1 .        Which of the following is NOT true about accounting standards in Singapore?

A)  Singapore achieved full convergence with IFRS for Singapore listed companies.

B)  The Accounting Standards Council (ASC) sets SFRS(I), Singapore’s equivalent of the IFRS.

C)  Compliance with SFRS(I) is enforced by the Accounting Standards Council (ASC).

D)  Non-compliance with SFRS(I) may be allowed if companies apply standards other than SFRS(I).

2 .        Which of the following is NOT true about the statement of financial position for a company listed in SGX?

A)   Presentation of assets and liabilities is based on a current and non -current distinction .

B)  Current assets include items expected to be sold or consumed within the company’s normal operating cycle or less than 12 months from the company’s financial statement date.

C)  The statement of financial position is a voluntary disclosure as it is not required by the SGX listing manual.

D)  Some liquid investments could be non-current if the company intends to hold the investments to maturity .

Use the following information to answer Questions 3 and 4.

On January 1, 2020, Robert, Inc. purchased a $2,000,000 , 10-year, 10% bond issued by Libby Company for a price of $1,770,592 . Libby pays interest semiannually each June 30 and December 31. The effective interest rate for this bond is 12% . For the year ended December 31, 2020, Robert recognized an interest revenue of $212,846. On January 15, 2021, Robert sold the bond for market price. Additional information on the bond’s market price is as follows:

Jan . 1, 2020   June 30, 2020 Dec. 31, 2020 Jan . 15, 2021

Market Price

$1,770,592

$1,780,000

$1,820,000

$1,810,000

3 .        Assume that Robert designated the above investment as AC. On December 31, 2020, at what amount would Robert report this investment in its balance sheet?

A)  $1,770,592

B)  $1,776,828 C)  $1,783,438

D)  $1,820,000

4 .        Assume that Robert designated the above investment as FVTOCI and recognized a $36,562 of OCI for the year ended December 31, 2020. What would be the effect of the sale of this investment on January 15, 2021 , on the company’s net income for 2021?

A) Increase by $10,000

B)  Increase by $26,562

C)  Decrease by $10,000

D) Decrease by $36,562

5 .        Which of the following does NOT affect the total comprehensive income for the year 2020 for a company listed in SGX?

A)  The company recognized revenues from its sale to a customer in 2020.

B)  The  company recognized an  unrealized gain  from  its  equity  investment designated as FVTPL in 2020.

C)  The company declared and paid dividends to its shareholders in 2020 .

D)  The company recognized an impairment loss for its building in 2020 .

6 .        Which of the following is true about disclosures of financial information?

A)  Firms will provide voluntary disclosures if the benefits of the disclosure exceed the costs.

B)  Firms are not required to report the statement of comprehensive income if they follow SFRS(I).

C)  Fees paid to auditors for non -audit work are not required to be disclosed for firms listed in SGX.

D)  Financial information can address information asymmetry problems but cannot mitigate agency problems.

Use the following information to answer Questions 7 and 8.

On January 1, 2020, Deborah Company purchased a $100,000, 10-year, 4 .5% bond issued by Ezra Company for a price of $104,059 . Ezra pays interest annually each December 31. The effective interest rate for this bond is 4% . For the year ended December 31, 2020, Deborah recognized an interest revenue of $4,162 . On January 15, 2021, Deborah sold the bond for market price. Additional information on the bond’s market price is as follows:

Jan . 1, 2020   Dec. 31, 2020 Jan . 15, 2021

Market Price

$104,059

$101,000

$104,000

7 .        Assume that Deborah Company designated the above investment as FVTPL. What amount of unrealized gain or loss from this investment would Deborah report in its income statement for the year ended December 31, 2020?

A) A loss of $3,059

B)  A loss of $2,721

C)  A loss of $1,059

D) No gain or loss

8 .        Assume that Deborah Company designated the above investment as FVTPL. What would be the effect of the sale of this investment on January 15, 2021 , on the company’s total comprehensive income for 2021?

A) Increase by $279

B)  Decrease by $59

C)  Increase by $3,000

D) No effect

9 .        Which of the following is true about segment reporting under SFRS(I) 8?

A)  Segment information is not very useful to financial statement users if the company is a conglomerate operating in diverse industries.

B)  Defining an operating segment does not have to be consistent with the way resources are allocated within a firm and performance is evaluated internally .

C)  An entity must report separately information about operating segments with revenue, profit/loss, or assets, greater than 1% of the entity .

D)  An entity must provide reconciliations of the totals of segment amounts to corresponding entity amounts .

10 .      Which of the following is true about a firm’s minority passive investment under SFRS(I) 9?

A)  The firm’s equity investment can be designated AC, FVTOCI, or FVTPL, depending on its business model.

B)  The firm may increase its net income when disposing of its equity securities designated as FVTOCI if the selling price is higher than the asset’s beginning- of-period fair value .

C)  The firm should recycle previously recognized OCIs to  net income when disposing of its equity securities designated as FVTOCI.

D)  At initial recognition, the firm is not allowed to elect to  designate equity securities as FVTOCI if the securities are held for trading.

Use the following information to answer Questions 11 and 14.

On January 1, 2020, Alex Company purchased 10% of Michigan Corporation's ordinary shares for $500,000. For the year ended December 31, 2020, Michigan reported a net income of $8,500,000 and paid a dividend of $2,500,000 . On January 15, 2021, Alex sold all of its investment in Michigan for market price. Additional information on Michigan’s stock price (per share) is as follows:

Stock Price (per share)

Jan . 1, 2020                      $1.0

Dec. 31, 2020                   $1.2

Jan . 15, 2021                   $0.9

1 1 .      Assume that Alex Company designated the above investment as FVTPL. What would be the effect of this investment on the company’s net income for the year ended December 31, 2020?

A) Increase by $100,000

B)  Increase by $250,000

C)  Increase by $350,000

D) Increase by $850,000

Selling Price – Latest carrying amount = (0.9 * 500000) – (1.2*500000) = -150000 NI: - 150,000

OCI:0

TCI: -150,000

12 .      Assume that Alex Company designated the above investment as FVTPL. What would be the effect of the sale of this investment on January 15, 2021 , on the company’s total comprehensive income for 2021?

A) No effect

B)  Decrease by $50,000

C)  Decrease by $100,000 D) Decrease by $150,000

13 .      Assume that Alex Company designated the above investment as FVTOCI. What would be the effect of this investment on the company’s net income for the year ended December 31, 2020?

A) Increase by $100,000 B)  Increase by $250,000

C)  Increase by $350,000

D) Increase by $850,000

Dividend Income: 10% * 2500000 = 250,000 OCI: (1.2 – 1.0) * 500000 = 100,000

14 .      Assume that Alex Company designated the above investment as FVTOCI. If there is no transfer of AOCI to retained earnings, what would be the effect of the sale of this investment on January 15, 2021 , on the company’stotal comprehensive income for 2021?

A) No effect

B)  Decrease by $50,000

C)  Decrease by $100,000 D) Decrease by $150,000

15 .      Brown Company bought the equity securities listed below during 2020. These securities were classified as FVTPL. Brown reported a net unrealized loss of $23,000 on these securities in its income statement for the year ended December 31, 2020. Pertinent data at the end of December 31, 2021 , is as follows:

Security

X

Y

Z

Cost

$390,000

$190,000

$430,000

Fair Value

$362,000

$170,000

$424,000

What amount of loss on these securities should Brown include in its income statement for the year ended December 31, 2021?

A)  $0

B)  $3,000

C)  $31,000

D)  $44,000

16 .      On January 1, 2020, Haily Corporation purchased 25% of the outstanding ordinary shares of Lisa Corporation for $1,800,000 . As a result of this purchase, Haily now has a significant influence on Lisa. The purchase cost was equal to 25% of the book value of Lisa’s net assets. On November 15, 2020, Lisa declared andpaid $2 million in dividends. Lisa reported a net loss of $9 million for the year 2020 . There were no intercompany transactions between Haily and Lisa in 2020 . What amount of loss should Haily report in its income statement for the year ended December 31, 2020, with respect to its investment in Lisa?

A)  $2,000,000

B)  $2,250,000

C)  $2,550,000

D)  $2,750,000

17 .      On  January  1,  2020, Nelson  Corporation purchased 20%  of the  outstanding ordinary shares of Silver Company for $300,000. As a result of this purchase, Nelson now has a significant influence on Silver. At the time ofpurchase, the book value of Silver’s net assets was $1,375,000 . The excess of the purchase cost over the book value was all allocated to an intangible asset on Silver's books , which had a remaining useful life of five years with zero salvage value . For the year ended December 31, 2020, Silver reported a net income of $125,000 and paid cash dividends of $25,000. There were no intercompany transactions between Nelson and Silver in 2020 . What is the carrying value of Nelson's investment in Silver at December 31, 2020?

A)  $295,000

B)  $300,000

C)  $315,000

D)  $320,000

18 .      On January 1, 2020, Samuel Company purchased 25% of the outstanding ordinary shares of Daniel Company for $1,200,000. As a result of this purchase , Samuel now has a significant influence on Daniel. At the time of purchase, the book value and fair value of Daniel’s net assets were $3,000,000 and $4,000,000, respectively. The excess of the fair value over the book value was allocated to Daniel’s building, which is to be depreciated over the remaining 10 years with zero salvage value on a straight-line basis. In 2020, Samuel sold $96,000 ofinventory to Daniel for a price of $160,000. During the same year, Daniel resold $120,000 of this inventory to retail consumers. Daniel reported a net income of $800,000 and paid a dividend of $200,000 for the year ended December 31, 2020 . What amount of equity income would Samuel report as a line item on the company’s income statement for the year ended December 31, 2020.

A) $121,000

B) $159,000

C) $171,000

D) $196,000

19 .      On  December  31,  2020, Manchester  Company  acquired  100%  of  Cascade Company’s common stock. During the year 2021, Manchester sold goods costing $10,000 to Cascade for $15,000 for cash . These goods were all sold for $20,000 on credit by Cascade to external customers later in the same year. At the end of 2021, Manchester Company mistakenly failed to make adjustments for the intercompany transactions between Manchester and Cascade when preparing for its consolidated financial statements. Which ofthe following is true regarding the effect of this error on the consolidated financial statements?

A) Inventory is overstated by $5,000.

B)  Revenue is understated by $15,000.

C)  Account receivable is overstated by $15,000 .

D)  COGS is overstated by $15,000.

20 .      On December 31, 2020, Bhojraj Company acquired 50% of Kothari Corporation for $45,000. Under IFRS, Kothari is treated as Bhojraj’s joint operation . Which of the following is true about Bhojraj’s investment in Kothari?

A) Bhojraj would report higher income from this investment for the year 2021 if Kothari was treated as a joint venture.

B) Bhojraj would report lower income from this investment for the year 2021 if Kothari was treated as a joint venture.

C) Bhojraj would report more liabilities due to this investment at the end of 2021 if Kothari was treated as a joint venture.

D) Bhojraj would report less liabilities due to this investment at the end of 2021 if Kothari was treated as a joint venture.

21 .      Which of the following is true about the acquisition method for intercorporate investment with controlling interest?

A) The parent company reports its investment in subsidiaries as an asset account in its balance sheet.

B) The owners’ equity of the subsidiary is added to the parent company’s balance sheet as part of the owners’ equity of the parent company.

C)  The parent company is required to  apply the  equity  method to  value its investment in subsidiaries.

D) The excess of the purchase price over the fair value of the subsidiary's net assets is recognized as goodwill.

Use the following information to answer Questions 22 and 25.

On December 31, 2020, RebeccaCompany acquired 70% of Timothy Company’s common stock for $85,000 . Rebecca estimated that it would have paid $120,000 if it had acquired 100% of Timothy’s common stock. As a result of the acquisition, Rebecca controlled the management and operations of Timothy Company . On the date of acquisition, the book values and fair values of Timothy Company’s identifiable assets and liabilities were the same except for a building, which had a fair value of $70,000, a remaining useful life of 20 years with zero salvage value , and is depreciated using the straight-line method . The pre- acquisition balance sheets for each company as of December 31, 2020, are as follows:

Pre-acquisition Balance Sheets - Dec. 31, 2020

For the year ended December 31, 2021, Rebeccareported a net income of $20,000 (revenue $70,000; expenses $50,000) and Timothy reported a net income of $10,000 (revenue $40,000; expenses $30,000) on their separate income statements before consolidation .

22 .      If Rebecca applies the “partial goodwill” method for consolidation, what amount of noncontrolling interest would the company report on its consolidated balance sheet at December 31, 2020?

A) $15,000

B) $22,000    C) $28,000

D) $30,000

23 .      If Rebecca applies the “full goodwill” method for consolidation, what amount of goodwill would the company report on its consolidated balance sheet at December 31, 2020?

A) $15,000

B) $20,000

C) $28,000

D) $35,000

24 .      If Rebecca applies the “full goodwill” method for consolidation, what amount of noncontrolling interest would the company report on its consolidated balance sheet at December 31, 2021? Assume no tax, no dividends, no intercompany transactions, and no goodwill impairment.

A) $30,700

B) $35,000

C) $37,700

D) $38,000

25       What amount of net income is  attributable to  Rebecca’s shareholders in  the

company’s consolidated income statement for the year ended December 31, 2021? Assume no tax, no dividends, no intercompany transactions, and no goodwill impairment.

A) $26,000

B) $26,300

C) $29,000

D) $30,300