Reference no: EM131821224

1. On January 1, 2015, FGH acquired 30% of the common shares of MNO at a cost of $150,000. On January 1, 2015, MNO had net assets of $300,000 and any acquisition differential is related to equipment with an estimated useful life of 10 years. During 2015, MNO had net income of $50,000 and paid dividends of $40,000. FGH has significant influence over MNO. What would be the amount of FGH's investment income from its MNO investment for the year ended December 31, 2015?

2. Regarding not-for-profit organizations, which one of the following statements is true?

a. Section 4430 of the CPA Canada Handbook requires small NFPOs to capitalize but not depreciate its capital assets.

b. Effective January 1, 2013, government organizations that use accounting standards for NFPOs must use the CPA Canada Public Sector Accounting Handbook.

c. Both large and small NFPOs may choose to report using Part IV of the CPA Canada Handbook or International Financial Reporting Standards.

d.Both large and small NFPOs may choose to report using Part III of the CPA Canada Handbook or International Financial Reporting Standar

3. Fast Company (a Canadian company) entered into a forward exchange contract with RBC at a three-month forward rate of US $1 = CDN $1.05. A month later, the forward two-month rate is US $1 = CDN $1.07. Which one of the following would result in a credit to Other Comprehensive Income for the first month of the contract?

a. The forward contract is designated as a cash flow hedge for an anticipated sale.

b. The forward contract is designated as a cash flow hedge for an anticipated purchase.

c. The forward contract is designated as a fair value hedge for an anticipated sale.

d. The forward contract is designated as a fair value hedge for an anticipated purchase.

4. What is the effect of reclassifying a financial instrument from long-term debt to equity?

a. The debt-tovequity ratio will decrease.

b. The debt-to-equity ratio will increase.

c. The current ratio will decrease:

d. The current ratio will increase.

5. Best Company owns 20% of Mix Ltd., a joint venture. During 2016, Best reported sales of $600,000 to Mix and earned a 40% gross profit on the sales. During 2016, Mix did not sell any of these items. For the 2016 consolidated income statement, by how much should Best Company's sales be reduced?

a. $56,000

b. $120,000

c. $240,000

d. $600,000