISA Certified Information Systems Auditor Study Guide Aligned With The CISA Review Manual 2019 To Help You Audit Monitor And Assess Information Systems
Authors: Hemang Doshi
1st Edition
1838989587, 978-1838989583
