Test Bank for Advanced Financial Accounting
13th Edition
By Theodore Christensen
,TEST BANK FOR
t t
AdvancedtFinancialtAccountingt13thtEditiontBytTheodoretChristensen
Chaptert1 Intercorporatet Acquisitionst andt Investmentst int Othert Entities
1) Assumingt not impairmentt int valuet priort tot transfer,t assetsttransferredt byt at parentt companyt totano
thert entityt itt hast createdt shouldt bet recordedt bytthet newlyt createdt entitytatt thet assets':
A) costt tot thet parentt company.
B) bookt valuet ontthet parentt company'st bookst att thet datet oft transfer.
C) fairt valuet att thet datet ofttransfer.
D) fairtvaluetoftconsideration texchangedtbytthetnewlytcreatedtentity.
Answer:t BtDiffic
ulty:t1tEasy
Topic:tInternaltExpansion:tCreatingtatBusinesstEntity;tValuationtoftBusinesstEntitiestLearningt
Objective: 01-
01tUnderstandtandtexplaintthetreasonstfortandtdifferenttmethodstoftbusinesst expansion,t thet typest
oft organizationalt structures,t andt thet typest oft acquisitions.;t 01t-
03tMaket calculationstandt preparet journalt entriest fort thet creationt oftat businesst entity.
Bloom's:
RemembertAACSB:
t ReflectivetThinkingtAICPA:
FNt Decisiont Making
2) Giventthetincreasedtdevelopmenttoftcomplextbusinesststructures,twhichtoftthetfollowingtregul
atorstistresponsiblet fortthetcontinuedtusefulnesstoftaccountingtreports?
A) Securitiest andt Exchanget Commissiont (SEC)
B) Publict Companyt Accountingt Oversightt Boardt (PCAOB)
C) Financialt Accountingt Standardst Boardt (FASB)
D) Allt oftthet othert answerst aret correct
Answer:t DtDiffic
ulty:t1tEasy
Topic: Ant Introductiont tot Complext Businesst Structures
LearningtObjective: 01-
01tUnderstandtandtexplaintthetreasonstfortandtdifferenttmethodstoftbusinesst expansion,t thet types
t oft organizationalt structures,t andt thet typest oftacquisitions.
Bloom's:
RemembertAACSB:
t ReflectivetThinking tAICPA:
FNtReporting
3) Atbusinesstcombinationtintwhichtthetacquiredtcompany'stassetstandtliabilitiestaretcombinedtwithtt
hosetoftthetacquiringt companytintotat singlet entitytistdefinedtas:
A) Stocktacquisition
B) Leveragedtbuyout
C) StatutorytMerger
,D) Reverset statutoryt rollup
, Answer:t CtDiffic
ulty:t1tEasy
Topic: Organizationalt Structuret andt Financialt Reporting
LearningtObjective: 01-
04tUnderstandtandtexplaintthetdifferencestbetweentdifferenttformstoftbusinesstcombinations.
Bloom's:
RemembertAACSB:
t ReflectivetThinkingtAICPA:
FNt Decisiont Making
4) Int whicht oftthet followingt situationst dot accountingt standardst nott requiret thatt thet financialtstat
ementst oftthet parentt andt subsidiarytbetconsolidated?
A) Atcorporationtcreatestatnewt100tpercentt ownedtsubsidiary
B) At corporationt purchasest 90t percentt oftthet votingt stockt oft anothert company
C) At corporationt hast botht controlt andt majorityt ownershipt oft ant unincorporatedt company
D) At corporationt ownst less-thant at controllingt interestt int ant unincorporatedt company
Answer:t DtDiffic
ulty:t1tEasy
Topic: Organizationalt Structuret andt Financialt Reporting
LearningtObjective: 01-
01tUnderstandtandtexplaintthetreasonstfortandtdifferenttmethodstoftbusinesst expansion,t thet typest o
ft organizationalt structures,t andt thet typest oftacquisitions.
Bloom's:
RemembertAACSB:
t ReflectivetThinkingtAICPA:
FNt Decisiont Making
Duringtitstinception,tDevontCompanytpurchasedtlandtfort$100,000tandtatbuildingtfort$180,000.tAft
ertexactlyt3tyears,titttransferredtthesetassetstandtcashtoft$50,000ttotatnewlytcreatedtsubsidiary,tRegantCo
mpany,tintexchangetfort15,000tsharestoftRegan'st$10tpartvaluetstock.tDevontuseststraight-
linetdepreciation.tUsefultlifetfortthetbuildingtist30tyears,twithtzerotresidualtvalue.tAntappraisaltreve
aledtthattthetbuildingthastat fairt valuetoft$200,000.
5) Basedt ont thet informationt provided,t att thet timet oft thet transfer,t Regant Companyt shouldt record:
A) Buildingt att $180,000t andt not accumulatedt depreciation.
B) Buildingt att $162,000t andt not accumulatedt depreciation.
C) Buildingt att $200,000t andt accumulatedt depreciationt oft $24,000.
D) Buildingt att $180,000t andt accumulatedt depreciationt oft $18,000.
Answer:ttDtDifficulty
:t 2t Medium
Topic:
Valuationt oft Businesst Entities;t Accountingt fort Internalt Expansion:t Creatingt BusinesstE
ntities
LearningtObjective: 01-
04tUnderstandtandtexplaintthetdifferencestbetweentdifferenttformstoftbusinesst combinations.;t 01-
03t Maket calculationst andt preparet journalt entriest fort thet creationt oftatbusinesstentity.
Bloom's:
UnderstandtAACSB
:t AnalyticaltThinkingtAICPA:
13th Edition
By Theodore Christensen
,TEST BANK FOR
t t
AdvancedtFinancialtAccountingt13thtEditiontBytTheodoretChristensen
Chaptert1 Intercorporatet Acquisitionst andt Investmentst int Othert Entities
1) Assumingt not impairmentt int valuet priort tot transfer,t assetsttransferredt byt at parentt companyt totano
thert entityt itt hast createdt shouldt bet recordedt bytthet newlyt createdt entitytatt thet assets':
A) costt tot thet parentt company.
B) bookt valuet ontthet parentt company'st bookst att thet datet oft transfer.
C) fairt valuet att thet datet ofttransfer.
D) fairtvaluetoftconsideration texchangedtbytthetnewlytcreatedtentity.
Answer:t BtDiffic
ulty:t1tEasy
Topic:tInternaltExpansion:tCreatingtatBusinesstEntity;tValuationtoftBusinesstEntitiestLearningt
Objective: 01-
01tUnderstandtandtexplaintthetreasonstfortandtdifferenttmethodstoftbusinesst expansion,t thet typest
oft organizationalt structures,t andt thet typest oft acquisitions.;t 01t-
03tMaket calculationstandt preparet journalt entriest fort thet creationt oftat businesst entity.
Bloom's:
RemembertAACSB:
t ReflectivetThinkingtAICPA:
FNt Decisiont Making
2) Giventthetincreasedtdevelopmenttoftcomplextbusinesststructures,twhichtoftthetfollowingtregul
atorstistresponsiblet fortthetcontinuedtusefulnesstoftaccountingtreports?
A) Securitiest andt Exchanget Commissiont (SEC)
B) Publict Companyt Accountingt Oversightt Boardt (PCAOB)
C) Financialt Accountingt Standardst Boardt (FASB)
D) Allt oftthet othert answerst aret correct
Answer:t DtDiffic
ulty:t1tEasy
Topic: Ant Introductiont tot Complext Businesst Structures
LearningtObjective: 01-
01tUnderstandtandtexplaintthetreasonstfortandtdifferenttmethodstoftbusinesst expansion,t thet types
t oft organizationalt structures,t andt thet typest oftacquisitions.
Bloom's:
RemembertAACSB:
t ReflectivetThinking tAICPA:
FNtReporting
3) Atbusinesstcombinationtintwhichtthetacquiredtcompany'stassetstandtliabilitiestaretcombinedtwithtt
hosetoftthetacquiringt companytintotat singlet entitytistdefinedtas:
A) Stocktacquisition
B) Leveragedtbuyout
C) StatutorytMerger
,D) Reverset statutoryt rollup
, Answer:t CtDiffic
ulty:t1tEasy
Topic: Organizationalt Structuret andt Financialt Reporting
LearningtObjective: 01-
04tUnderstandtandtexplaintthetdifferencestbetweentdifferenttformstoftbusinesstcombinations.
Bloom's:
RemembertAACSB:
t ReflectivetThinkingtAICPA:
FNt Decisiont Making
4) Int whicht oftthet followingt situationst dot accountingt standardst nott requiret thatt thet financialtstat
ementst oftthet parentt andt subsidiarytbetconsolidated?
A) Atcorporationtcreatestatnewt100tpercentt ownedtsubsidiary
B) At corporationt purchasest 90t percentt oftthet votingt stockt oft anothert company
C) At corporationt hast botht controlt andt majorityt ownershipt oft ant unincorporatedt company
D) At corporationt ownst less-thant at controllingt interestt int ant unincorporatedt company
Answer:t DtDiffic
ulty:t1tEasy
Topic: Organizationalt Structuret andt Financialt Reporting
LearningtObjective: 01-
01tUnderstandtandtexplaintthetreasonstfortandtdifferenttmethodstoftbusinesst expansion,t thet typest o
ft organizationalt structures,t andt thet typest oftacquisitions.
Bloom's:
RemembertAACSB:
t ReflectivetThinkingtAICPA:
FNt Decisiont Making
Duringtitstinception,tDevontCompanytpurchasedtlandtfort$100,000tandtatbuildingtfort$180,000.tAft
ertexactlyt3tyears,titttransferredtthesetassetstandtcashtoft$50,000ttotatnewlytcreatedtsubsidiary,tRegantCo
mpany,tintexchangetfort15,000tsharestoftRegan'st$10tpartvaluetstock.tDevontuseststraight-
linetdepreciation.tUsefultlifetfortthetbuildingtist30tyears,twithtzerotresidualtvalue.tAntappraisaltreve
aledtthattthetbuildingthastat fairt valuetoft$200,000.
5) Basedt ont thet informationt provided,t att thet timet oft thet transfer,t Regant Companyt shouldt record:
A) Buildingt att $180,000t andt not accumulatedt depreciation.
B) Buildingt att $162,000t andt not accumulatedt depreciation.
C) Buildingt att $200,000t andt accumulatedt depreciationt oft $24,000.
D) Buildingt att $180,000t andt accumulatedt depreciationt oft $18,000.
Answer:ttDtDifficulty
:t 2t Medium
Topic:
Valuationt oft Businesst Entities;t Accountingt fort Internalt Expansion:t Creatingt BusinesstE
ntities
LearningtObjective: 01-
04tUnderstandtandtexplaintthetdifferencestbetweentdifferenttformstoftbusinesst combinations.;t 01-
03t Maket calculationst andt preparet journalt entriest fort thet creationt oftatbusinesstentity.
Bloom's:
UnderstandtAACSB
:t AnalyticaltThinkingtAICPA:
