Question 1: 10 M/Cs, one mark for each 1. Which risk exposure a forward contract hedges against? A. Economic exposure B. Transaction exposure C. Translation exposure D. All above 2. ABC corporation acquired 80% of the voting shares of Black Ltd. for $4,500,000. Black's carrying value of net assets was $2,000,000 on the acquisition day. If Black's earnings per share failed to reach the agreed level by the two parties in three years, it would return an amount of money back to ABC. This amount of money had a present value of $500,000 on the acquisition day. The carrying values of Black's assets and liabilities on the acquisition day were equal to their fair values except for the followings: Bank Loan Building Fair value $ 40,000 1,000,000 Book value $30,000 600,000 Goodwill reported for this acquisition under the entity theory is: A. $3,235,000 B. $3,390,000 C. $2,610,000 D. $2,590,000 3. Companies A and B entered to a joint operation on Jan 1, 20X1. On that day, A earned an interest of 30% from its contribution to the operation. On that day, A should A. Dr contributed asset (FV), Cr contributed asset (BV), Cr. unrealized gain (FV-BV). B. Dr contributed asset (FV), Cr contributed asset (BV), Cr. unrealized gain (FV- BV)*30%, Cr. realized gain (FV-BV)*70%. C. Dr contributed asset (FV), Cr contributed asset (BV), Cr. realized gain (FV-BV). D. Dr contributed asset (FV), Cr contributed asset (BV), Cr. unrealized gain (FV- BV)*70%, Cr. realized gain (FV-BV)*30%. 4. Which of the following statements is NOT true? A. NCI in consolidated net income can be affected by upstream inventory sales. B. NCI in consolidated net income can be affected by downstream inventory sales. C. Parent's portion in consolidated net income can be affected by upstream inventory sales. D. Parent's portion in consolidated net income can be affected by downstream inventory sales. E. A & C F. B & C G. A & D H. B & D