TEST BANK bk bk
Advanced Financial Accounting13th
bk bk bk
Edition
By Theodore Christensen ALL CHAPTERS 1 TO 20
b k b k bk bk bk bk bk
COVEREDbk
,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 Intercorporate bk b k Acquisitions b k and Investments bk b k in Other Entities
b k bk
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
bk bk bk bk bk bk bk bk bk bk bk bk bk bk
entity at the assets':
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A) cost to the parent company.
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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.
bk bk bk bk bk bk bk bk bk
Answer: B bk
Difficulty: 1
bk bk
Easy
bk
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
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of business expansion, the types of organizational structures, and the types of
bk bk bk bk bk bk b k bk bk bk bk bk
acquisitions.; 01 -03 Make calculations and prepare journal entries for the creation of a
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business entity.
bk bk
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
bk bk bk bk bk bk bk bk bk bk
followingr egulators is responsible for the continued usefulness of accounting reports?
bk bk bk bk bk bk bk bk bk bk bk
,A) Securities and Exchange Commission (SEC)
bk b k bk bk
B) Public Company Accounting Oversight Board (PCAOB)
bk b k bk b k bk
C) Financial Accounting Standards Board (FASB)
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D) All of the other answers are correct
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Answer: D bk
Difficulty: 1
bk bk
Easy
bk
Topic: An Introduction to Complex Business Structures
bk bk bk bk b k
Learning Objective: 01-01 Understand and explain the reasons for and different methods
bk bk bk bk bk bk bk bk bk bk
ofb usiness expansion, the types of organizational structures, and the types of
bk bk bk bk bk bk bk bk bk bk bk bk
acquisitions.
bk
Bloom's: Remember
AACSB: Reflective
bk b k
Thinking AICPA: FN
bk bk
Reporting
bk
3) A business combination in which the acquired company's assets and liabilities are
bk bk bk bk bk bk bk bk bk bk bk
combined with those of the acquiring company into a single entity is defined as:
bk bk bk bk bk bk bk bk bk bk bk bk bk bk
A) Stock acquisition bk
B) Leveraged buyout bk
C) Statutory Merger bk
D) Reverse statutory rollup bk bk
, Answer: C bk
Difficulty: 1
bk bk
Easy
bk
Topic: Organizational Structure and Financial Reporting bk bk bk bk
Learning Objective: 01-04 Understand and explain the differences between different forms
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ofb usiness combinations.
bk bk bk
Bloom's: Remember
AACSB: Reflective
bk b k
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
bk bk bk bk bk bk bk bk bk bk bk
the financial statements of the parent and subsidiary be consolidated?
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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
bk bk bk bk b k bk bk bk bk bk b k
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 bk
Difficulty: 1
bk bk
Easy
bk
Topic: Organizational Structure and Financial Reporting bk bk bk bk
Learning Objective: 01-01 Understand and explain the reasons for and different methods
bk bk bk bk bk bk bk bk bk bk
ofb usiness expansion, the types of organizational structures, and the types of
bk bk bk bk bk bk bk bk bk bk bk bk
acquisitions.
bk
Bloom's: Remember
AACSB: Reflective
bk b k
Thinking AICPA: FN
bk bk
Decision Making
bk bk
During its inception, Devon Company purchased land for $100,000 and a building for
bk bk bk bk bk bk bk bk bk bk bk bk
$180,000. After exactly 3 years, it transferred these assets and cash of $50,000 to a newly
bk bk bk bk bk bk bk bk bk bk bk bk bk bk bk bk
created subsidiary, Regan Company, in exchange for 15,000 shares of Regan's $10 par
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value stock. Devon uses straight-line depreciation. Useful life for the building is 30
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years, with zero residual value. An appraisal revealed that the building has a fair value
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of $200,000.
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5) Based on the information provided, at the time of the transfer, Regan Company should
bk bk bk bk bk bk bk bk bk bk bk bk bk
record:
b k
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 bk bk
Difficulty: 2
bk bk
Medium
b k
Topic: Valuation of Business Entities; Accounting for Internal Expansion: Creating
bk bk bk b k b k bk bk bk
Business Entities
b k bk
Learning Objective: 01-04 Understand and explain the differences between different forms
bk bk bk bk bk bk bk bk bk
of business combinations.; 01-03 Make calculations and prepare journal entries for the
bk bk bk bk bk bk bk bk bk bk b k bk
Advanced Financial Accounting13th
bk bk bk
Edition
By Theodore Christensen ALL CHAPTERS 1 TO 20
b k b k bk bk bk bk bk
COVEREDbk
,TABLE OF CONTENT
bk bk bk bk bk
bk bk
PREFACE1. Intercorporate Acquisitions and Investments in Other Entities
bk bk bk bk bk bk bk
2. Reporting Intercorporate Investments and Consolidation of Wholly Owned Subsidiaries with No Differential
bk bk bk bk bk bk bk bk bk bk bk bk
3. The Reporting Entity and the Consolidation of Less-Than-Wholly-Owned Subsidiaries with NoDifferential
bk bk bk bk bk bk bk bk bk bk bk
4. Consolidation of Wholly Owned Subsidiaries Acquired at More Than Book Value
bk bk bk bk bk bk bk bk bk bk bk
5. Consolidation of Less-Than-Wholly-Owned Subsidiaries Acquired at More Than Book Value
bk bk bk bk bk bk bk bk bk bk
6. Intercompany Inventory Transactions
bk bk bk
7. Intercompany Transfers of Services and Noncurrent Assets
bk bk bk bk bk bk bk
8. Intercompany Indebtedness
bk bk
9. Consolidation Ownership Issues
bk bk bk
10. Additional Consolidation Reporting Issues
bk bk bk bk
11. Multinational Accounting: Foreign Currency Transactions and Financial Instruments
bk bk bk bk bk bk bk bk
12. Multinational Accounting: Issues in Financial Reporting and Translation of Foreign Entity Statements
bk bk bk bk bk bk bk bk bk bk bk bk
13. Segment and Interim Reporting
bk bk bk bk
14. SEC Reporting
bk bk
15. Partnerships: Formation, Operation, and Changes in Membership
bk bk bk bk bk bk bk
16. Partnerships: Liquidation
bk bk
17. Governmental Entities: Introduction and General Fund Accounting
bk bk bk bk bk bk bk
18. Governmental Entities: Special Funds and Governmentwide Financial Statements
bk bk bk bk bk bk bk bk
19. Not-for-Profit Entities
bk bk
20. Corporations in Financial Difficulty
bk bk bk bk
Chapter 1 Intercorporate bk b k Acquisitions b k and Investments bk b k in Other Entities
b k bk
1) Assuming no impairment in value prior to transfer, assets transferred by a parent
bk b k b k bk bk bk bk bk bk bk bk bk
company toanother entity it has created should be recorded by the newly created
bk bk bk bk bk bk bk bk bk bk bk bk bk bk
entity at the assets':
bk bk bk bk
A) cost to the parent company.
bk bk bk bk
B) book value on the parent company's books at the date of transfer.
bk bk bk bk b k bk bk bk bk bk bk
C) fair value at the date of transfer.
bk bk bk bk bk bk
D) fair value of consideration exchanged by the newly created entity.
bk bk bk bk bk bk bk bk bk
Answer: B bk
Difficulty: 1
bk bk
Easy
bk
Topic: Internal Expansion: Creating a Business Entity; Valuation of Business Entities
bk bk bk bk bk bk bk bk bk bk
Learning Objective: 01-01 Understand and explain the reasons for and different methods
bk bk bk bk bk bk bk bk bk bk bk
of business expansion, the types of organizational structures, and the types of
bk bk bk bk bk bk b k bk bk bk bk bk
acquisitions.; 01 -03 Make calculations and prepare journal entries for the creation of a
bk bk bk bk bk bk bk bk bk bk bk bk bk bk
business entity.
bk bk
Bloom's: Remember
AACSB: Reflective
bk b k
Thinking AICPA: FN
bk bk
Decision Making
bk bk
2) Given the increased development of complex business structures, which of the
bk bk bk bk bk bk bk bk bk bk
followingr egulators is responsible for the continued usefulness of accounting reports?
bk bk bk bk bk bk bk bk bk bk bk
,A) Securities and Exchange Commission (SEC)
bk b k bk bk
B) Public Company Accounting Oversight Board (PCAOB)
bk b k bk b k bk
C) Financial Accounting Standards Board (FASB)
bk bk bk bk
D) All of the other answers are correct
bk bk bk bk bk bk
Answer: D bk
Difficulty: 1
bk bk
Easy
bk
Topic: An Introduction to Complex Business Structures
bk bk bk bk b k
Learning Objective: 01-01 Understand and explain the reasons for and different methods
bk bk bk bk bk bk bk bk bk bk
ofb usiness expansion, the types of organizational structures, and the types of
bk bk bk bk bk bk bk bk bk bk bk bk
acquisitions.
bk
Bloom's: Remember
AACSB: Reflective
bk b k
Thinking AICPA: FN
bk bk
Reporting
bk
3) A business combination in which the acquired company's assets and liabilities are
bk bk bk bk bk bk bk bk bk bk bk
combined with those of the acquiring company into a single entity is defined as:
bk bk bk bk bk bk bk bk bk bk bk bk bk bk
A) Stock acquisition bk
B) Leveraged buyout bk
C) Statutory Merger bk
D) Reverse statutory rollup bk bk
, Answer: C bk
Difficulty: 1
bk bk
Easy
bk
Topic: Organizational Structure and Financial Reporting bk bk bk bk
Learning Objective: 01-04 Understand and explain the differences between different forms
bk bk bk bk bk bk bk bk bk
ofb usiness combinations.
bk bk bk
Bloom's: Remember
AACSB: Reflective
bk b k
Thinking AICPA: FN
bk bk
Decision Making
bk bk
4) In which of the following situations do accounting standards not require that
bk bk bk bk bk bk bk bk bk bk bk
the financial statements of the parent and subsidiary be consolidated?
bk bk bk bk bk bk bk bk bk bk
A) A corporation creates a new 100 percent owned subsidiary
bk bk bk bk bk bk bk bk
B) A corporation purchases 90 percent of the voting stock of another company
bk bk bk bk b k bk bk bk bk bk b k
C) A corporation has both control and majority ownership of an unincorporated company
bk bk bk bk bk b k bk bk bk bk bk
D) A corporation owns less-than a controlling interest in an unincorporated company
bk bk bk bk b k b k b k bk bk bk
Answer: D bk
Difficulty: 1
bk bk
Easy
bk
Topic: Organizational Structure and Financial Reporting bk bk bk bk
Learning Objective: 01-01 Understand and explain the reasons for and different methods
bk bk bk bk bk bk bk bk bk bk
ofb usiness expansion, the types of organizational structures, and the types of
bk bk bk bk bk bk bk bk bk bk bk bk
acquisitions.
bk
Bloom's: Remember
AACSB: Reflective
bk b k
Thinking AICPA: FN
bk bk
Decision Making
bk bk
During its inception, Devon Company purchased land for $100,000 and a building for
bk bk bk bk bk bk bk bk bk bk bk bk
$180,000. After exactly 3 years, it transferred these assets and cash of $50,000 to a newly
bk bk bk bk bk bk bk bk bk bk bk bk bk bk bk bk
created subsidiary, Regan Company, in exchange for 15,000 shares of Regan's $10 par
bk bk bk bk bk bk bk bk bk bk bk bk bk
value stock. Devon uses straight-line depreciation. Useful life for the building is 30
bk bk bk bk bk bk bk bk bk bk bk bk bk
years, with zero residual value. An appraisal revealed that the building has a fair value
bk bk bk bk bk bk bk bk bk bk bk bk bk bk bk
of $200,000.
bk bk
5) Based on the information provided, at the time of the transfer, Regan Company should
bk bk bk bk bk bk bk bk bk bk bk bk bk
record:
b k
A) Building at $180,000 and no accumulated depreciation.
bk b k bk bk bk bk
B) Building at $162,000 and no accumulated depreciation.
bk bk bk bk bk b k
C) Building at $200,000 and accumulated depreciation of $24,000.
bk b k b k bk b k bk bk
D) Building at $180,000 and accumulated depreciation of $18,000.
bk b k bk bk bk bk bk
Answer: D bk bk
Difficulty: 2
bk bk
Medium
b k
Topic: Valuation of Business Entities; Accounting for Internal Expansion: Creating
bk bk bk b k b k bk bk bk
Business Entities
b k bk
Learning Objective: 01-04 Understand and explain the differences between different forms
bk bk bk bk bk bk bk bk bk
of business combinations.; 01-03 Make calculations and prepare journal entries for the
bk bk bk bk bk bk bk bk bk bk b k bk
