Test Bank Advanced Accounting 3rd Edition By Jeter Chaney

Test Bank For Advanced Accounting 3rd Edition, Jeter & Chaney YOU CAN FIND MORE QUESTIONS AND ANSWERS, just go HERE Chapter 1: Introduction to Business Combinations and the Conceptual Framework Multiple Choice 1. Stock given as consideration for a business combination is valued at a. fair market value b. par value c. historical cost d. None of the above 2. Which of the following situations best describes a business combination to be accounted for as a statutory merger? a. Both companies in a combination continue to operate as separate, but related, legal entities. b. Only one of the combining companies survives and the other loses its separate identity. c. Two companies combine to form a new third company, and the original two companies are dissolved. d. One company transfers assets to another company it has created. 3. A firm can use which method of financing for an acquisition structured as either an asset or stock acquisition? a. Cash b. Issuing Debt c. Issuing Stock d. All of the above 4. The objectives of FASB 141R (Business Combinations) and FASB 160 (NonControlling Interests in Consolidated Financial Statements) are as follows: a. to improve the relevance, comparibility, and transparency of financial information related to business combinations. b. to eliminate the amortization of Goodwill. c. to facilitate the convergence project of the FASB and the International Accounting Standards Board. d. a and b only 5. A business combination in which the boards of directors of the potential combining companies negotiate mutually agreeable terms is a(n) a. agreeable combination. b. friendly combination. c. hostile combination. d. unfriendly combination. 6. A merger between a supplier and a. customer is a(n) a. friendly combination. b. horizontal combination. c. unfriendly combination. d. vertical combination. 7. When a business acquisition is financed using debt, the interest payments are tax deductible and create a. operating synergy. b. international synergy. c. financial synergy. d. diversification synergy. 8. The defense tactic that involves purchasing shares held by the would-be acquiring company at a price substantially in excess of their fair value is called a. poison pill. b. pac-man defense. c. greenmail. d. white knight. 9. The third period of business combinations started after World War II and is called a. horizontal integration. b. merger mania. c. operating integration. d. vertical integration. 10. A statutory results when one company acquires all the net assets of another company and the acquired company ceases to exist as a separate legal entity. a. acquisition. b. combination. c. consolidation. d. merger. 11. When a new corporation is formed to acquire two or more other corporations and the acquired corporations cease to exist as separate legal entities, the result is a statutory a. acquisition. b. combination. c. consolidation. d. merger. 12. The excess of the amount offered in an acquisition over the prior stock price of the acquired firm is the a. bonus. b. goodwill. c. implied offering price. d. takeover premium. 13. The difference between normal earnings and expected future earnings is a. average earnings. b. excess earnings. c. ordinary earnings. d. target earnings. 14. The first step in estimating goodwill in the excess earnings approach is to a. determine normal earnings. b. identify a normal rate of return for similar firms. c. compute excess earnings. d. estimate expected future earnings. 15. A potential offering price for a company is computed by adding the estimated goodwill to the a. book value of the company’s net assets. b. book value of the company’s net identifiable assets. c. fair value of the company’s net assets. d. fair value of the company’s net identifiable assets. 16. Estimated goodwill is determined by computing the present value of the a. average earnings. b. excess earnings. c. expected future earnings. d. normal earnings. 17. Which of the following statements would not be a valid or logical reason for entering into a business combination? a. to increase market share. b. to avoid becoming a takeover target. c. to reduce risk by acquiring established product lines. d. the operating costs of the combined entity would be more than the sum of the separate entities. 18. The parent company concept of consolidation represents the view that the primary purpose of consolidated financial statements is: a. to provide information relevant to the controlling stockholders. b. to represent the view that the affiliated companies are a separate, identifiable economic entity. c. to emphasis control of the whole by a single management. d. to include only a portion of the subsidiary’s assets, liabilities, revenues, expenses, gains, and losses. 19. Which of the following statements is correct? a. Total elimination is consistent with the parent company concept. b. Partial elimination is consistent with the economic unit concept. c. Past accounting standards required the total elimination of unrealized intercompany profit in assets acquired from affiliated companies. d. none of these. 20. Under the parent company concept, consolidated net income the consolidated net income under the economic unit concept. a. is the same as b. is higher than c. is lower than d. can be higher or lower than Chapter 2: Accounting for Business Combinations 1. SFAS 141R requires that all business combinations be accounted for using a. the pooling of interests method. b. the acquisition method. c. either the acquisition or the pooling of interests methods. d. neither the acquisition nor the pooling of interests methods. 2. Under the acquisition method, if the fair values of identifiable net assets exceed the value implied by the purchase Pratt of the acquired company, the excess should be a. accounted for as goodwill. b. allocated to reduce current and long-lived assets. c. allocated to reduce current assets and classify any remainder as an extraordinary gain. d. allocated to reduce any previously recorded goodwill and classify any remainder as an ordinary gain. 3. In a period in which an impairment loss occurs, SFAS No. 142 requires each of the following note disclosures except a. a description of the facts and circumstances leading to the impairment. b. the amount of goodwill by reporting segment. c. the method of determining the fair value of the reporting unit. d. the amounts of any adjustments made to impairment estimates from earlier periods, if significant. 4. Once a reporting unit is determined to have a fair value below its carrying value, the goodwill impairment loss is computed by comparing the a. fair value of the reporting unit and the fair value of the identifiable net assets. b. carrying value of the goodwill to its implied fair value. c. fair value of the reporting unit to its carrying amount (goodwill included). d. carrying value of the reporting unit to the fair value of the identifiable net assets. 5. SFAS 141R requires that the acquirer disclose each of the following for each material business combination except the a. name and a description of the acquiree. b. percentage of voting equity instruments acquired. c. fair value of the consideration transferred. d. Each of the above is a required disclosure 6. In a leveraged buyout, the portion of the net assets of the new corporation provided by the management group is recorded at a. appraisal value. b. book value. c. fair value. d. lower of cost or market. 7. When the acquisition price of an acquired firm is less than the fair value of the identifiable net assets, all of the following are recorded at fair value except a. Assumed liabilities. b. Current assets. c. Long-lived assets. d. Each of the above is recorded at fair value. 8. Under SFAS 141R, a. both direct and indirect costs are to be capitalized. b. both direct and indirect costs are to be expensed. c. direct costs are to be capitalized and indirect costs are to be expensed. d. indirect costs are to be capitalized and direct costs are to be expensed. 9. A business combination is accounted for properly as an acquisition. Which of the following expenses related to effecting the business combination should enter into the determination of net income of the combined corporation for the period in which the expenses are incurred? Security Overhead allocated issue costs to the merger a. Yes Yes b. Yes No c. No Yes d. No No 10. In a business combination, which of the following costs are assigned to the valuation of the security? Professional or Security consulting fees issue costs a. Yes Yes b. Yes No c. No Yes d. No No 11. Par Company and Sub Company were combined in an acquisition transaction. Par was able to acquire Sub at a bargain Pratt. The sum of the fair values of identifiable assets acquired less the fair value of liabilities assumed exceeded the cost to Par. After eliminating previously recorded goodwill, there was still some "negative goodwill." Proper accounting treatment by Par is to report the amount as a. paid-in capital. b. a deferred credit, which is amortized. c. an ordinary gain. d. an extraordinary gain. 12. With an acquisition, direct and indirect expenses are a. expensed in the period incurred. b. capitalized and amortized over a discretionary period. c. considered a part of the total cost of the acquired company. d. charged to retained earnings when incurred 13. In a business combination accounted for as an acquisition, how should the excess of fair value of net assets acquired over the consideration paid be treated? a. Amortized as a credit to income over a period not to exceed forty years. b. Amortized as a charge to expense over a period not to exceed forty years. c. Amortized directly to retained earnings over a period not to exceed forty years. d. Recorded as an ordinary gain. 14. P Corporation issued 10,000 shares of common stock with a fair value of $25 per share for all the outstanding common stock of S Company in a business combination properly accounted for as an acquisition. The fair value of S Company's net assets on that date was $220,000. P Company also agreed to issue an additional 2,000 shares of common stock with a fair value of $50,000 to the former stockholders of S Company as an earnings contingency. Assuming that the contingency is expected to be met, the $50,000 fair value of the additional shares to be issued should be treated as a(n) a. decrease in noncurrent liabilities of S Company that were assumed by P Company. b. decrease in consolidated retained earnings. c. increase in consolidated goodwill. d. decrease in consolidated other contributed capital. 15. On February 5, Pryor Corporation paid $1,600,000 for all the issued and outstanding common stock of Shaw, Inc., in a transaction properly accounted for as an acquisition. The book values and fair values of Shaw's assets and liabilities on February 5 were as follows Book Value Fair Value Cash $ 160,000 $ 160,000 Receivables (net) 180,000 180,000 Inventory 315,000 300,000 Plant and equipment (net) 820,000 920,000 Liabilities (350,000) (350,000) Net assets $1,125,000 $1,210,000 What is the amount of goodwill resulting from the business combination? a. $-0-. b. $475,000. c. $85,000. d. $390,000. 16. P Company purchased the net assets of S Company for $225,000. On the date of P's purchase, S Company had no investments in marketable securities and $30,000 (book and fair value) of liabilities. The fair values of S Company's assets, when acquired, were Current assets $ 120,000 Noncurrent assets 180,000 Total $300,000 How should the $45,000 difference between the fair value of the net assets acquired ($270,000) and the consideration paid ($225,000) be accounted for by P Company? a. The noncurrent assets should be recorded at $ 135,000. b. The $45,000 difference should be credited to retained earnings. c. The current assets should be recorded at $102,000, and the noncurrent assets should be recorded at $153,000. d. An ordinary gain of $45,000 should be recorded. 17. If the value implied by the purchase price of an acquired company exceeds the fair values of identifiable net assets, the excess should be a. allocated to reduce any previously recorded goodwill and classify any remainder as an ordinary gain. b. allocated to reduce current and long-lived assets. c. allocated to reduce long-lived assets. d. accounted for as goodwill. 18. P Co. issued 5,000 shares of its common stock, valued at $200,000, to the former shareholders of S Company two years after S Company was acquired in an all-stock transaction. The additional shares were issued because P Company agreed to issue additional shares of common stock if the average post combination earnings over the next two years exceeded $500,000. P Company will treat the issuance of the additional shares as a (decrease in) a. consolidated retained earnings. b. consolidated goodwill. c. consolidated paid-in capital. d. non-current liabilities of S Company assumed by P Company. 19. In a business combination in which the total fair value of the identifiable assets acquired over liabilities assumed is greater than the consideration paid, the excess fair value is: a. classified as an extraordinary gain. b. allocated first to eliminate any previously recorded goodwill, and any remaining excess over the consideration paid is classified as an ordinary gain. c. allocated first to reduce proportionately non-current assets then to non-monetary current assets, and any remaining excess over cost is classified as a deferred credit. d. allocated first to reduce proportionately non-current, depreciable assets to zero, and any remaining excess over cost is classified as a deferred credit. 20. The first step in determining goodwill impairment involves comparing the a. implied value of a reporting unit to its carrying amount (goodwill excluded). b. fair value of a reporting unit to its carrying amount (goodwill excluded). c. implied value of a reporting unit to its carrying amount (goodwill included). d. fair value of a reporting unit to its carrying amount (goodwill included). Chapter 3: Consolidated Financial Statements—Date of Acquisition 1. A majority-owned subsidiary that is in legal reorganization should normally be accounted for using a. consolidated financial statements. b. the equity method. c. the market value method. d. the cost method. 2. Under the acquisition method, indirect costs relating to acquisitions should be a. included in the investment cost. b. expensed as incurred. c. deducted from other contributed capital. d. none of these. 3. Eliminating entries are made to cancel the effects of intercompany transactions and are made on the a. books of the parent company. b. books of the subsidiary company. c. workpaper only. d. books of both the parent company and the subsidiary. 4. One reason a parent company may pay an amount less than the book value of the subsidiary's stock acquired is a. an undervaluation of the subsidiary's assets. b. the existence of unrecorded goodwill. c. an overvaluation of the subsidiary's liabilities. d. none of these. 5. In a business combination accounted for as an acquisition, registration costs related to common stock issued by the parent company are a. expensed as incurred. b. deducted from other contributed capital. c. included in the investment cost. d. deducted from the investment cost. 6. On the consolidated balance sheet, consolidated stockholders' equity is a. equal to the sum of the parent and subsidiary stockholders' equity. b. greater than the parent's stockholders' equity. c. less than the parent's stockholders' equity. d. equal to the parent's stockholders' equity. 7. Majority-owned subsidiaries should be excluded from the consolidated statements when a. control does not rest with the majority owner. b. the subsidiary operates under governmentally imposed uncertainty. c. a foreign subsidiary is domiciled in a country with foreign exchange restrictions or controls. d. any of these circumstances exist. 8. Under the economic entity concept, consolidated financial statements are intended primarily for the benefit of the a. stockholders of the parent company. b. creditors of the parent company. c. minority stockholders. d. all of the above. 9. Reasons a parent company may pay more than book value for the subsidiary company's stock include all of the following except a. the fair value of one of the subsidiary's assets may exceed its recorded value because of appreciation. b. the existence of unrecorded goodwill. c. liabilities may be overvalued. a. $90,000. b. $54,000. c. $36,000. d. $-0-. d. stockholders' equity may be undervalued. 10. What is the method of presentation required by SFAS 160 of “non-controlling interest” on a consolidated balance sheet? a. As a deduction from goodwill from consolidation. b. As a separate item within the long-term liabilities section. c. As a part of stockholders' equity. d. As a separate item between liabilities and stockholders' equity. 11. Which of the following is a limitation of consolidated financial statements? a. Consolidated statements provide no benefit for the stockholders and creditors of the parent company. b. Consolidated statements of highly diversified companies cannot be compared with industry standards. c. Consolidated statements are beneficial only when the consolidated companies operate within the same industry. d. Consolidated statements are beneficial only when the consolidated companies operate in different industries. 12. Pine Corp. owns 60% of Sage Corp.'s outstanding common stock. On May 1, 2011, Pine advanced Sage $90,000 in cash, which was still outstanding at December 31, 2011. What portion of this advance should be eliminated in the preparation of the December 31, 2011 consolidated balance sheet? Use the following information for questions 13-15. On January 1, 2011, Polk Company and Sigler Company had condensed balance sheets as follows: Polk Sigler Current assets $ 280,000 $ 80,000 Noncurrent assets _360,000 160,000 Total assets $ 640,000 $240,000 Current liabilities $ 120,000 $ 40,000 Long-term debt 200,000 -0- Stockholders' equity 120,000 200,00 Total liabilities & stockholders' equity $ 640,000 $240,000 On January 2, 2011 Polk borrowed $240,000 and used the proceeds to purchase 90% of the outstanding common stock of Sigler. This debt is payable in 10 equal annual principal payments, plus interest, starting December 30, 2011. Any difference between book value and the value implied by the purchase price relates to land. On Polk's January 2, 2011 consolidated balance sheet, 13. Noncurrent assets should be a. $520,000. b. $536,000. c. $544,000. d. $586,667. 14. Current liabilities should be a. $200,000. b. $184,000. c. $160,000. d. $120,000. 15. Noncurrent liabilities should be a. $440,000. b. $416,000. c. $240,000. d. $216,000. 16. A newly acquired subsidiary has pre-existing goodwill on its books. The parent company’s consolidated balance sheet will: a. treat the goodwill the same as other intangible assets of the acquired company. b. will always show the pre-existing goodwill of the subsidiary at its book value. c. not show any value for the subsidiary’s pre-existing goodwill. d. do an impairment test to see if any of it has been impaired. 17. The Difference between Implied and Book Value account is: a. an account necessary for the preparation of consolidated working papers. b. used in allocating the amounts paid for recorded balance sheet accounts that are different than their fair values. c. the excess implied value assigned to goodwill. d. the unamortized excess that cannot be assigned to any related balance sheet accounts 18. The main evidence of control for purposes of consolidated financial statements involves a. possessing majority ownership b. having decision-making ability that is not shared with others. c. being the sole shareholder d. having the parent company and the subsidiary participating in the same industry. 19. In which of the following cases would consolidation be inappropriate? a. The subsidiary is in bankruptcy. b. Subsidiary's operations are dissimilar from those of the parent. c. The parent owns 90 percent of the subsidiary's common stock, but all of the subsidiary's nonvoting preferred stock is held by a single investor. d. Subsidiary is foreign. a. $650,000 b. $500,000 c. $550,000 d. $375,000 20. Princeton Company acquired 75 percent of the common stock of Sheffield Corporation on December 31, 2011. On the date of acquisition, Princeton held land with a book value of $150,000 and a fair value of $300,000; Sheffield held land with a book value of $100,000 and fair value of $500,000. What amount would land be reported in the consolidated balance sheet prepared immediately after the combination? Chapter 4: Consolidated Financial Statements after Acquisition 1. An investor adjusts the investment account for the amortization of any difference between cost and book value under the a. cost method. b. complete equity method. c. partial equity method. d. complete and partial equity methods. 2. Under the partial equity method, the entry to eliminate subsidiary income and dividends includes a debit to a. Dividend Income. b. Dividends Declared - S Company. c. Equity in Subsidiary Income. d. Retained Earnings - S Company. 3. On the consolidated statement of cash flows, the parent‟s acquisition of additional shares of the subsidiary‟s stock directly from the subsidiary is reported as a. an investing activity. b. a financing activity. c. an operating activity. d. none of these. 4. Under the cost method, the workpaper entry to establish reciprocity a. debits Retained Earnings - S Company. b. credits Retained Earnings - S Company. c. debits Retained Earnings - P Company. d. credits Retained Earnings - P Company. 5. Under the cost method, the investment account is reduced when a. there is a liquidating dividend. b. the subsidiary declares a cash dividend. c. the subsidiary incurs a net loss. d. none of these. 6. The parent company records its share of a subsidiary‟s income by a. crediting Investment in S Company under the partial equity method. b. crediting Equity in Subsidiary Income under both the cost and partial equity methods. c. debiting Equity in Subsidiary Income under the cost method. d. none of these. 7. In years subsequent to the year of acquisition, an entry to establish reciprocity is made under the a. complete equity method. b. cost method. c. partial equity method. d. complete and partial equity methods. 8. A parent company received dividends in excess of the parent company‟s share of the subsidiary‟s earnings subsequent to the date of the investment. How will the parent company‟s investment account be affected by those dividends under each of the following accounting methods? Cost Method Partial Equity Method a. No effect No effect b. Decrease No effect c. No effect Decrease d. Decrease Decrease 9. P Company purchased 80% of the outstanding common stock of S Company on May 1, 2011, for a cash payment of $1,272,000. S Company‟s December 31, 2010 balance sheet reported common stock of $800,000 and retained earnings of $540,000. During the calendar year 2011, S Company earned $840,000 evenly throughout the year and declared a dividend of $300,000 on November 1. What is the amount needed to establish reciprocity under the cost method in the preparation of a consolidated workpaper on December 31, 2011? a. $208,000 b. $260,000 c. $248,000 d. $432,000 10. P Company purchased 90% of the outstanding common stock of S Company on January 1, 1997. S Company‟s stockholders‟ equity at various dates was: 1/1/97 1/1/11 12/31/11 Common stock $400,000 $400,000 $400,000 Retained earnings 120,000 380,000 460,000 Total $520,000 $780,000 $860,000 The workpaper entry to establish reciprocity under the cost method in the preparation of a consolidated statements workpaper on December 31, 2011 should include a credit to P Company‟s retained earnings of a. $80,000. b. $234,000. c. $260,000. d. $306,000. 11. Consolidated net income for a parent company and its partially owned subsidiary is best defined as the parent company‟s a. recorded net income. b. recorded net income plus the subsidiary‟s recorded net income. c. recorded net income plus the its share of the subsidiary‟s recorded net income. d. income from independent operations plus subsidiary‟s income resulting from transactions with outside parties. 12. In the preparation of a consolidated statements workpaper, dividend income recognized by a parent company for dividends distributed by its subsidiary is a. included with parent company income from other sources to constitute consolidated net income. b. assigned as a component of the noncontrolling interest. c. allocated proportionately to consolidated net income and the noncontrolling interest. d. eliminated. 13. In the preparation of a consolidated statement of cash flows using the indirect method of presenting cash flows from operating activities, the amount of the noncontrolling interest in consolidated income is a. combined with the controlling interest in consolidated net income. b. deducted from the controlling interest in consolidated net income. c. reported as a significant noncash investing and financing activity in the notes. d. reported as a component of cash flows from financing activities. 14. On October 1, 2011, Parr Company acquired for cash all of the voting common stock of Stein Company. The purchase price of Stein‟s stock equaled the book value and fair value of Stein‟s net assets. The separate net income for each company, excluding Parr‟s share of income from Stein was as follows: Parr Stein Twelve months ended 12/31/11 $4,500,000 $2,700,000 Three months ended 12/31/11 495,000 450,000 During September, Stein paid $150,000 in dividends to its stockholders. For the year ended December 31, 2011, Parr issued parent company only financial statements. These statements are not considered those of the primary reporting entity. Under the partial equity method, what is the amount of net income reported in Parr‟s income statement? a. $7,200,000. b. $4,650,000. c. $4,950,000. d. $1,800,000. 15. A parent company uses the partial equity method to account for an investment in common stock of its subsidiary. A portion of the dividends received this year were in excess of the parent company‟s share of the subsidiary‟s earnings subsequent to the date of the investment. The amount of dividend income that should be reported in the parent company‟s separate income statement should be a. zero. b. the total amount of dividends received this year. c. the portion of the dividends received this year that were in excess of the parent ‟s share of subsidiary‟s earnings subsequent to the date of investment. d. the portion of the dividends received this year that were NOT in excess of the parent ‟s share of subsidiary‟s earnings subsequent to the date of investment. 16. Masters, Inc. owns 40% of Fields Corporation. During the year, Fields had net earnings of $200,000 and paid dividends of $50,000. Masters used the cost method of accounting. What effect would this have on the investment account, net earnings, and retained earnings, respectively? a. understate, overstate, overstate. b. overstate, understate, understate c. overstate, overstate, overstate d. understate, understate, understate Use the following information in answering questions 17 and 18. 17. Prior Industries acquired a 70 percent interest in Stevenson Company by purchasing 14,000 of its 20,000 outstanding shares of common stock at book value of $210,000 on January 1, 2010. Stevenson reported net income in 2010 of $90,000 and in 2011 of $120,000 earned evenly throughout the respective years. Prior received $24,000 dividends from Stevenson in 2010 and $36,000 in 2011. Prior uses the equity method to record its investment. Prior should record investment income from Stevenson during 2011 of: a. $36,000 b. $120,000 c. $84,000 d. $48,000 18. The balance of Prior‟s Investment in Stevenson account at December 31, 2011 is: a. $210,000 b. $285,000 c. $297,000 d. $315,000 19. Parkview Company acquired a 90% interest in Sutherland Company on December 31, 2010, for $320,000. During 2011 Sutherland had a net income of $22,000 and paid a cash dividend of $7,000. Applying the cost method would give a debit balance in the Investment in Stock of Sutherland Company account at the end of 2011 of: a. $335,000 b. $333,500 c. $313,700 d. $320,000 20. Hall, Inc., owns 40% of the outstanding stock of Gloom Company. During 2011, Hall received a $4,000 cash dividend from Gloom. What effect did this dividend have on Hall‟s 2011 financial statements? a. Increased total assets. b. Decreased total assets. c. Increased income. d. Decreased investment account. Chapter 5: Allocation and Depreciation of Differences Between Implied and Book Value 1. When the implied value exceeds the aggregate fair values of identifiable net assets, the residual difference is accounted for as a. excess of implied over fair value. b. a deferred credit. c. difference between implied and fair value. d. goodwill. 2. Long-term debt and other obligations of an acquired company should be valued for consolidation purposes at their a. book value. b. carrying value. c. fair value. d. face value. 3. On January 1, 2010, Lester Company purchased 70% of Stork Corporation's $5 par common stock for $600,000. The book value of Stork net assets was $640,000 at that time. The fair value of Stork's identifiable net assets were the same as their book value except for equipment that was $40,000 in excess of the book value. In the January 1, 2010, consolidated balance sheet, goodwill would be reported at a. $152,000. b. $177,143. c. $80,000. d. $0. 4. When the value implied by the purchase price of a subsidiary is in excess of the fair value of identifiable net assets, the workpaper entry to allocate the difference between implied and book value includes a 1. debit to Difference Between Implied and Book Value. 2. credit to Excess of Implied over Fair Value. 3. credit to Difference Between Implied and Book Value. a. 1 b. 2 c. 3 d. Both 1 and 2 5. If the fair value of the subsidiary's identifiable net assets exceeds both the book value and the value implied by the purchase price, the workpaper entry to eliminate the investment account a. debits Excess of Fair Value over Implied Value. b. debits Difference Between Implied and Fair Value. c. debits Difference Between Implied and Book Value. d. credits Difference Between Implied and Book Value. 6. The entry to amortize the amount of difference between implied and book value allocated to an unspecified intangible is recorded 1. on the subsidiary's books. 2. on the parent's books. 3. on the consolidated statements workpaper. a. 1 b. 2 c. 3 d. Both 2 and 3