All of the following are MNE consolidation methods except (Points : 4) Full consolidation Proportional consolidation Equity method Intangible elimination method

Question 2. 2. Research and development costs (Points : 4)

Are generally written off immediately to earnings in the United States. Are typically capitalized and amortized. Are not very significant due to the lack of R&D being done in the U.S. currently. Are split into two parts by the IASB. Research costs should be capitalized, whereas development costs should be written off.

Question 3. 3. Most countries (Points : 4)

Require the direct method of cash flow statements Require the indirect method of cash flow statements Require the working capital approach Dont require any specific method in cash flow statements

Question 4. 4. The trend of IASB accounting for combinations is becoming (Points : 4)

Less restrictive No trend is present Dependent on business cycles More restrictive

Question 5. 5. A major argument in favor of setting up goodwill as an asset without amortization is that (Points : 4)

It is inconsistent to amortize purchased but not internally generated goodwill. It is the cost of resources which will be used up. Its future value is being continuously maintained. Everything needs to pass through the income statement sometime.

Question 6. 6. The major argument against segment disclosure is that (Points : 4)

Data collection costs are high That competitors will take advantage of the data Earnings conservatism will be affected In some cases it may be inappropriate and misleading

Question 7. 7. Market risk measures are correlated to I. Accounting-based risk measures formed from line of businesses II. Accounting-based risk measures formed from geographical areas (Points : 4)

I only II only Neither I or II Both I and II

Question 8. 8. A major value of segment information for users is that (Points : 4)

It focuses on issues other than cash flows. In the United States, GAAP requires firms to disclose segment information by major country. It provides information to investors that might involve cost of preparation but not cost of competitive advantage. It allows users who have different information needs to get disaggregated information that might be of use to them.

Question 9. 9. A problem with segment disclosure is that (Points : 4)

IAS 14 has been rejected by MNEs There are too many segments Segment reporting is only within the UK scope of the audit Management will be disclosing its own view of segments with significant differences in risk and return

Question 10. 10. The IASB's segment reporting standard IAS 14 (Points : 4)

Gives management more discretion to identify geographic segments. Bases its requirements on the company's organization structure and internal reporting system. Contradicts proposals for reform issued by the FASB. Restricts the criteria for identifying segments to assessing "risks and returns".