Test Bank for Advanced Financial Accounting
a a a a a
13th Edition
a a a
By Theodore Christensen
a a
,TEST BANK FOR
a a
Advanced Financial Accounting 13th Edition By Theodore Christensen
a a a a a a a
Chapter a1 Intercorporate a Acquisitions a and a Investments a in a Other a Entities
1) Assuming a no a impairment a in a value a prior a to a transfer, a assets atransferred a by aa a parent
a company a toaanother a entity a it a has a created a should a be a recorded a by athe a newly a created a entity
aat a the a assets':
A) cost a to a the a parent a company.
B) book a value a on athe a parent a company's a books a at a the a date a of a transfer.
C) fair a value a at a the a date a of atransfer.
D) fair avalue aof aconsideration aexchanged aby athe anewly acreated aentity.
Answer: a B
a Difficulty: a1
aEasy
Topic: aInternal aExpansion: aCreating aa aBusiness aEntity; aValuation aof aBusiness aEntities
a Learning aObjective: 01-01 a Understand a and a explain a the a reasons a for a and a different a methods
a of abusiness a expansion, a the a types a of a organizational a structures, a and a the a types a of
a acquisitions.; a 01 a-03 aMake a calculations a and a prepare a journal a entries a for a the a creation a of aa
a business a entity.
Bloom's: Remember
a AACSB: a Reflective
aThinking aA ICPA: FN
a Decision a Making
2) Given athe aincreased adevelopment aof acomplex abusiness astructures, awhich aof athe
afollowingar egulators ais aresponsible a for athe acontinued a usefulness a of aaccounting a reports?
A) Securities a and a Exchange a Commission a (SEC)
B) Public a Company a Accounting a Oversight a Board a (PCAOB)
C) Financial a Accounting a Standards a Board a (FASB)
D) All a of athe a other a answers a are a correct
Answer: a D
a Difficulty: a1
aEasy
Topic: An a Introduction a to a Complex a Business a Structures
Learning aObjective: 01-01 aUnderstand aand aexplain athe areasons afor aand adifferent amethods
aofabusiness a expansion, a the a types a of a organizational a structures, a and a the a types a of
aacquisitions.
Bloom's: Remember
a AACSB: a Reflective
aThinking aA ICPA: FN
aReporting
3) A abusiness acombination ain awhich athe aacquired acompany's aassets aand aliabilities aare
acombinedaw ith athose a of athe aacquiring a company ainto a a a single a entity ais adefined aas:
,A) Stock aacquisition
B) Leveraged abuyout
C) Statutory aMerger
D) Reverse a statutory a rollup
, Answer: a C
a Difficulty: a1
aEasy
Topic: Organizational a Structure a and a Financial a Reporting
Learning aObjective: 01-04 aUnderstand aand aexplain athe adifferences abetween adifferent aforms
aofab usiness a combinations.
Bloom's: Remember
a AACSB: a Reflective
aThinking aA ICPA: FN
a Decision a Making
4) In a which a of athe a following a situations a do a accounting a standards a not a require a that
a the a financialastatements a of athe a parent a and a subsidiary abe a consolidated?
A) A acorporation acreates aa anew a100 apercent a owned asubsidiary
B) A a corporation a purchases a 90 a percent a of athe a voting a stock a of a another a company
C) A a corporation a has a both a control a and a majority a ownership a of aan a unincorporated a company
D) A a corporation a owns a less-than a a a controlling a interest a in a an a unincorporated a company
Answer: a D
a Difficulty: a1
aEasy
Topic: Organizational a Structure a and a Financial a Reporting
Learning aObjective: 01-01 aUnderstand aand aexplain athe areasons afor aand adifferent amethods
aofabusiness a expansion, a the a types a of a organizational a structures, a and a the a types a of
aacquisitions.
Bloom's: Remember
a AACSB: a Reflective
aThinking aA ICPA: FN
a Decision a Making
During aits ainception, aDevon aCompany apurchased aland afor a$100,000 aand aa abuilding afor
a$180,000. aAfter aexactly a3 ayears, ait atransferred a these aassets aand a cash aof a$50,000 ato aa anewly
acreated asubsidiary,aR egan a Company, a in a exchange afor a 15,000 a shares a of a Regan's a $10 a par a value
astock. a Devon a uses astraight-line a depreciation. a Useful a life a for a the a building a is a 30 a years, a with
a zero a residual a value. a An a appraisal arevealed a that a the a building a has aa a fair a value a of a$200,000.
5) Based a on athe a information a provided, a at a the a time a of a the a transfer, a Regan a Company a should
a record:
A) Building a at a $180,000 a and a no a accumulated a depreciation.
B) Building a at a $162,000 a and a no a accumulated a depreciation.
C) Building a at a $200,000 a and a accumulated a depreciation a of a $24,000.
D) Building a at a $180,000 a and a accumulated a depreciation a of a $18,000.
Answer: a aD
aDifficulty: a 2
a Medium
Topic: Valuation a of a Business a Entities; a Accounting a for a Internal a Expansion: a Creating
a Business a Entities
Learning aObjective: 01-04 aUnderstand aand aexplain athe adifferences abetween adifferent aforms
a of abusiness a combinations.; a 01-03 a Make a calculations a and a prepare a journal a entries a for a the
a creation a of aa a business a entity.
a a a a a
13th Edition
a a a
By Theodore Christensen
a a
,TEST BANK FOR
a a
Advanced Financial Accounting 13th Edition By Theodore Christensen
a a a a a a a
Chapter a1 Intercorporate a Acquisitions a and a Investments a in a Other a Entities
1) Assuming a no a impairment a in a value a prior a to a transfer, a assets atransferred a by aa a parent
a company a toaanother a entity a it a has a created a should a be a recorded a by athe a newly a created a entity
aat a the a assets':
A) cost a to a the a parent a company.
B) book a value a on athe a parent a company's a books a at a the a date a of a transfer.
C) fair a value a at a the a date a of atransfer.
D) fair avalue aof aconsideration aexchanged aby athe anewly acreated aentity.
Answer: a B
a Difficulty: a1
aEasy
Topic: aInternal aExpansion: aCreating aa aBusiness aEntity; aValuation aof aBusiness aEntities
a Learning aObjective: 01-01 a Understand a and a explain a the a reasons a for a and a different a methods
a of abusiness a expansion, a the a types a of a organizational a structures, a and a the a types a of
a acquisitions.; a 01 a-03 aMake a calculations a and a prepare a journal a entries a for a the a creation a of aa
a business a entity.
Bloom's: Remember
a AACSB: a Reflective
aThinking aA ICPA: FN
a Decision a Making
2) Given athe aincreased adevelopment aof acomplex abusiness astructures, awhich aof athe
afollowingar egulators ais aresponsible a for athe acontinued a usefulness a of aaccounting a reports?
A) Securities a and a Exchange a Commission a (SEC)
B) Public a Company a Accounting a Oversight a Board a (PCAOB)
C) Financial a Accounting a Standards a Board a (FASB)
D) All a of athe a other a answers a are a correct
Answer: a D
a Difficulty: a1
aEasy
Topic: An a Introduction a to a Complex a Business a Structures
Learning aObjective: 01-01 aUnderstand aand aexplain athe areasons afor aand adifferent amethods
aofabusiness a expansion, a the a types a of a organizational a structures, a and a the a types a of
aacquisitions.
Bloom's: Remember
a AACSB: a Reflective
aThinking aA ICPA: FN
aReporting
3) A abusiness acombination ain awhich athe aacquired acompany's aassets aand aliabilities aare
acombinedaw ith athose a of athe aacquiring a company ainto a a a single a entity ais adefined aas:
,A) Stock aacquisition
B) Leveraged abuyout
C) Statutory aMerger
D) Reverse a statutory a rollup
, Answer: a C
a Difficulty: a1
aEasy
Topic: Organizational a Structure a and a Financial a Reporting
Learning aObjective: 01-04 aUnderstand aand aexplain athe adifferences abetween adifferent aforms
aofab usiness a combinations.
Bloom's: Remember
a AACSB: a Reflective
aThinking aA ICPA: FN
a Decision a Making
4) In a which a of athe a following a situations a do a accounting a standards a not a require a that
a the a financialastatements a of athe a parent a and a subsidiary abe a consolidated?
A) A acorporation acreates aa anew a100 apercent a owned asubsidiary
B) A a corporation a purchases a 90 a percent a of athe a voting a stock a of a another a company
C) A a corporation a has a both a control a and a majority a ownership a of aan a unincorporated a company
D) A a corporation a owns a less-than a a a controlling a interest a in a an a unincorporated a company
Answer: a D
a Difficulty: a1
aEasy
Topic: Organizational a Structure a and a Financial a Reporting
Learning aObjective: 01-01 aUnderstand aand aexplain athe areasons afor aand adifferent amethods
aofabusiness a expansion, a the a types a of a organizational a structures, a and a the a types a of
aacquisitions.
Bloom's: Remember
a AACSB: a Reflective
aThinking aA ICPA: FN
a Decision a Making
During aits ainception, aDevon aCompany apurchased aland afor a$100,000 aand aa abuilding afor
a$180,000. aAfter aexactly a3 ayears, ait atransferred a these aassets aand a cash aof a$50,000 ato aa anewly
acreated asubsidiary,aR egan a Company, a in a exchange afor a 15,000 a shares a of a Regan's a $10 a par a value
astock. a Devon a uses astraight-line a depreciation. a Useful a life a for a the a building a is a 30 a years, a with
a zero a residual a value. a An a appraisal arevealed a that a the a building a has aa a fair a value a of a$200,000.
5) Based a on athe a information a provided, a at a the a time a of a the a transfer, a Regan a Company a should
a record:
A) Building a at a $180,000 a and a no a accumulated a depreciation.
B) Building a at a $162,000 a and a no a accumulated a depreciation.
C) Building a at a $200,000 a and a accumulated a depreciation a of a $24,000.
D) Building a at a $180,000 a and a accumulated a depreciation a of a $18,000.
Answer: a aD
aDifficulty: a 2
a Medium
Topic: Valuation a of a Business a Entities; a Accounting a for a Internal a Expansion: a Creating
a Business a Entities
Learning aObjective: 01-04 aUnderstand aand aexplain athe adifferences abetween adifferent aforms
a of abusiness a combinations.; a 01-03 a Make a calculations a and a prepare a journal a entries a for a the
a creation a of aa a business a entity.
