Read the 2015 annual report of Air France Γ’ΒΒ KLM and answer the 20 questions asked regarding the accounting issues. Link is provided below:
http://www.airfranceklm.com/sites/default/files/publications/afkl_registration_doc_2015.pdf
1. Air France-KLM reports Γ’ΒΒConsolidated statement of recognized income and expensesΓ’ΒΒ for the year ended December 31, 2015. If this statement was a U.S. GAAP statement, what would be the title of this statement?
a. Consolidated statement of total net income
b. Consolidated statement of other comprehensive income
c. Consolidated statement of comprehensive income
d. Consolidated statement of recognized net income
2. What method does Air France-KLM use for the Statement of Cash Flows?
a. Indirect method
b. Direct method
c. Gross method
d. Net method
3. The basic and diluted earnings per share for the year ended December 31, 2015, indicates that Air France-KLM has:
a. no convertible debts.
b. some dilutive securities.
c. no preferred stocks.
d. some treasury stocks.
4. What method is used to account for investments in companies over which Air France-KLM can Γ’ΒΒexercise significant influence on financial and operating policy decisions?Γ’ΒΒ
a. Cost method
b. Liability method
c. Equity method
d. Fair value method
5. Sale of passenger tickets is accounted for at the time of ticket sale as:
a. Sales revenue
b. Deferred revenue
c. Contingent asset
d. No recognition
6. How does Air France account for business combination costs other than those related to the issuance of debt or equity securities?
a. Expensed as incurred
b. Capitalized as incurred
c. Included in goodwill
d. Used to offset fair value of the acquisition
7. Which of the following is not an Γ’ΒΒaccumulated other comprehensive incomeΓ’ΒΒ item among those reported in the Γ’ΒΒreserves and retained earningsΓ’ΒΒ in the 2015 consolidated balance sheet of Air France-KLM?
a. Available for sale securities reserves.
b. Derivatives reserves.
c. Legal reserves.
d. Pension defined benefits reserves.
8. What is the carrying amount of investments in debt and equity securities that are classified as available-for-sale?
a. Fair value Cost
b. Amortized cost
c. Lower of cost or market
9. Inventories are carried at:
a. The lower of the first-in-first-out cost or net realizable value.
b. The first-in-first-out cost.
c. The lower of the weighted-average cost or net realizable value.
d. The weighted-average cost.
10. Air France-KLM classifies its frequent flyer programs as:
a. Noncurrent liability
b. Current liability
c. Current asset
d. Other debt
11. The followings are included in Air France-KLMΓ’ΒΒs intangible assets, except for:
a. Trademarks
b. Leased aircraft
c. Customer relationships
d. Slots for takeoff and landing
12. Air France-KLM reports bank overdrafts as:
a. A contra account to cash and cash equivalents.
b. A current liability.
c. An expense.
d. A bank deposits in transit.
13. Which method does Air France-KLM use to record depreciation expense for its flight equipment?
a. The activity-based method.
b. The sum-of-yearsΓ’ΒΒ-digit method.
c. The straight-line method.
d. The group method.
14. Which accounting standards does Air France-KLM use?
a. U.S. GAAP
b. French GAAP
c. Netherlands GAAP
d. International Financial Reporting Standards
15. As of December 31, 2015, what assets are held for sale?
a. Land
b. Aircraft
c. Equipment
d. Buildings
16. Which of the following is included in Γ’ΒΒincome from operating activitiesΓ’ΒΒ but not in Γ’ΒΒincome from current operations?
a. Sale of aircraft equipment
b. Research and development costs
c. Bad debt expense
d. Interest revenue
17. Which of the following is not true about accounting treatment for the overhaul cost of major airframe and engine?
a. The cost is treated as separate asset component.
b. The cost is capitalized.
c. The cost is depreciated over the remaining useful life.
d. The cost is expensed as incurred.
18. How are financial assets accounted for if the Air France-KLM intends to sell them in the near future to realize capital gains?
a. At fair value with fair value changes recognized in the current period profit and loss
b. At fair value with fair value changes recognized as other comprehensive income
c. At cost with no recognition of fair value changes
d. At amortized cost with no recognition of fair value changes
19. Which of the following is not true about impairment test?
a. Tangible fixed assets, intangible assets, goodwill, and other assets with indefinite useful life are subject to an impairment test.
b. The impairment test is done at least once a year.
c. Recoverable value is the lower of the net realizable value and value in use.
d. The value in use is determined according to the discounted future cash flow method.
20. Which of the following is not an Γ’ΒΒother non-current income and expensesΓ’ΒΒ item?
a. Restructuring costs
b. Gains and losses on disposal of shares available for sale
c. Gains and losses on disposal of subsidiaries and affiliates
d. Gains and losses on sale of trading securities
