Hasher Inc borrowed issued 2500 (quantity) bonds with a face value of $ 1000 at the beginning of 2012. The bonds original maturity was 5 years coupon is 6% p.a. The bonds were issued at $1025 per in 2012 and the company spent $ 3 as issue expense per bond. An analyst tracking Hasher Inc made the following statements. He is correct with respect to
I. If the company follows IFRS the effective yield of the bond that should be used for calculating interest expense is 5.42%
II. If the company follows US GAAP then it will report bond amortization of $4.5 in 2012, under effective yield method
III. If the company's operating profit remains constant during the life of the bond the company's interest coverage ratio will be highest in 2012.
Hai Friends.. I am planning to do CFA. I have completed Bcom long back & my work Ex is from Sales & Marketing and i want to get into finance field especially in Investment Management. Can u tell me about CFA levels, Difficulty, expenses, target period, Job opportunity and package after completing CFA level 1 etc...
In a period of rising prices, when compared to a company that uses weighted average cost for inventory, a company using FIFO will most likely report higher values for its:
James an analyst wants to construct confidence intervals for the population mean of a normal distribution when the population variance is unknown. The appropriate test that he should choose is
a) The t-statistic at α/2 with n degrees of freedom.
b) The z-statistic at α/2 with n-1 degrees of freedom.
c) The t-statistic at α/2 with n – 1 degrees of freedom.
Udance Inc owns an investment property which is being carried at fair value based on the prevailing rental markets. The company bought the investment property under discussion in 2009 and the fair values for next four years are as given below.
2009 Beginning Purchase cost: $ 275,000
Fair Value at the end of 2009: $ 272,000
Fair Value at the end of 2010: $ 265,000
Fair Value at the end of 2011: $ 285,000
Fair Value at the end of 2012: $ 260,000
If Udance inc follows IFRS then with respect to this property which of the following statement is MOST appropriate. In 2012 financial statements the company should
a) Charge $ 5,000 to net income
b) Charge $ 10,000 to revaluation reserve and $15,000 to net income
A company received a sales advance on $25,000 on 15-January 2011 and recorded it as deferred revenue immediately. During the year they delivered the goods but because of clerical error the company failed to make adjusting entry. Ignoring taxes, which of the below is the MOST likely effect of this error
Basin Bank owns bonds which are classified as Available for sale. The bond witnessed a drop in fair value during the year. All else remaining the same if the company has classified the bonds as Held for Trading the Net profit would have been
Below are the purchase and sale details of furniture inventory. If the company uses LIFO inventory reporting then which of the below statement is LEAST accurate
a) Cost of Goods sold under perpetual inventory reporting will be higher than COGS of periodic inventory reporting by $ 50
b) The inventory turnover under perpetual inventory reporting will be higher than ITR under periodic inventory reporting
c) The cash flow from operations under both perpetual and periodic inventory system would be the same
Bravo and Gayle were discussing about financial statements and made the following statements
Bravo: The free cash flow to equity of a firm will always be lesser that free cash flow to firm as the later involves cash flow to all stake holders compared to FCFE which includes cash flow to only equity holders. When a long lived asset were bought for cash the net effect on investment cash flow would be zero as one item is negative and other is positive
Gayle: US GAAP requires reconciliation of net income with cash flow from operations only if indirect method of cash flow reporting is followed. Under IFRS but not under US GAAP, a company must report its Free cash flow to equity as a part of its financial statements.
a) Bravo is partially incorrect and Gayle is partially incorrect
b) Bravo is partially incorrect and Gayle is completely incorrect
c) Bravo is completely incorrect and Gayle is completely incorrect
Bokaro inc reported Inventory Turnover ratio of 6, Receivable turnover ratio of 8 and payable turnover ratio of 10. The company's cash conversion cycle is closest to
Dinesh and Dwarak were discussing about IFRS frame work for preparation and presentation of financial markets
Dinesh: The objective of the framework is providing guidance in preparing financial statements which present current financial position of the company only. The framework assumes the concern is a going concern and hence all revenues and expenses are to be reported in accrual basis
Dwarak: The elements of financial statements can be reported at historical cost only. The financial statements should have qualitative characters such as Understandability, relevance, reliability and comparability.
a) Dinesh is completely correct and Dwarak is partially correct
b) Dinesh is partially correct and Dwarak is completely correct
c) Dinesh is partially correct and Dwarak is partially correct
I am planning to take up cfa level 1 in dec 2014. I have'nt register for it yet. Before investing I want to see if its my cup of tea. guys can anyone of u provide me with some study material (atleast starter) so that i can gauge myself. Also do I need to join any coaching classes or self study would suffice??
Sarvy Motors sold a car for $ 18,000 to be paid in twelve equal installments. Sarvy's appropriate discount rate is 10%. The inventory value of the car is $ 15,000. Which of the below statements is/ are correct
I. If Sarvy follows US GAAP and the it is certain about collections then at the time of sale the company should report a gross profit of $ 3000
II. If Sarvy follows IFRS and it is certain about collections of EMI then at the time of sale it should report a gross profit of $ 2,062
III. If Sarvy is not certain about collections then at the end of month 1 (at the time of collection of 1st installment) the company can recognize no profit as per both IFRS and US GAAP
Airpower Inc established a wind power mill at a price of US $ 100 mn. To encourage green energy the company got a subsidy of $ 20 mn at the start of operations of the asset. The company's margin tax rate is 20%. For tax purpose the subsidy should be used to reduce the carrying value of the asset where as for accounting purpose the subsidy should be treated as other income. With respect to this wind power mill Airpower which of the below statement is LEAST likely correct
I. Recognize a Deferred tax liability of $ 4 mn at inception
II. The total asset turnover ratio as calculated using accounting statements would be higher
III. Ignoring the effect of tax, the owner's equity would be same under both accounting and tax statement
