Test Bank For Advanced Financial Accounting 13th Edition By Theodore Christensen|9781260772135| All Chapters 1-20| LATEST

Test Bank for Advanced Financial Accounting
13th Edition
By Theodore Christensen

,TEST BANK FOR N N



Advanced Financial Accounting 13th Edition By Theodore Christensen
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Chapter 1 Intercorporate Acquisitions and Investments in Other Entities
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1) Assuming no impairment in value prior to transfer, assets transferred by a parent company to
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Nanother entity it has created should be recorded by the newly created 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.
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Answer: B Diffic N N


ulty: 1 EasyN N


Topic: Internal Expansion: Creating a Business Entity; Valuation of Business Entities Learni
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ng Objective:
N 01-
01 Understand and explain the reasons for and different methods of business expansion, the ty
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pes of organizational structures, and the types of acquisitions.; 01 -
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03 Make calculations and prepare journal entries for the creation of a business entity.
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Bloom's:
Remember AACSB: N


NReflective Thinking AICPA: N N


FN Decision Making N N




2) Given the increased development of complex business structures, which of the following
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Nregulators is responsible for the continued usefulness of accounting reports?
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A) Securities and Exchange Commission (SEC) N N N N


B) Public Company Accounting Oversight Board (PCAOB)
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C) Financial Accounting Standards Board (FASB) N N N N


D) All of the other answers are correct
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Answer: D Diffic N N


ulty: 1 EasyN N


Topic: An Introduction to Complex Business Structures
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Learning Objective: 01- N


01 Understand and explain the reasons for and different methods of business expansion, the t
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ypes of organizational structures, and the types of acquisitions.
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Bloom's:
Remember AACSB: N


NReflective Thinking AICPA: N N


FN Reporting N




3) A business combination in which the acquired company's assets and liabilities are combined
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Nwith those of the acquiring company into a single entity is defined as:
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A) Stock acquisition N


B) Leveraged buyout N


C) Statutory Merger N

,D) Reverse statutory rollup
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, Answer: C Diffic N N


ulty: 1 Easy N N


Topic: Organizational Structure and Financial Reporting N N N N


Learning Objective: 01- N


04 Understand and explain the differences between different forms of business combinations.
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Bloom's:
Remember AACSB: N


NReflective Thinking AICPA: N N


FN Decision Making N N




4) In which of the following situations do accounting standards not require that the financial
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Nstatements 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
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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 Diffic N N


ulty: 1 Easy N N


Topic: Organizational Structure and Financial Reporting N N N N


Learning Objective: 01- N


01 Understand and explain the reasons for and different methods of business expansion, the t
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ypes of organizational structures, and the types of acquisitions.
N N N N N N N N


Bloom's:
Remember AACSB: N


NReflective Thinking AICPA: N N


FN Decision Making N N




During its inception, Devon Company purchased land for $100,000 and a building for $180,000.
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NAfter exactly 3 years, it transferred these assets and cash of $50,000 to a newly created subsidiary
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, Regan Company, in exchange for 15,000 shares of Regan's $10 par value stock. Devon uses str
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aight-
line depreciation. Useful life for the building is 30 years, with zero residual value. An appraisal
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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 Difficulty N N


: 2 Medium
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Topic:
Valuation of Business Entities; Accounting for Internal Expansion: Creating Business
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NEntities
Learning Objective: 01- N


04 Understand and explain the differences between different forms of business combinations.; 0
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1-03 Make calculations and prepare journal entries for the creation of a business entity.
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Bloom's:
Understand AACSB N