LSU ACCT 4235 FINAL TEST STUDY GUIDE
2025/2026 VERIFIED QUESTIONS AND
CORRECT ANSWERS WITH RATIONALES ||
100% GUARANTEED PASS <UPDATED
VERSION>
LSU ACCT 4235 Final Test Study Guide
Module 1: Business Combinations & Consolidation Introduction
1. In a business combination accounted for as an acquisition, how should the acquirer's costs
of facilitating the combination be accounted for?
A) Capitalized as part of the acquisition cost.
B) Expensed in the period the combination is completed.
C) Expensed in the period the costs are incurred.
D) Capitalized and amortized over a maximum of 20 years.
Answer: C
2. When a business combination is achieved in a single transaction, the acquisition method
requires the identification of the:
A) Combination initiator.
B) Legal acquirer.
C) Acquirer and the acquiree.
D) Parent and the subsidiary.
Answer: C
3. In a consolidation worksheet, the "Investment in Subsidiary" account on the parent's books
is:
A) Always eliminated against the subsidiary's stockholders' equity.
B) Combined with the subsidiary's assets.
C) Reported as a non-current asset in the consolidated balance sheet.
D) Amortized over its useful life.
Answer: A
,4. What is the primary goal of preparing consolidated financial statements?
A) To report the legal form of the parent and subsidiary as separate entities.
B) To report the financial position and results of operations of a parent and its subsidiaries as a
single economic entity.
C) To simplify the accounting for intercompany transactions.
D) To comply with the tax laws of the parent company's country.
Answer: B
5. On the date of a acquisition, the fair value of the net identifiable assets of the acquiree is
$500,000. The acquirer pays $650,000 for 100% of the acquiree. The resulting goodwill is:
A) $0
B) $150,000
C) $500,000
D) $650,000
Answer: B
Module 2: Consolidation - Post-Acquisition
6. In the year following a acquisition, consolidation entry (C) is used to:
A) Eliminate the subsidiary's equity accounts.
B) Eliminate the income from subsidiary account.
C) Allocate the difference between fair value and book value.
D) Amortize the excess fair value over book value.
Answer: D
7. Parent Company owns 80% of Subsidiary Company. The subsidiary reports net income of
$100,000. The noncontrolling interest's share of the subsidiary's net income is:
A) $0
B) $20,000
C) $80,000
D) $100,000
Answer: B
8. Consolidated net income for a period is defined as the parent's:
A) Net income plus the subsidiary's net income.
B) Net income plus the parent's share of the subsidiary's net income.
C) Revenues less expenses for the consolidated entity.
D) Income from independent operations plus the subsidiary's dividends.
Answer: B
, 9. When the parent uses the equity method for its internal investment account, the entry to
record its share of the subsidiary's income includes a debit to:
A) Investment in Subsidiary and a credit to Cash.
B) Investment in Subsidiary and a credit to Equity in Subsidiary Earnings.
C) Equity in Subsidiary Earnings and a credit to Investment in Subsidiary.
D) Cash and a credit to Investment in Subsidiary.
Answer: B
10. Consolidation entry (S) is used to eliminate the:
A) Subsidiary's assets against the parent's investment account.
B) Parent's "Investment in Subsidiary" against the subsidiary's stockholders' equity accounts.
C) Intercompany sales.
D) Subsidiary's liabilities.
Answer: B
Module 3: Intercompany Transactions - Inventory
11. An upstream intercompany sale of inventory refers to a sale:
A) From the parent to the subsidiary.
B) From the subsidiary to the parent.
C) Between two subsidiaries.
D) To an external party.
Answer: B
12. In preparing consolidated financial statements, intercompany revenue and expenses must
be eliminated for which of the following transactions?
A) Only downstream sales of inventory.
B) Only upstream sales of inventory.
C) Both upstream and downstream sales of inventory.
D) Only sales of fixed assets.
Answer: C
13. In the consolidation worksheet, an intercompany inventory sale that has not been resold
to an external party requires an adjustment to:
A) Increase cost of goods sold and decrease inventory.
B) Decrease sales and decrease cost of goods sold.
C) Decrease sales and increase inventory.
D) Decrease inventory and increase retained earnings.
Answer: C
2025/2026 VERIFIED QUESTIONS AND
CORRECT ANSWERS WITH RATIONALES ||
100% GUARANTEED PASS <UPDATED
VERSION>
LSU ACCT 4235 Final Test Study Guide
Module 1: Business Combinations & Consolidation Introduction
1. In a business combination accounted for as an acquisition, how should the acquirer's costs
of facilitating the combination be accounted for?
A) Capitalized as part of the acquisition cost.
B) Expensed in the period the combination is completed.
C) Expensed in the period the costs are incurred.
D) Capitalized and amortized over a maximum of 20 years.
Answer: C
2. When a business combination is achieved in a single transaction, the acquisition method
requires the identification of the:
A) Combination initiator.
B) Legal acquirer.
C) Acquirer and the acquiree.
D) Parent and the subsidiary.
Answer: C
3. In a consolidation worksheet, the "Investment in Subsidiary" account on the parent's books
is:
A) Always eliminated against the subsidiary's stockholders' equity.
B) Combined with the subsidiary's assets.
C) Reported as a non-current asset in the consolidated balance sheet.
D) Amortized over its useful life.
Answer: A
,4. What is the primary goal of preparing consolidated financial statements?
A) To report the legal form of the parent and subsidiary as separate entities.
B) To report the financial position and results of operations of a parent and its subsidiaries as a
single economic entity.
C) To simplify the accounting for intercompany transactions.
D) To comply with the tax laws of the parent company's country.
Answer: B
5. On the date of a acquisition, the fair value of the net identifiable assets of the acquiree is
$500,000. The acquirer pays $650,000 for 100% of the acquiree. The resulting goodwill is:
A) $0
B) $150,000
C) $500,000
D) $650,000
Answer: B
Module 2: Consolidation - Post-Acquisition
6. In the year following a acquisition, consolidation entry (C) is used to:
A) Eliminate the subsidiary's equity accounts.
B) Eliminate the income from subsidiary account.
C) Allocate the difference between fair value and book value.
D) Amortize the excess fair value over book value.
Answer: D
7. Parent Company owns 80% of Subsidiary Company. The subsidiary reports net income of
$100,000. The noncontrolling interest's share of the subsidiary's net income is:
A) $0
B) $20,000
C) $80,000
D) $100,000
Answer: B
8. Consolidated net income for a period is defined as the parent's:
A) Net income plus the subsidiary's net income.
B) Net income plus the parent's share of the subsidiary's net income.
C) Revenues less expenses for the consolidated entity.
D) Income from independent operations plus the subsidiary's dividends.
Answer: B
, 9. When the parent uses the equity method for its internal investment account, the entry to
record its share of the subsidiary's income includes a debit to:
A) Investment in Subsidiary and a credit to Cash.
B) Investment in Subsidiary and a credit to Equity in Subsidiary Earnings.
C) Equity in Subsidiary Earnings and a credit to Investment in Subsidiary.
D) Cash and a credit to Investment in Subsidiary.
Answer: B
10. Consolidation entry (S) is used to eliminate the:
A) Subsidiary's assets against the parent's investment account.
B) Parent's "Investment in Subsidiary" against the subsidiary's stockholders' equity accounts.
C) Intercompany sales.
D) Subsidiary's liabilities.
Answer: B
Module 3: Intercompany Transactions - Inventory
11. An upstream intercompany sale of inventory refers to a sale:
A) From the parent to the subsidiary.
B) From the subsidiary to the parent.
C) Between two subsidiaries.
D) To an external party.
Answer: B
12. In preparing consolidated financial statements, intercompany revenue and expenses must
be eliminated for which of the following transactions?
A) Only downstream sales of inventory.
B) Only upstream sales of inventory.
C) Both upstream and downstream sales of inventory.
D) Only sales of fixed assets.
Answer: C
13. In the consolidation worksheet, an intercompany inventory sale that has not been resold
to an external party requires an adjustment to:
A) Increase cost of goods sold and decrease inventory.
B) Decrease sales and decrease cost of goods sold.
C) Decrease sales and increase inventory.
D) Decrease inventory and increase retained earnings.
Answer: C
