MODERN ADVANCED ACCOUNTING
CERTIFICATION EVALUATION EXAMS SET
FULL QUESTIONS AND COMPLETE
SOLUTION
●● What does FASB ASC Topic 810 address?
Answer: Consolidation.
●● What is the acquisition method in accounting?
Answer: A method that uses fair-value measurement for assessing
business activity.
●● What are some motives for business combinations?
Answer: Vertical integration, cost savings, quick market entry,
economies of scale, attractive financing, diversification of risk, and
business expansion.
●● Why is consolidated financial reporting important?
Answer: It provides more meaningful information than separate
statements and fairly presents the activities of consolidated companies.
●● What is a business combination?
,Answer: A transaction where an acquirer obtains control over one or
more businesses, uniting them into a single economic entity.
●● What is a statutory merger?
Answer: A business combination where only one of the original
companies continues to exist.
●● What are the two types of statutory mergers?
Answer: One company obtains all assets and liabilities of another, or one
company acquires all capital stock of another.
●● What is statutory consolidation?
Answer: A business combination that unites two or more companies
under a newly created company.
●● What is control without dissolution?
Answer: When one company acquires a majority of voting stock of
another without dissolving it.
●● What is a Variable Interest Entity (VIE)?
Answer: A vehicle for control exercised through contractual
arrangements, where the sponsoring firm may not own the VIE but is its
primary beneficiary.
, ●● What does the FASB Control Model state about controlling financial
interest?
Answer: Ownership of a majority voting interest (more than 50% of
voting shares) generally indicates consolidation.
●● What happens to the financial records when one company gains
control over another?
Answer: A single set of consolidated financial statements must be
prepared, combining financial data of both entities.
●● What is the process for consolidation if dissolution occurs?
Answer: All account balances are consolidated in the survivor's financial
records, with permanent consolidation at the combination date.
●● What is the consolidation process if separate incorporation is
maintained?
Answer: Only financial statement information is consolidated, using
worksheets without disturbing individual accounting systems.
●● What are the valuation principles of the acquisition method?
Answer: The acquisition method is required to account for a business
combination.
CERTIFICATION EVALUATION EXAMS SET
FULL QUESTIONS AND COMPLETE
SOLUTION
●● What does FASB ASC Topic 810 address?
Answer: Consolidation.
●● What is the acquisition method in accounting?
Answer: A method that uses fair-value measurement for assessing
business activity.
●● What are some motives for business combinations?
Answer: Vertical integration, cost savings, quick market entry,
economies of scale, attractive financing, diversification of risk, and
business expansion.
●● Why is consolidated financial reporting important?
Answer: It provides more meaningful information than separate
statements and fairly presents the activities of consolidated companies.
●● What is a business combination?
,Answer: A transaction where an acquirer obtains control over one or
more businesses, uniting them into a single economic entity.
●● What is a statutory merger?
Answer: A business combination where only one of the original
companies continues to exist.
●● What are the two types of statutory mergers?
Answer: One company obtains all assets and liabilities of another, or one
company acquires all capital stock of another.
●● What is statutory consolidation?
Answer: A business combination that unites two or more companies
under a newly created company.
●● What is control without dissolution?
Answer: When one company acquires a majority of voting stock of
another without dissolving it.
●● What is a Variable Interest Entity (VIE)?
Answer: A vehicle for control exercised through contractual
arrangements, where the sponsoring firm may not own the VIE but is its
primary beneficiary.
, ●● What does the FASB Control Model state about controlling financial
interest?
Answer: Ownership of a majority voting interest (more than 50% of
voting shares) generally indicates consolidation.
●● What happens to the financial records when one company gains
control over another?
Answer: A single set of consolidated financial statements must be
prepared, combining financial data of both entities.
●● What is the process for consolidation if dissolution occurs?
Answer: All account balances are consolidated in the survivor's financial
records, with permanent consolidation at the combination date.
●● What is the consolidation process if separate incorporation is
maintained?
Answer: Only financial statement information is consolidated, using
worksheets without disturbing individual accounting systems.
●● What are the valuation principles of the acquisition method?
Answer: The acquisition method is required to account for a business
combination.
