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Advanced Financial Accounting13th
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Edition
By Theodore Christensen ALL CHAPTERS 1 TO 20
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COVERED yt
,TABLE OF CONTENT
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PREFACE1. Intercorporate Acquisitions and Investments in Other Entities
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2. Reporting Intercorporate Investments and Consolidation of Wholly Owned Subsidiaries with No Differential
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3. The Reporting Entity and the Consolidation of Less-Than-Wholly-Owned Subsidiaries with NoDifferential
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4. Consolidation of Wholly Owned Subsidiaries Acquired at More Than Book Value
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5. Consolidation of Less-Than-Wholly-Owned Subsidiaries Acquired at More Than Book Value
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6. Intercompany Inventory Transactions
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7. Intercompany Transfers of Services and Noncurrent Assets
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8. Intercompany Indebtedness
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9. Consolidation Ownership Issues
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10. Additional Consolidation Reporting Issues
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11. Multinational Accounting: Foreign Currency Transactions and Financial Instruments
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12. Multinational Accounting: Issues in Financial Reporting and Translation of Foreign Entity Statements
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13. Segment and Interim Reporting
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14. SEC Reporting
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15. Partnerships: Formation, Operation, and Changes in Membership
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16. Partnerships: Liquidation
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17. Governmental Entities: Introduction and General Fund Accounting
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18. Governmental Entities: Special Funds and Governmentwide Financial Statements
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19. Not-for-Profit Entities
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20. Corporations in Financial Difficulty
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Chapter 1 yt Intercorporate Acquisitions and Investments in Other Entities y t y t yt y t y t y t
1) Assuming no impairment in value prior to transfer, assets transferred by a parent
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company toanother entity it has created should be recorded by the newly created entity at
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the assets':
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A) cost to the parent company. yt yt yt y t
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.
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D) fair value of consideration exchanged by the newly created entity.
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Answer: B y t
Difficulty: 1 Easy
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Topic: Internal Expansion: Creating a Business Entity; Valuation of Business Entities
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Learning Objective: 01-01 Understand and explain the reasons for and different methods of
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business expansion, the types of organizational structures, and the types of acquisitions.;
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01 -03 Make calculations and prepare journal entries for the creation of a business entity.
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Bloom's: Remember
AACSB: Reflective
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Thinking AICPA: FN
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Decision Making
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2) Given the increased development of complex business structures, which of the
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followingr egulators is responsible for the continued usefulness of accounting reports?
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A) Securities and Exchange Commission (SEC) y t y t y t y t
B) Public Company Accounting Oversight Board (PCAOB) y t y t y t y t y t
C) Financial Accounting Standards Board (FASB) y t y t y t y t
,D) All of the other answers are correct
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Answer: D y t
Difficulty: 1 Easy
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Topic: An Introduction to Complex Business Structures
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Learning Objective: 01-01 Understand and explain t he r easons for and different methods
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ofbusiness expansion, the types of organizational structures, and the types of acquisitions.
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Bloom's: Remember
AACSB: Reflective
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Thinking AICPA: FN
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Reporting
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3) A business combination in which the acquired company's assets and liabilities are
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combined with those of t he acquiring company into a single entity is defined as:
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A) Stock acquisitionyt
B) Leveraged buyout yt
C) Statutory Merger yt
D) Reverse statutory rollup y t yt
, Answer: C y t
Difficulty: 1 Easy
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Topic: Organizational Structure and Financial Reporting y t y t y t y t
Learning Objective: 01-04 Understand and explain the differences between different forms
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ofbusiness combinations.
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Bloom's: Remember
AACSB: Reflective
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Thinking AICPA: FN
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Decision Making
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4) In which of the following situations do accounting standards not require that the
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financial statements of t he parent and subsidiary be consolidated?
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A) A corporation creates a new 1 00 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 y t
Difficulty: 1 Easy
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Topic: Organizational Structure and Financial Reporting y t y t y t y t
Learning Objective: 01-01 Understand and explain the reasons for and different methods
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ofb usiness expansion, the types of organizational structures, and the types of acquisitions.
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Bloom's: Remember
AACSB: Reflective
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Thinking AICPA: FN
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Decision Making
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During its inception, Devon Company purchased land for $100,000 and a building for $180,000.
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After exactly 3 years, it transferred these assets and cash of $50,000 to a newly created
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subsidiary, Regan Company, in exchange for 15,000 shares of Regan's $10 par value stock.
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Devon uses straight-line depreciation. Useful life for the building is 30 years, with zero
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residual value. An appraisal revealed 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.
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B) Building at $162,000 and no accumulated depreciation.
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C) Building at $200,000 and accumulated depreciation of $24,000.
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D) Building at $180,000 and accumulated depreciation of $18,000.
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Answer: D yt yt
Difficulty: 2
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Medium
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Topic: Valuation of Business Entities; Accounting for Internal Expansion: Creating y t yt y t y t y t y t y t y t
Business Entities
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Learning Objective: 01-04 Understand and explain the differences between different forms of
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business combinations.; 01-03 Make calculations and prepare journal entries for the
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creation of a business entity.
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Bloom's: Understand
AACSB: Analytical
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Thinking AICPA: FN
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Measurement
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Advanced Financial Accounting13th
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Edition
By Theodore Christensen ALL CHAPTERS 1 TO 20
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COVERED yt
,TABLE OF CONTENT
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PREFACE1. Intercorporate Acquisitions and Investments in Other Entities
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2. Reporting Intercorporate Investments and Consolidation of Wholly Owned Subsidiaries with No Differential
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3. The Reporting Entity and the Consolidation of Less-Than-Wholly-Owned Subsidiaries with NoDifferential
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4. Consolidation of Wholly Owned Subsidiaries Acquired at More Than Book Value
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5. Consolidation of Less-Than-Wholly-Owned Subsidiaries Acquired at More Than Book Value
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6. Intercompany Inventory Transactions
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7. Intercompany Transfers of Services and Noncurrent Assets
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8. Intercompany Indebtedness
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9. Consolidation Ownership Issues
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10. Additional Consolidation Reporting Issues
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11. Multinational Accounting: Foreign Currency Transactions and Financial Instruments
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12. Multinational Accounting: Issues in Financial Reporting and Translation of Foreign Entity Statements
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13. Segment and Interim Reporting
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14. SEC Reporting
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15. Partnerships: Formation, Operation, and Changes in Membership
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16. Partnerships: Liquidation
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17. Governmental Entities: Introduction and General Fund Accounting
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18. Governmental Entities: Special Funds and Governmentwide Financial Statements
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19. Not-for-Profit Entities
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20. Corporations in Financial Difficulty
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Chapter 1 yt Intercorporate Acquisitions and Investments in Other Entities y t y t yt y t y t y t
1) Assuming no impairment in value prior to transfer, assets transferred by a parent
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company toanother entity it has created should be recorded by the newly created entity at
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the assets':
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A) cost to the parent company. yt yt yt y t
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.
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D) fair value of consideration exchanged by the newly created entity.
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Answer: B y t
Difficulty: 1 Easy
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Topic: Internal Expansion: Creating a Business Entity; Valuation of Business Entities
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Learning Objective: 01-01 Understand and explain the reasons for and different methods of
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business expansion, the types of organizational structures, and the types of acquisitions.;
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01 -03 Make calculations and prepare journal entries for the creation of a business entity.
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Bloom's: Remember
AACSB: Reflective
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Thinking AICPA: FN
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Decision Making
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2) Given the increased development of complex business structures, which of the
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followingr egulators is responsible for the continued usefulness of accounting reports?
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A) Securities and Exchange Commission (SEC) y t y t y t y t
B) Public Company Accounting Oversight Board (PCAOB) y t y t y t y t y t
C) Financial Accounting Standards Board (FASB) y t y t y t y t
,D) All of the other answers are correct
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Answer: D y t
Difficulty: 1 Easy
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Topic: An Introduction to Complex Business Structures
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Learning Objective: 01-01 Understand and explain t he r easons for and different methods
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ofbusiness expansion, the types of organizational structures, and the types of acquisitions.
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Bloom's: Remember
AACSB: Reflective
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Thinking AICPA: FN
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Reporting
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3) A business combination in which the acquired company's assets and liabilities are
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combined with those of t he acquiring company into a single entity is defined as:
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A) Stock acquisitionyt
B) Leveraged buyout yt
C) Statutory Merger yt
D) Reverse statutory rollup y t yt
, Answer: C y t
Difficulty: 1 Easy
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Topic: Organizational Structure and Financial Reporting y t y t y t y t
Learning Objective: 01-04 Understand and explain the differences between different forms
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ofbusiness combinations.
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Bloom's: Remember
AACSB: Reflective
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Thinking AICPA: FN
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Decision Making
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4) In which of the following situations do accounting standards not require that the
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financial statements of t he parent and subsidiary be consolidated?
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A) A corporation creates a new 1 00 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 y t
Difficulty: 1 Easy
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Topic: Organizational Structure and Financial Reporting y t y t y t y t
Learning Objective: 01-01 Understand and explain the reasons for and different methods
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ofb usiness expansion, the types of organizational structures, and the types of acquisitions.
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Bloom's: Remember
AACSB: Reflective
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Thinking AICPA: FN
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Decision Making
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During its inception, Devon Company purchased land for $100,000 and a building for $180,000.
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After exactly 3 years, it transferred these assets and cash of $50,000 to a newly created
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subsidiary, Regan Company, in exchange for 15,000 shares of Regan's $10 par value stock.
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Devon uses straight-line depreciation. Useful life for the building is 30 years, with zero
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residual value. An appraisal revealed 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.
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B) Building at $162,000 and no accumulated depreciation.
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C) Building at $200,000 and accumulated depreciation of $24,000.
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D) Building at $180,000 and accumulated depreciation of $18,000.
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Answer: D yt yt
Difficulty: 2
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Medium
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Topic: Valuation of Business Entities; Accounting for Internal Expansion: Creating y t yt y t y t y t y t y t y t
Business Entities
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Learning Objective: 01-04 Understand and explain the differences between different forms of
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business combinations.; 01-03 Make calculations and prepare journal entries for the
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creation of a business entity.
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Bloom's: Understand
AACSB: Analytical
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Thinking AICPA: FN
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Measurement
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