Advanced Financial Accounting (13th Edition, Theodore Christensen) – Complete Verified Test Bank

TEST BANK FOR ADVANCED FINANCIAL ACCOUNTING 13TH EDITION


BY THEODORE CHRISTENSEN

,TEST BANK FOR v k v k




Advanced Financial Accounting 13th Edition By Theodore Christensen vk vk vk vk vk vk vk




Chapter 1 vk Intercorporate Acquisitions and Investments in Other Entities v k v k v k v k v k v k




1) Assuming no impairment in value prior to transfer, assets transferred by a parent company to
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another entity it has created should be recorded by the newly created entity at the assets':
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A) cost to the parent company. vk vk vk v k




B) book value on the parent company's books at the date of transfer.
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C) fair value at the date of transfer. v k vk vk v k vk vk




D) fair value of consideration exchanged by the newly created entity.
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Answer: B Diffic v k vk




ulty: 1 Easy vk vk




Topic: Internal Expansion: Creating a Business Entity; Valuation of Business Entities Learning
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Objective: 01-
01 Understand and explain the reasons for and different methods of business expansion, the type
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s of organizational structures, and the types of acquisitions.; 01-
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03 Make calculations and prepare journal entries for the creation of a business entity.
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Bloom's:
Remember AACSB: vk




v Reflective ThinkingAICPA:
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FN Decision Making vk vk




2) Given the increased development of complex business structures, which of the followingregu
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lators is responsible for the continued usefulness of accounting reports?
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A) Securities and Exchange Commission (SEC) v k v k v k v k




B) Public Company Accounting Oversight Board (PCAOB) v k v k v k v k v k




C) Financial Accounting Standards Board (FASB) v k v k v k v k




D) All of the other answers are correctvk vk v k vk v k v k




Answer: D Diffic v k vk




ulty: 1 Easy vk vk




Topic: An Introduction to Complex Business Structures vk v k v k v k v k




Learning Objective: 01- vk




01 Understand and explain the reasons for and different methods ofbusiness expansion, the type
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s of organizational structures, and the types of acquisitions.
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Bloom's:
Remember AACSB: vk




v Reflective ThinkingAICPA:
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FN Reporting vk




3) A business combination in which the acquired company's assets and liabilities are combinedwith t
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hose of the acquiring company into a single entity is defined as:
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A) Stock acquisition vk




B) Leveraged buyout vk




C) Statutory Merger vk

,D) Reverse statutory rollup
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, Answer: C Diffic v k vk




ulty: 1 Easy vk vk




Topic: Organizational Structure and Financial Reporting v k v k v k v k




Learning Objective: 01- vk




04 Understand and explain the differences between different forms ofbusiness combinations.
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Bloom's:
Remember AACSB: vk




vReflective ThinkingAICPA:
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FN Decision Making vk vk




4) In which of the following situations do accounting standards not require that the financial
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statements of the parent and subsidiary be consolidated? vk vk vk vk vk vk vk




A) A corporation creates a new 100 percent owned subsidiary
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B) A corporation purchases 90 percent of the voting stock of another company
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C) A corporation has both control and majority ownership of an unincorporated company
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D) A corporation owns less-than a controlling interest in an unincorporated company
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Answer: D Diffic v k vk




ulty: 1 Easy vk vk




Topic: Organizational Structure and Financial Reporting v k v k v k v k




Learning Objective: 01- vk




01 Understand and explain the reasons for and different methods ofbusiness expansion, the types
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of organizational structures, and the types of acquisitions.
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Bloom's:
Remember AACSB: vk




vReflective ThinkingAICPA:
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FN Decision Making vk vk




During its inception, Devon Company purchased land for $100,000 and a building for $180,000. Aft
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er exactly 3 years, it transferred these assets and cash of $50,000 to a newly created subsidiary,Regan C
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ompany, in exchange for 15,000 shares of Regan's $10 par value stock. Devon uses straight-
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line depreciation. Useful life for the building is 30 years, with zero residual value. An appraisal rev
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ealed that the building has a fair value of $200,000.
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5) Based on the information provided, at the time of the transfer, Regan Company should record:
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A) Building at $180,000 and no accumulated depreciation. v k v k v k v k v k v k




B) Building at $162,000 and no accumulated depreciation. vk v k v k v k v k v k




C) Building at $200,000 and accumulated depreciation of $24,000. v k v k v k v k v k v k vk




D) Building at $180,000 and accumulated depreciation of $18,000. v k v k v k v k v k v k v k




Answer: D Difficulty vkvk vk




: 2 Medium
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Topic:
Valuation of Business Entities; Accounting for Internal Expansion: Creating Busines v k vk v k v k v k v k v k v k v k




s Entities
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Learning Objective: 01- vk




04 Understand and explain the differences between different forms of business combinations.; 01-
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03 Make calculations and prepare journal entries for the creation of a business entity.
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Bloom's:
Understand AACSB vk




: Analytical ThinkingAICPA:
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