TEST BANK FOR ADVANCED FINANCIAL
ACCOUNTING 13TH EDITION
BY THEODORE CHRISTENSEN
,TEST BANK FOR
Advanced Financial Accounting 13th Edition By Theodore Christensen
ChapterNM1 IntercorporateN M AcquisitionsN M andNMInvestmentsN M inN M OtherN M Entities
1) AssumingNMnoNMimpairmentN M inNMvalueNMpriorNMtoNMtransfer,NMassetsNMtransf
erredN M byNMaN M parentN M companyNMtoNManotherN M entityN M itN M hasN M createdN
M shouldN M beN M recordedN M byN M theN M newlyN M createdN M entityN M atN M theN M a
ssets':
A) costNMtoNMtheNMparentNMcompany.
B) bookNMvalueNMonNMtheNMparentN M company'sNMbooksNMatNMtheNMdateNMofNMtransfer.
C) fairNMvalueNMatNMtheNMdateNMofNMtransfer.
D) fairNMvalueNMofNMconsiderationNMexchangedNMbyNMtheNMnewlyNMcreatedNMentity.
Answer:NMBNM
Difficulty:NM1N
MEasy
Topic:N M InternalN M Expansion:N M CreatingN M aN M BusinessN M Entity;N M Valuation
N M ofN M BusinessN M EntitiesNMLearningN M Objective:N M N M 01-
01N M UnderstandN M andN M explainN M theN M reasonsN M forN M andN M differentN M met
hodsN M ofNMbusinessNMexpansion,NMtheNMtypesNMofN M organizationalN M structures,N
MandNMtheNMtypesNMofNMacquisitions.;NM01NM-
03NMMakeN M calculationsN M andN M prepareN M journalN M entriesN M forN M theN M cre
ationN M ofN M aN M businessN M entity.
Bloom's:
RememberN M AA
CSB:N M ReflectiveNMThink
ingNMAICPA:
FNNMDecisionNM
Making
2) GivenNMtheNMincreasedNMdevelopmentNMofNMcomplexNMbusinessNMstructures,N
MwhichNMofNMtheNMfollowingN M regulatorsN M isN M responsibleN M forN M theN M
continuedN M usefulnessN M ofN M accountingN M reports?
A) SecuritiesNMandN M ExchangeNMCommissionN M (SEC)
B) PublicN MCompanyN M AccountingNMOversightN M BoardNM(PCAOB)
C) FinancialN M AccountingN M StandardsNMBoardN M (FASB)
D) AllNMofNMtheNMotherNManswersNMareNMcorrect
Answer:NMDNM
Difficulty:NM1N
MEasy
Topic: AnNMIntroductionNMtoNMComplexNMBusinessN M Structures
LearningN M Objective:N M N M 01-
01NMUnderstandNMandNMexplainNMtheNMreasonsNMforNMandNMdifferentN M methods
NMofN M businessN M expansion,N M theN M typesN M ofN M organizationalN M structures,N
M andN M theN M typesN M ofN M acquisitions.
,Bloom's:
RememberN M AA
CSB:N M ReflectiveNMThink
ingNMAICPA:
FNNMReporting
3) ANMbusinessNMcombinationNMinNMwhichNMtheNMacquiredNMcompany'sNMassetsNM
andNMliabilitiesNMareNMcombinedN M withN M thoseN M ofN M theN M acquiringN M compa
nyN M intoN M aN M singleN M entityN M isN M definedN M as:
A) StockNMacquisition
B) LeveragedN M buyout
C) StatutoryNMMerger
D) ReverseN M statutoryNMrollup
, Answer:NMCNM
Difficulty:NM1N
MEasy
Topic: OrganizationalNMStructureN M andNMFinancialNMReporting
LearningN M Objective:N M N M 01-
04NMUnderstandNMandNMexplainNMtheNMdifferencesNMbetweenNMdifferentN M formsN
MofNMbusinessNMcombinations.
Bloom's:
RememberN M AA
CSB:N M ReflectiveNMThink
ingNMAICPA:
FNNMDecisionNM
Making
4) InNMwhichNMofNMtheNMfollowingNMsituationsNMdoNMaccountingN M standardsNM
notNMrequireNMthatN M theNMfinancialNMstatementsN M ofNMtheN M parentN M andN
M subsidiaryN M beN M consolidated?
A) ANMcorporationNMcreatesNMaNMnewNM100NMpercentN M ownedNMsubsidiary
B) ANMcorporationNMpurchasesNM90NMpercentN M ofNMtheNMvotingNMstockNMofNManotherN M co
mpany
C) ANMcorporationN M hasNMbothNMcontrolNMandN M majorityNMownershipNMofNManNMunincorpor
atedNMcompany
D) ANMcorporationNMownsNMless-
thanNMaN M controllingN M interestN M inNManNMunincorporatedNMcompany
Answer:NMDNM
Difficulty:NM1N
MEasy
Topic: OrganizationalNMStructureN M andNMFinancialNMReporting
LearningN M Objective:N M N M 01-
01NMUnderstandNMandNMexplainNMtheNMreasonsNMforNMandNMdifferentN M methods
NMofNMbusinessN M expansion,N M theN M typesN M ofN M organizationalN M structures,N
M andN M theN M typesN M ofN M acquisitions.
Bloom's:
RememberN M AA
CSB:N M ReflectiveNMThink
ingNMAICPA:
FNNMDecisionNM
Making
DuringN M itsNMinception,N M DevonN M CompanyN M purchasedN M landN M forN M $100,000
N M andNMaN M buildingN M forNM$180,000.NMAfterNMexactlyNM3NMyears,NMitNMtransfe
rredNMtheseNMassetsNMandN M cashNMofNM$50,000NMtoNMaNMnewlyNMcreatedN M subsi
diary,NMReganN M Company,N M inN M exchangeN M forN M 15,000N M sharesN M ofN M Rega
n'sN M $10N M parN M valueN M stock.N M DevonN M usesNMstraight-
lineN M depreciation.N M UsefulN M lifeN M forN M theN M buildingN M isNM30N M years,N M w
ithN M zeroN M residualN M value.N M AnNMappraisalN M revealedN M thatN M theN M building
N M hasN M aN M fairN M valueN M ofN M $200,000.
5) BasedNMonNMtheNMinformationNMprovided,NMatNMtheNMtimeNMofNMtheNMtransfer,NMRegan
NMCompanyNMshouldN M record:
ACCOUNTING 13TH EDITION
BY THEODORE CHRISTENSEN
,TEST BANK FOR
Advanced Financial Accounting 13th Edition By Theodore Christensen
ChapterNM1 IntercorporateN M AcquisitionsN M andNMInvestmentsN M inN M OtherN M Entities
1) AssumingNMnoNMimpairmentN M inNMvalueNMpriorNMtoNMtransfer,NMassetsNMtransf
erredN M byNMaN M parentN M companyNMtoNManotherN M entityN M itN M hasN M createdN
M shouldN M beN M recordedN M byN M theN M newlyN M createdN M entityN M atN M theN M a
ssets':
A) costNMtoNMtheNMparentNMcompany.
B) bookNMvalueNMonNMtheNMparentN M company'sNMbooksNMatNMtheNMdateNMofNMtransfer.
C) fairNMvalueNMatNMtheNMdateNMofNMtransfer.
D) fairNMvalueNMofNMconsiderationNMexchangedNMbyNMtheNMnewlyNMcreatedNMentity.
Answer:NMBNM
Difficulty:NM1N
MEasy
Topic:N M InternalN M Expansion:N M CreatingN M aN M BusinessN M Entity;N M Valuation
N M ofN M BusinessN M EntitiesNMLearningN M Objective:N M N M 01-
01N M UnderstandN M andN M explainN M theN M reasonsN M forN M andN M differentN M met
hodsN M ofNMbusinessNMexpansion,NMtheNMtypesNMofN M organizationalN M structures,N
MandNMtheNMtypesNMofNMacquisitions.;NM01NM-
03NMMakeN M calculationsN M andN M prepareN M journalN M entriesN M forN M theN M cre
ationN M ofN M aN M businessN M entity.
Bloom's:
RememberN M AA
CSB:N M ReflectiveNMThink
ingNMAICPA:
FNNMDecisionNM
Making
2) GivenNMtheNMincreasedNMdevelopmentNMofNMcomplexNMbusinessNMstructures,N
MwhichNMofNMtheNMfollowingN M regulatorsN M isN M responsibleN M forN M theN M
continuedN M usefulnessN M ofN M accountingN M reports?
A) SecuritiesNMandN M ExchangeNMCommissionN M (SEC)
B) PublicN MCompanyN M AccountingNMOversightN M BoardNM(PCAOB)
C) FinancialN M AccountingN M StandardsNMBoardN M (FASB)
D) AllNMofNMtheNMotherNManswersNMareNMcorrect
Answer:NMDNM
Difficulty:NM1N
MEasy
Topic: AnNMIntroductionNMtoNMComplexNMBusinessN M Structures
LearningN M Objective:N M N M 01-
01NMUnderstandNMandNMexplainNMtheNMreasonsNMforNMandNMdifferentN M methods
NMofN M businessN M expansion,N M theN M typesN M ofN M organizationalN M structures,N
M andN M theN M typesN M ofN M acquisitions.
,Bloom's:
RememberN M AA
CSB:N M ReflectiveNMThink
ingNMAICPA:
FNNMReporting
3) ANMbusinessNMcombinationNMinNMwhichNMtheNMacquiredNMcompany'sNMassetsNM
andNMliabilitiesNMareNMcombinedN M withN M thoseN M ofN M theN M acquiringN M compa
nyN M intoN M aN M singleN M entityN M isN M definedN M as:
A) StockNMacquisition
B) LeveragedN M buyout
C) StatutoryNMMerger
D) ReverseN M statutoryNMrollup
, Answer:NMCNM
Difficulty:NM1N
MEasy
Topic: OrganizationalNMStructureN M andNMFinancialNMReporting
LearningN M Objective:N M N M 01-
04NMUnderstandNMandNMexplainNMtheNMdifferencesNMbetweenNMdifferentN M formsN
MofNMbusinessNMcombinations.
Bloom's:
RememberN M AA
CSB:N M ReflectiveNMThink
ingNMAICPA:
FNNMDecisionNM
Making
4) InNMwhichNMofNMtheNMfollowingNMsituationsNMdoNMaccountingN M standardsNM
notNMrequireNMthatN M theNMfinancialNMstatementsN M ofNMtheN M parentN M andN
M subsidiaryN M beN M consolidated?
A) ANMcorporationNMcreatesNMaNMnewNM100NMpercentN M ownedNMsubsidiary
B) ANMcorporationNMpurchasesNM90NMpercentN M ofNMtheNMvotingNMstockNMofNManotherN M co
mpany
C) ANMcorporationN M hasNMbothNMcontrolNMandN M majorityNMownershipNMofNManNMunincorpor
atedNMcompany
D) ANMcorporationNMownsNMless-
thanNMaN M controllingN M interestN M inNManNMunincorporatedNMcompany
Answer:NMDNM
Difficulty:NM1N
MEasy
Topic: OrganizationalNMStructureN M andNMFinancialNMReporting
LearningN M Objective:N M N M 01-
01NMUnderstandNMandNMexplainNMtheNMreasonsNMforNMandNMdifferentN M methods
NMofNMbusinessN M expansion,N M theN M typesN M ofN M organizationalN M structures,N
M andN M theN M typesN M ofN M acquisitions.
Bloom's:
RememberN M AA
CSB:N M ReflectiveNMThink
ingNMAICPA:
FNNMDecisionNM
Making
DuringN M itsNMinception,N M DevonN M CompanyN M purchasedN M landN M forN M $100,000
N M andNMaN M buildingN M forNM$180,000.NMAfterNMexactlyNM3NMyears,NMitNMtransfe
rredNMtheseNMassetsNMandN M cashNMofNM$50,000NMtoNMaNMnewlyNMcreatedN M subsi
diary,NMReganN M Company,N M inN M exchangeN M forN M 15,000N M sharesN M ofN M Rega
n'sN M $10N M parN M valueN M stock.N M DevonN M usesNMstraight-
lineN M depreciation.N M UsefulN M lifeN M forN M theN M buildingN M isNM30N M years,N M w
ithN M zeroN M residualN M value.N M AnNMappraisalN M revealedN M thatN M theN M building
N M hasN M aN M fairN M valueN M ofN M $200,000.
5) BasedNMonNMtheNMinformationNMprovided,NMatNMtheNMtimeNMofNMtheNMtransfer,NMRegan
NMCompanyNMshouldN M record:
