SOLUTIONS TEST BANK FOR
uo uo uo
Advanced Financial Accounting 13th Edition By Theodore Christensen
uo uo uo uo uo uo uo
Chapter uo1 Intercorporate uoAcquisitions uoand uoInvestments uoin uoOther uoEntities
1) Assuming uono uoimpairment uoin uovalue uoprior uoto uotransfer, uoassets uotransferred uoby uoa uoparent
uocompany uoto uoanother uoentity uoit uohas uocreated uoshould uobe uorecorded uoby uothe uonewly uocreated
uoentity uoat uothe uoassets':
A) cost uoto uothe uoparent uocompany.
B) book uovalue uoon uothe uoparent uocompany's uobooks uoat uothe uodate uoof uotransfer.
C) fair uovalue uoat uothe uodate uoof uotransfer.
D) fair uovalue uoof uoconsideration uoexchanged uoby uothe uonewly uocreated uoentity.
Answer: u o B
uoDifficulty: uo1 uoEasy
Topic: u o Internal uoExpansion: uoCreating uoa uoBusiness uoEntity; uoValuation uoof uoBusiness
uoEntities uoLearning uoObjective: 01-01 uoUnderstand uoand uoexplain uothe uoreasons uofor uoand
uodifferent uomethods uoof uobusiness uoexpansion, uothe uotypes uoof uoorganizational uostructures, uoand uothe
uotypes uoof uoacquisitions.; uo01-03 uoMake uocalculations uoand uoprepare uojournal uoentries uofor uothe
uocreation uoof uoa uobusiness uoentity.
Bloom's: Remember
u o AACSB: uoReflective
uoThinking uoAICPA: FN
uoDecision uoMaking
2) Given uothe uoincreased uodevelopment uoof uocomplex uobusiness uostructures, uowhich uoof uothe
uofollowing uoregulators uois uoresponsible uofor uothe uocontinued uousefulness uoof uoaccounting
uoreports?
A) Securities uoand uoExchange uoCommission uo(SEC)
B) Public uoCompany uoAccounting uoOversight uoBoard uo(PCAOB)
C) Financial uoAccounting uoStandards uoBoard uo(FASB)
D) All uoof uothe uoother uoanswers uoare uocorrect
Answer: u o D
uoDifficulty: uo1 uoEasy
Topic: An uoIntroduction uoto uoComplex uoBusiness uoStructures
Learning uoObjective: 01-01 uoUnderstand uoand uoexplain uothe uoreasons uofor uoand uodifferent
uomethods uoof uobusiness uoexpansion, uothe uotypes uoof uoorganizational uostructures, uoand uothe uotypes
uoof uoacquisitions.
Bloom's: Remember
u o AACSB: uoReflective
uoThinking uoAICPA: FN
uoReporting
3) A uobusiness uocombination uoin uowhich uothe uoacquired uocompany's uoassets uoand uoliabilities uoare
uocombined uowith uothose uoof uothe uoacquiring uocompany uointo uoa uosingle uoentity uois uodefined uoas:
A) Stock uoacquisition
B) Leveraged uobuyout
C) Statutory uoMerger
,D) Reverse uostatutory uorollup
,Answer: u o C
uoDifficulty: uo1 uoEasy
Topic: Organizational uoStructure uoand uoFinancial uoReporting
Learning uoObjective: 01-04 uoUnderstand uoand uoexplain uothe uodifferences uobetween uodifferent
uoforms uoof uobusiness uocombinations.
Bloom's: Remember
u o AACSB: uoReflective
uoThinking uoAICPA: FN
uoDecision uoMaking
4) In uowhich uoof uothe uofollowing uosituations uodo uoaccounting uostandards uonot uorequire uothat uothe
uofinancial uostatements uoof uothe uoparent uoand uosubsidiary uobe uoconsolidated?
A) A uocorporation uocreates uoa uonew uo100 uopercent uoowned uosubsidiary
B) A uocorporation uopurchases uo90 uopercent uoof uothe uovoting uostock uoof uoanother uocompany
C) A uocorporation uohas uoboth uocontrol uoand u o majority uoownership uoof uoan uounincorporated uocompany
D) A uocorporation uoowns uoless-than uoa uocontrolling uointerest uoin uoan uounincorporated uocompany
Answer: u o D
uoDifficulty: uo1 uoEasy
Topic: Organizational uoStructure uoand uoFinancial uoReporting
Learning uoObjective: 01-01 uoUnderstand uoand uoexplain uothe uoreasons uofor uoand uodifferent
uomethods uoof uobusiness uoexpansion, uothe uotypes uoof uoorganizational uostructures, uoand uothe uotypes
uoof uoacquisitions.
Bloom's: Remember
u o AACSB: uoReflective
uoThinking uoAICPA: FN
uoDecision uoMaking
During uoits uoinception, uoDevon uoCompany uopurchased uoland uofor uo$100,000 uoand uoa uobuilding uofor
uo$180,000. uoAfter uoexactly uo3 uoyears, uoit uotransferred uothese uoassets uoand uocash uoof uo$50,000 uoto uoa uonewly
uocreated uosubsidiary, uoRegan uoCompany, uoin uoexchange uofor uo15,000 uoshares uoof uoRegan's uo$10 uopar
uovalue uostock. uoDevon uouses uostraight-line uodepreciation. uoUseful uolife uofor uothe uobuilding uois uo30
uoyears, uowith uozero uoresidual uovalue. uoAn uoappraisal uorevealed uothat uothe uobuilding uohas uoa uofair uovalue
uoof uo$200,000.
5) Based uoon uothe uoinformation uoprovided, uoat uothe uotime uoof uothe uotransfer, uoRegan uoCompany uoshould
u o record:
A) Building uoat uo$180,000 uoand uono uoaccumulated uodepreciation.
B) Building uoat uo$162,000 uoand uono uoaccumulated uodepreciation.
C) Building uoat uo$200,000 uoand uoaccumulated uodepreciation uoof uo$24,000.
D) Building uoat uo$180,000 uoand uoaccumulated uodepreciation uoof uo$18,000.
Answer: u o D
uoDifficulty: uo2
uoMedium
Topic: Valuation uoof uoBusiness uoEntities; uoAccounting uofor uoInternal uoExpansion: uoCreating
uoBusiness uoEntities
Learning uoObjective: 01-04 uoUnderstand uoand uoexplain uothe uodifferences uobetween uodifferent
uoforms uoof uobusiness uocombinations.; uo01-03 uoMake uocalculations uoand uoprepare uojournal uoentries uofor
uothe uocreation uoof uoa uobusiness uoentity.
Bloom's: Understand
, uoAACSB: uoAnalytical uoThinking
uoAICPA: FN uoMeasurement
uo uo uo
Advanced Financial Accounting 13th Edition By Theodore Christensen
uo uo uo uo uo uo uo
Chapter uo1 Intercorporate uoAcquisitions uoand uoInvestments uoin uoOther uoEntities
1) Assuming uono uoimpairment uoin uovalue uoprior uoto uotransfer, uoassets uotransferred uoby uoa uoparent
uocompany uoto uoanother uoentity uoit uohas uocreated uoshould uobe uorecorded uoby uothe uonewly uocreated
uoentity uoat uothe uoassets':
A) cost uoto uothe uoparent uocompany.
B) book uovalue uoon uothe uoparent uocompany's uobooks uoat uothe uodate uoof uotransfer.
C) fair uovalue uoat uothe uodate uoof uotransfer.
D) fair uovalue uoof uoconsideration uoexchanged uoby uothe uonewly uocreated uoentity.
Answer: u o B
uoDifficulty: uo1 uoEasy
Topic: u o Internal uoExpansion: uoCreating uoa uoBusiness uoEntity; uoValuation uoof uoBusiness
uoEntities uoLearning uoObjective: 01-01 uoUnderstand uoand uoexplain uothe uoreasons uofor uoand
uodifferent uomethods uoof uobusiness uoexpansion, uothe uotypes uoof uoorganizational uostructures, uoand uothe
uotypes uoof uoacquisitions.; uo01-03 uoMake uocalculations uoand uoprepare uojournal uoentries uofor uothe
uocreation uoof uoa uobusiness uoentity.
Bloom's: Remember
u o AACSB: uoReflective
uoThinking uoAICPA: FN
uoDecision uoMaking
2) Given uothe uoincreased uodevelopment uoof uocomplex uobusiness uostructures, uowhich uoof uothe
uofollowing uoregulators uois uoresponsible uofor uothe uocontinued uousefulness uoof uoaccounting
uoreports?
A) Securities uoand uoExchange uoCommission uo(SEC)
B) Public uoCompany uoAccounting uoOversight uoBoard uo(PCAOB)
C) Financial uoAccounting uoStandards uoBoard uo(FASB)
D) All uoof uothe uoother uoanswers uoare uocorrect
Answer: u o D
uoDifficulty: uo1 uoEasy
Topic: An uoIntroduction uoto uoComplex uoBusiness uoStructures
Learning uoObjective: 01-01 uoUnderstand uoand uoexplain uothe uoreasons uofor uoand uodifferent
uomethods uoof uobusiness uoexpansion, uothe uotypes uoof uoorganizational uostructures, uoand uothe uotypes
uoof uoacquisitions.
Bloom's: Remember
u o AACSB: uoReflective
uoThinking uoAICPA: FN
uoReporting
3) A uobusiness uocombination uoin uowhich uothe uoacquired uocompany's uoassets uoand uoliabilities uoare
uocombined uowith uothose uoof uothe uoacquiring uocompany uointo uoa uosingle uoentity uois uodefined uoas:
A) Stock uoacquisition
B) Leveraged uobuyout
C) Statutory uoMerger
,D) Reverse uostatutory uorollup
,Answer: u o C
uoDifficulty: uo1 uoEasy
Topic: Organizational uoStructure uoand uoFinancial uoReporting
Learning uoObjective: 01-04 uoUnderstand uoand uoexplain uothe uodifferences uobetween uodifferent
uoforms uoof uobusiness uocombinations.
Bloom's: Remember
u o AACSB: uoReflective
uoThinking uoAICPA: FN
uoDecision uoMaking
4) In uowhich uoof uothe uofollowing uosituations uodo uoaccounting uostandards uonot uorequire uothat uothe
uofinancial uostatements uoof uothe uoparent uoand uosubsidiary uobe uoconsolidated?
A) A uocorporation uocreates uoa uonew uo100 uopercent uoowned uosubsidiary
B) A uocorporation uopurchases uo90 uopercent uoof uothe uovoting uostock uoof uoanother uocompany
C) A uocorporation uohas uoboth uocontrol uoand u o majority uoownership uoof uoan uounincorporated uocompany
D) A uocorporation uoowns uoless-than uoa uocontrolling uointerest uoin uoan uounincorporated uocompany
Answer: u o D
uoDifficulty: uo1 uoEasy
Topic: Organizational uoStructure uoand uoFinancial uoReporting
Learning uoObjective: 01-01 uoUnderstand uoand uoexplain uothe uoreasons uofor uoand uodifferent
uomethods uoof uobusiness uoexpansion, uothe uotypes uoof uoorganizational uostructures, uoand uothe uotypes
uoof uoacquisitions.
Bloom's: Remember
u o AACSB: uoReflective
uoThinking uoAICPA: FN
uoDecision uoMaking
During uoits uoinception, uoDevon uoCompany uopurchased uoland uofor uo$100,000 uoand uoa uobuilding uofor
uo$180,000. uoAfter uoexactly uo3 uoyears, uoit uotransferred uothese uoassets uoand uocash uoof uo$50,000 uoto uoa uonewly
uocreated uosubsidiary, uoRegan uoCompany, uoin uoexchange uofor uo15,000 uoshares uoof uoRegan's uo$10 uopar
uovalue uostock. uoDevon uouses uostraight-line uodepreciation. uoUseful uolife uofor uothe uobuilding uois uo30
uoyears, uowith uozero uoresidual uovalue. uoAn uoappraisal uorevealed uothat uothe uobuilding uohas uoa uofair uovalue
uoof uo$200,000.
5) Based uoon uothe uoinformation uoprovided, uoat uothe uotime uoof uothe uotransfer, uoRegan uoCompany uoshould
u o record:
A) Building uoat uo$180,000 uoand uono uoaccumulated uodepreciation.
B) Building uoat uo$162,000 uoand uono uoaccumulated uodepreciation.
C) Building uoat uo$200,000 uoand uoaccumulated uodepreciation uoof uo$24,000.
D) Building uoat uo$180,000 uoand uoaccumulated uodepreciation uoof uo$18,000.
Answer: u o D
uoDifficulty: uo2
uoMedium
Topic: Valuation uoof uoBusiness uoEntities; uoAccounting uofor uoInternal uoExpansion: uoCreating
uoBusiness uoEntities
Learning uoObjective: 01-04 uoUnderstand uoand uoexplain uothe uodifferences uobetween uodifferent
uoforms uoof uobusiness uocombinations.; uo01-03 uoMake uocalculations uoand uoprepare uojournal uoentries uofor
uothe uocreation uoof uoa uobusiness uoentity.
Bloom's: Understand
, uoAACSB: uoAnalytical uoThinking
uoAICPA: FN uoMeasurement
