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(ACCT202)[2010](s)midterm~1406^_10052.pdf
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ACCT 202 Financial Accounting II Spring 2010 Midterm Exam
Date: March 26, 2010 (Friday) Time: 7:00pm C 8:30pm (1.5 Hours)
This exam paper contains SIX (6) pages (including this cover page).
Instructions:
1.
This is a CLOSED book examination.

2.
This exam contains EIGHT (8) questions. ALL questions are compulsory.

3.
Answer all questions in the answer booklet provided.

4.
Write your name, student number, and lecture section number (L1: Mon 1630-1750 & Fri 1200-1320; L2: Mon 1330-1450 & Fri 0900-1020) on the cover of the answer booklet.

5.
START EACH QUESTION ON A NEW PAGE. Indicate the question no clearly.

6.
SHOW YOUR WORKINGS. If you do not show your workings, you may not receive full credit for a correct answer and you will not receive any partial credit for an incorrect answer.

7.
Materials, aids and instruments allowed during the examination: present value tables and electronic calculators ONLY.

8.
Budget your time wisely. You have 90 minutes to get a maximum of 90 marks. On average, use 1 minute to get every 1 mark.

9.
You may keep this exam paper. Answers to this exam will be released on LMES tonight. Please report any problem in the answers immediately.



TURN OFF YOUR MOBILE PHONES!!!


(a)
Bonds may be retired prior to maturity in THREE ways. List them. (3 marks/minutes)

(b)
For each of the ways identified in (a) above, indicate whether a gain or loss should be recognized on the income statement.



(3 marks/minutes)

(a)
What is the difference between a basic stock option plan and a performance-based stock option plan in the computation of compensation expense?

(3.5 marks/minutes)

(b)
What are the TWO differences in accounting for the obligation under a stock option plan versus a stock appreciation rights (SAR) plan?

(3.5 marks/minutes)

(a)
Compare and contrast the effects of a stock dividend and a stock split on stockholders equity.



(3 marks/minutes)
(b) Under US GAAP, what is the difference in the accounting for a small stock dividend versus a large stock dividend? Why is there such a difference?
There is no need to discuss how to distinguish between a small stock dividend and a large stock dividend.
(4 marks/minutes)
CONTINUE ON NEXT PAGE

(a)
What criteria must be met for a security to be classified as held to maturity?

(1.5 marks/minutes)

(b)
What criteria must be met for a security to be classified as a trading security?

(1.5 marks/minutes)

(c)
What criteria must be met for a security to be classified as an available-for-sale security?


(2 marks/minutes)
(d) What criteria must be met for a security to be classified as an equity method security?
(2 marks/minutes)

(a)
How is an other-than-temporary decline in the value of investments recorded? (2 marks/minutes)

(b)
After an other-than-temporary decline in the value of investments ha