,Chapter jy1 Intercorporate jyAcquisitions jyand jyInvestments jyin jyOther jyEntities
1) Assuming jyno jyimpairment jyin jyvalue jyprior jyto jytransfer, jyassets jytransferred jyby jya jyparent
jycompany jytoa jy nother jyentity jyit jyhas jycreated jyshould jybe jyrecorded jyby jythe jynewly jycreated jyentity jyat
jythe jyassets':
A) cost jyto jythe jyparent jycompany.
B) book jyvalue jyon jythe jyparent jycompany's jybooks jyat jythe jydate jyof jytransfer.
C) fair jyvalue jyat jythe jydate jyof jytransfer.
D) fair jyvalue jyof jyconsideration jyexchanged jyby jythe jynewly jycreated jyentity.
Answer: j y B
jyDifficulty: jy1
jyEasy
Topic: j y Internal jyExpansion: jyCreating jya jyBusiness jyEntity; jyValuation jyof jyBusiness jyEntities
jyLearning jyObjective: 01-01 jyUnderstand jyand jyexplain jythe jyreasons jyfor jyand jydifferent jymethods
jyof jybusiness jyexpansion, jythe jytypes jyof jyorganizational jystructures, jyand jythe jytypes jyof
jyacquisitions.; jy01-03jM
y ake jycalculations jyand jyprepare jyjournal jyentries jyfor jythe jycreation jyof jya
jybusiness jyentity.
Bloom's: Remember
jyAACSB: Reflective
jyThinkingjA y ICPA: FN
jyDecision jyMaking
2) Given jythe jyincreased jydevelopment jyof jycomplex jybusiness jystructures, jywhich jyof jythe
jyfollowingjr y egulators jyis jyresponsible jyfor jythe jycontinued jyusefulness jyof jyaccounting jyreports?
A) Securities jyand jyExchange jyCommission jy(SEC)
B) Public jyCompany jyAccounting jyOversight jyBoard jy(PCAOB)
C) Financial jyAccounting jyStandards jyBoard jy(FASB)
D) All jyof jythe jyother jyanswers jyare jycorrect
Answer: j y D
jyDifficulty: jy1
jyEasy
Topic: An jyIntroduction jyto jyComplex jyBusiness jyStructures
Learning jyObjective: 01-01 jyUnderstand jyand jyexplain jythe jyreasons jyfor jyand jydifferent
jymethods jyofjby usiness jyexpansion, jythe jytypes jyof jyorganizational jystructures, jyand jythe jytypes jyof
jyacquisitions.
Bloom's: Remember
jyAACSB: Reflective
jyThinkingjAy ICPA: FN
jyReporting
3) A jybusiness jycombination jyin jywhich jythe jyacquired jycompany's jyassets jyand jyliabilities jyare
jycombinedjywith jythose jyof jythe jyacquiring jycompany jyinto jya jysingle jyentity jyis jydefined jyas:
A) Stock jyacquisition
B) Leveraged jybuyout
C) Statutory jyMerger
D) Reverse jystatutory jyrollup
,Answer: j y C
jyDifficulty: jy1
jyEasy
Topic: Organizational jyStructure jyand jyFinancial jyReporting
Learning jyObjective: 01-04 jyUnderstand jyand jyexplain jythe jydifferences jybetween jydifferent
jyforms jyofjb
y usiness jycombinations.
Bloom's: Remember
jyAACSB: Reflective
jyThinkingjA y ICPA: FN
jyDecision jyMaking
4) In jywhich jyof jythe jyfollowing jysituations jydo jyaccounting jystandards jynot jyrequire jythat jythe
jyfinancials
jy tatements jyof jythe jyparent jyand jysubsidiary jybe jyconsolidated?
A) A jycorporation jycreates jya jynew jy100 jypercent jyowned jysubsidiary
B) A jycorporation jypurchases jy90 jypercent jyof jythe jyvoting jystock jyof jyanother jycompany
C) A jycorporation jyhas jyboth jycontrol jyand j ymajority jyownership jyof jyan jyunincorporated jycompany
D) A jycorporation jyowns jyless-than jya jycontrolling jyinterest jyin jyan jyunincorporated jycompany
Answer: j y D
jyDifficulty: jy1
jyEasy
Topic: Organizational jyStructure jyand jyFinancial jyReporting
Learning jyObjective: 01-01 jyUnderstand jyand jyexplain jythe jyreasons jyfor jyand jydifferent
jymethods jyofjby usiness jyexpansion, jythe jytypes jyof jyorganizational jystructures, jyand jythe jytypes jyof
jyacquisitions.
Bloom's: Remember
jyAACSB: Reflective
jyThinkingjA y ICPA: FN
jyDecision jyMaking
During jyits jyinception, jyDevon jyCompany jypurchased jyland jyfor jy$100,000 jyand jya jybuilding jyfor
jy$180,000. jyAfter jyexactly jy3 jyyears, jyit jytransferred jythese jyassets jyand jycash jyof jy$50,000 jyto jya jynewly
jycreated jysubsidiary,jR
y egan jyCompany, jyin jyexchange jyfor jy15,000 jyshares jyof jyRegan's jy$10 jypar
jyvalue jystock. jyDevon jyuses jystraight-line jydepreciation. jyUseful jylife jyfor jythe jybuilding jyis jy30 jyyears,
jywith jyzero jyresidual jyvalue. jyAn jyappraisal jyrevealed jythat jythe jybuilding jyhas jya jyfair jy value jyof
jy$200,000.
5) Based jyon jythe jyinformation jyprovided, jyat jythe jytime jyof jythe jytransfer, jyRegan jyCompany jyshould j yrecord:
A) Building jyat jy$180,000 jyand jyno jyaccumulated jydepreciation.
B) Building jyat jy$162,000 jyand jyno jyaccumulated jydepreciation.
C) Building jyat jy$200,000 jyand jyaccumulated jydepreciation jyof jy$24,000.
D) Building jyat jy$180,000 jyand jyaccumulated jydepreciation jyof jy$18,000.
Answer: j y D
jyDifficulty: jy2
jyMedium
Topic: Valuation jyof jyBusiness jyEntities; jyAccounting jyfor jyInternal jyExpansion: jyCreating
jyBusinessjE y ntities
Learning jyObjective: 01-04 jyUnderstand jyand jyexplain jythe jydifferences jybetween jydifferent jyforms
jyof jybusiness jycombinations.; jy01-03 jyMake jycalculations jyand jyprepare jyjournal jyentries jyfor jythe
jycreation jyof jyajb
y usiness jyentity.
, Bloom's: Understand
jyAACSB: Analytical
jyThinkingjA
y ICPA: FN
jyMeasurement
1) Assuming jyno jyimpairment jyin jyvalue jyprior jyto jytransfer, jyassets jytransferred jyby jya jyparent
jycompany jytoa jy nother jyentity jyit jyhas jycreated jyshould jybe jyrecorded jyby jythe jynewly jycreated jyentity jyat
jythe jyassets':
A) cost jyto jythe jyparent jycompany.
B) book jyvalue jyon jythe jyparent jycompany's jybooks jyat jythe jydate jyof jytransfer.
C) fair jyvalue jyat jythe jydate jyof jytransfer.
D) fair jyvalue jyof jyconsideration jyexchanged jyby jythe jynewly jycreated jyentity.
Answer: j y B
jyDifficulty: jy1
jyEasy
Topic: j y Internal jyExpansion: jyCreating jya jyBusiness jyEntity; jyValuation jyof jyBusiness jyEntities
jyLearning jyObjective: 01-01 jyUnderstand jyand jyexplain jythe jyreasons jyfor jyand jydifferent jymethods
jyof jybusiness jyexpansion, jythe jytypes jyof jyorganizational jystructures, jyand jythe jytypes jyof
jyacquisitions.; jy01-03jM
y ake jycalculations jyand jyprepare jyjournal jyentries jyfor jythe jycreation jyof jya
jybusiness jyentity.
Bloom's: Remember
jyAACSB: Reflective
jyThinkingjA y ICPA: FN
jyDecision jyMaking
2) Given jythe jyincreased jydevelopment jyof jycomplex jybusiness jystructures, jywhich jyof jythe
jyfollowingjr y egulators jyis jyresponsible jyfor jythe jycontinued jyusefulness jyof jyaccounting jyreports?
A) Securities jyand jyExchange jyCommission jy(SEC)
B) Public jyCompany jyAccounting jyOversight jyBoard jy(PCAOB)
C) Financial jyAccounting jyStandards jyBoard jy(FASB)
D) All jyof jythe jyother jyanswers jyare jycorrect
Answer: j y D
jyDifficulty: jy1
jyEasy
Topic: An jyIntroduction jyto jyComplex jyBusiness jyStructures
Learning jyObjective: 01-01 jyUnderstand jyand jyexplain jythe jyreasons jyfor jyand jydifferent
jymethods jyofjby usiness jyexpansion, jythe jytypes jyof jyorganizational jystructures, jyand jythe jytypes jyof
jyacquisitions.
Bloom's: Remember
jyAACSB: Reflective
jyThinkingjAy ICPA: FN
jyReporting
3) A jybusiness jycombination jyin jywhich jythe jyacquired jycompany's jyassets jyand jyliabilities jyare
jycombinedjywith jythose jyof jythe jyacquiring jycompany jyinto jya jysingle jyentity jyis jydefined jyas:
A) Stock jyacquisition
B) Leveraged jybuyout
C) Statutory jyMerger
D) Reverse jystatutory jyrollup
,Answer: j y C
jyDifficulty: jy1
jyEasy
Topic: Organizational jyStructure jyand jyFinancial jyReporting
Learning jyObjective: 01-04 jyUnderstand jyand jyexplain jythe jydifferences jybetween jydifferent
jyforms jyofjb
y usiness jycombinations.
Bloom's: Remember
jyAACSB: Reflective
jyThinkingjA y ICPA: FN
jyDecision jyMaking
4) In jywhich jyof jythe jyfollowing jysituations jydo jyaccounting jystandards jynot jyrequire jythat jythe
jyfinancials
jy tatements jyof jythe jyparent jyand jysubsidiary jybe jyconsolidated?
A) A jycorporation jycreates jya jynew jy100 jypercent jyowned jysubsidiary
B) A jycorporation jypurchases jy90 jypercent jyof jythe jyvoting jystock jyof jyanother jycompany
C) A jycorporation jyhas jyboth jycontrol jyand j ymajority jyownership jyof jyan jyunincorporated jycompany
D) A jycorporation jyowns jyless-than jya jycontrolling jyinterest jyin jyan jyunincorporated jycompany
Answer: j y D
jyDifficulty: jy1
jyEasy
Topic: Organizational jyStructure jyand jyFinancial jyReporting
Learning jyObjective: 01-01 jyUnderstand jyand jyexplain jythe jyreasons jyfor jyand jydifferent
jymethods jyofjby usiness jyexpansion, jythe jytypes jyof jyorganizational jystructures, jyand jythe jytypes jyof
jyacquisitions.
Bloom's: Remember
jyAACSB: Reflective
jyThinkingjA y ICPA: FN
jyDecision jyMaking
During jyits jyinception, jyDevon jyCompany jypurchased jyland jyfor jy$100,000 jyand jya jybuilding jyfor
jy$180,000. jyAfter jyexactly jy3 jyyears, jyit jytransferred jythese jyassets jyand jycash jyof jy$50,000 jyto jya jynewly
jycreated jysubsidiary,jR
y egan jyCompany, jyin jyexchange jyfor jy15,000 jyshares jyof jyRegan's jy$10 jypar
jyvalue jystock. jyDevon jyuses jystraight-line jydepreciation. jyUseful jylife jyfor jythe jybuilding jyis jy30 jyyears,
jywith jyzero jyresidual jyvalue. jyAn jyappraisal jyrevealed jythat jythe jybuilding jyhas jya jyfair jy value jyof
jy$200,000.
5) Based jyon jythe jyinformation jyprovided, jyat jythe jytime jyof jythe jytransfer, jyRegan jyCompany jyshould j yrecord:
A) Building jyat jy$180,000 jyand jyno jyaccumulated jydepreciation.
B) Building jyat jy$162,000 jyand jyno jyaccumulated jydepreciation.
C) Building jyat jy$200,000 jyand jyaccumulated jydepreciation jyof jy$24,000.
D) Building jyat jy$180,000 jyand jyaccumulated jydepreciation jyof jy$18,000.
Answer: j y D
jyDifficulty: jy2
jyMedium
Topic: Valuation jyof jyBusiness jyEntities; jyAccounting jyfor jyInternal jyExpansion: jyCreating
jyBusinessjE y ntities
Learning jyObjective: 01-04 jyUnderstand jyand jyexplain jythe jydifferences jybetween jydifferent jyforms
jyof jybusiness jycombinations.; jy01-03 jyMake jycalculations jyand jyprepare jyjournal jyentries jyfor jythe
jycreation jyof jyajb
y usiness jyentity.
, Bloom's: Understand
jyAACSB: Analytical
jyThinkingjA
y ICPA: FN
jyMeasurement
