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Advanced Financial Accounting Exam 2026-2027 || || || || ||
Update with accurate detailed solutions || || || ||
Consolidated Financial Statements - ✔✔Portray the related companies as if they were actually a
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single company. ||
Subsidiary - ✔✔Is a corporation that is controlled by another corporation
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Parent Company - ✔✔The controlling company who usually owns through majority ownership of
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its common stock
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Special-Purpose Entity (SPE) - ✔✔A financing vehicle that is not a substantive operating entity, || || || || || || || || || || || || || ||
usually one created for a single specified purpose.
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Pooling-Of-Interests - ✔✔Previously widely used method of accounting for business || || || || || || || || || ||
combinations, sometimes created earnings and, in the view of many, provided misleading || || || || || || || || || || || ||
financial reporting subsequent to a combination.
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Spin-Off - ✔✔Occurs when the ownership of a newly created or existing subsidiary is distributed
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to the parent's stockholders without the stockholders surrendering any of their stock in the parent
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company.
Split-Off - ✔✔Occurs when the subsidiary's shares are exchanged for shares of the parent,
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thereby leading to a reduction in the outstanding shares of the parent company
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Business Combination - ✔✔Occurs when "...an acquirer obtains control of one or more
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businesses."
Concept of Control - ✔✔Relates to the ability to direct policies and management
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, 2
Merger - ✔✔Business combination in which the acquired company's assets and liabilities are
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combined with those of the acquiring company. || || || || || ||
Controlling Ownership - ✔✔A business combination in which the acquired company remains as
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a seperate legal entity with a majority of its common stock owned by the purchasing company
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leads to a parent-subsidiary relationship.
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Noncontrolling Ownership - ✔✔The purchase of a less-than-majority interest in another || || || || || || || || || || ||
corporation does not usually result in a business combination or controlling situation.
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Other Beneficial Interest - ✔✔One company may have a beneficial interest in another entity even
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without a direct ownership interest.
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Primary Beneficiary - ✔✔A company that has the ability to make decisions significantly
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affecting the results of another entity's activities or is expected to receive a majority of the other
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entity's profits and losses
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Statutory Merger - ✔✔Is a type of business combination in which only one of the combining
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companies survives and the other loses its seperate identitiy.
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Liquidated - ✔✔When the acquired company's assets and liabilities are transferred to the
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acquiring company, and the acquired company is disolved
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Statutory Consolidation - ✔✔Is a business combination in which both combining companies are
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dissolved and the assets and liabilities of both companies are transferred to a newly created
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corporation.
Stock Acquisition - ✔✔Occurs when one company acquires the voting shares of another
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company and the two companies continue to operate as seperat, but related, legal entities
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Parent-Subsidiary Relationship - ✔✔The relationship that is created in a stock acquisition || || || || || || || || || || ||
Advanced Financial Accounting Exam 2026-2027 || || || || ||
Update with accurate detailed solutions || || || ||
Consolidated Financial Statements - ✔✔Portray the related companies as if they were actually a
|| || || || || || || || || || || || || ||
single company. ||
Subsidiary - ✔✔Is a corporation that is controlled by another corporation
|| || || || || || || || || ||
Parent Company - ✔✔The controlling company who usually owns through majority ownership of
|| || || || || || || || || || || ||
its common stock
|| || ||
Special-Purpose Entity (SPE) - ✔✔A financing vehicle that is not a substantive operating entity, || || || || || || || || || || || || || ||
usually one created for a single specified purpose.
|| || || || || || ||
Pooling-Of-Interests - ✔✔Previously widely used method of accounting for business || || || || || || || || || ||
combinations, sometimes created earnings and, in the view of many, provided misleading || || || || || || || || || || || ||
financial reporting subsequent to a combination.
|| || || || ||
Spin-Off - ✔✔Occurs when the ownership of a newly created or existing subsidiary is distributed
|| || || || || || || || || || || || || || ||
to the parent's stockholders without the stockholders surrendering any of their stock in the parent
|| || || || || || || || || || || || || || ||
company.
Split-Off - ✔✔Occurs when the subsidiary's shares are exchanged for shares of the parent,
|| || || || || || || || || || || || || ||
thereby leading to a reduction in the outstanding shares of the parent company
|| || || || || || || || || || || ||
Business Combination - ✔✔Occurs when "...an acquirer obtains control of one or more
|| || || || || || || || || || || || ||
businesses."
Concept of Control - ✔✔Relates to the ability to direct policies and management
|| || || || || || || || || || || ||
, 2
Merger - ✔✔Business combination in which the acquired company's assets and liabilities are
|| || || || || || || || || || || || ||
combined with those of the acquiring company. || || || || || ||
Controlling Ownership - ✔✔A business combination in which the acquired company remains as
|| || || || || || || || || || || || ||
a seperate legal entity with a majority of its common stock owned by the purchasing company
|| || || || || || || || || || || || || || || ||
leads to a parent-subsidiary relationship.
|| || || ||
Noncontrolling Ownership - ✔✔The purchase of a less-than-majority interest in another || || || || || || || || || || ||
corporation does not usually result in a business combination or controlling situation.
|| || || || || || || || || || ||
Other Beneficial Interest - ✔✔One company may have a beneficial interest in another entity even
|| || || || || || || || || || || || || || ||
without a direct ownership interest.
|| || || ||
Primary Beneficiary - ✔✔A company that has the ability to make decisions significantly
|| || || || || || || || || || || || ||
affecting the results of another entity's activities or is expected to receive a majority of the other
|| || || || || || || || || || || || || || || || ||
entity's profits and losses
|| || ||
Statutory Merger - ✔✔Is a type of business combination in which only one of the combining
|| || || || || || || || || || || || || || || ||
companies survives and the other loses its seperate identitiy.
|| || || || || || || ||
Liquidated - ✔✔When the acquired company's assets and liabilities are transferred to the
|| || || || || || || || || || || || ||
acquiring company, and the acquired company is disolved
|| || || || || || ||
Statutory Consolidation - ✔✔Is a business combination in which both combining companies are
|| || || || || || || || || || || || ||
dissolved and the assets and liabilities of both companies are transferred to a newly created
|| || || || || || || || || || || || || || ||
corporation.
Stock Acquisition - ✔✔Occurs when one company acquires the voting shares of another
|| || || || || || || || || || || || ||
company and the two companies continue to operate as seperat, but related, legal entities
|| || || || || || || || || || || || ||
Parent-Subsidiary Relationship - ✔✔The relationship that is created in a stock acquisition || || || || || || || || || || ||
