ACCT303 Final Exam Questions and
Answers Verified by Experts
A rule of thumb for applying the __________ method is ownership of 20% - 50%. equity
method
If an investor owns 18% and has the ability to signifiantly influence the investee, the investment
should be accounted for using the equity method
If an investor owns more than 50% of the stock of an investee the method the investor should use
to account for the investment is the consolidation method
The level of ownership is the most important criteria in determining the applicable accounting
method when accounting for an investment. False
The equity method tends to be most appropriate when an investor owns 40% of the stock of an
investee and they can influence the investee. True
,The consolidation method tends to be the most appropriate when an investor exercises control of
an investee, often achieved by acquiring more than 50% of the voting stock. True
No two business combinations are exactly alike. Reasons businesses combine include all of the
following except fair value acquisition allocation
When a company merges into a parent company and ceases to legally exist we refer to that as
_____________. dissolution
The consolidation method can be used when dissolution of the subsidiary takes place. What is
the meaning of "dissolution" in this context? the subsidiary company ceases to exist and
dissolves into the parent company.
Worksheet entries are used in the consolidation process. The S Entry eliminates the
subsidiary's stockholders' equity accounts as of the beginning of the current year.
Worksheet entries are used in the consolidation process. The A entry is used to recognize
the unamortized allocations associated with the original adjustments to fair value.
, The consolidating worksheet entry that eliminates the impact of intra entity subsidiary income
accrued by the parent is known as the _________________. I entry
The worksheet entry necessary for the consolidation when the parent applied the equity method,
which eliminates the impact of intra entity subsidiary dividends, is known as the
______________. D entry
The E entry recognizes excess amortization expenses for the current period on the
allocations from the original adjustments to fair value.
When consolidated financial statements are required but the parent does not own 100% of the
subsidiary the term used to describe the outside owner is _____________________. non
controlling interest.
When consolidating financial statements in the presence of a non controlling interest the equity
section of the balance sheet includes the equity of the non controlling interest's share of
the subsidiary.
Answers Verified by Experts
A rule of thumb for applying the __________ method is ownership of 20% - 50%. equity
method
If an investor owns 18% and has the ability to signifiantly influence the investee, the investment
should be accounted for using the equity method
If an investor owns more than 50% of the stock of an investee the method the investor should use
to account for the investment is the consolidation method
The level of ownership is the most important criteria in determining the applicable accounting
method when accounting for an investment. False
The equity method tends to be most appropriate when an investor owns 40% of the stock of an
investee and they can influence the investee. True
,The consolidation method tends to be the most appropriate when an investor exercises control of
an investee, often achieved by acquiring more than 50% of the voting stock. True
No two business combinations are exactly alike. Reasons businesses combine include all of the
following except fair value acquisition allocation
When a company merges into a parent company and ceases to legally exist we refer to that as
_____________. dissolution
The consolidation method can be used when dissolution of the subsidiary takes place. What is
the meaning of "dissolution" in this context? the subsidiary company ceases to exist and
dissolves into the parent company.
Worksheet entries are used in the consolidation process. The S Entry eliminates the
subsidiary's stockholders' equity accounts as of the beginning of the current year.
Worksheet entries are used in the consolidation process. The A entry is used to recognize
the unamortized allocations associated with the original adjustments to fair value.
, The consolidating worksheet entry that eliminates the impact of intra entity subsidiary income
accrued by the parent is known as the _________________. I entry
The worksheet entry necessary for the consolidation when the parent applied the equity method,
which eliminates the impact of intra entity subsidiary dividends, is known as the
______________. D entry
The E entry recognizes excess amortization expenses for the current period on the
allocations from the original adjustments to fair value.
When consolidated financial statements are required but the parent does not own 100% of the
subsidiary the term used to describe the outside owner is _____________________. non
controlling interest.
When consolidating financial statements in the presence of a non controlling interest the equity
section of the balance sheet includes the equity of the non controlling interest's share of
the subsidiary.
