ADVANCED ACCOUNTING HOYLE
SCHAEFER DOUPNIK FIFTEENTH EDITION
UPDATED ACTUAL QUESTIONS AND
CORRECT ANSWERS WITH FULL SOLUTION
⩥ 2) Given the increased development of complex business structures,
which of the following regulators is responsible for the continued
usefulness of accounting reports?
A) Securities and Exchange Commission (SEC)
B) Public Company Accounting Oversight Board (PCAOB)
C) Financial Accounting Standards Board (FASB)
D) All of the other answers are correct
Answer: D
⩥ 3) A business combination in which the acquired company's assets and
liabilities are combined with those of the acquiring company into a
single entity is defined as:
A) Stock acquisition
B) Leveraged buyout
C) Statutory Merger
D) Reverse statutory rollup
Answer: C
,⩥ 4) In which of the following situations do accounting standards not
require that the financial statements of the parent and subsidiary be
consolidated?
A) A corporation creates a new 100 percent owned subsidiary
B) A corporation purchases 90 percent of the voting stock of another
company
C) A corporation has both control and majority ownership of an
unincorporated company
D) A corporation owns less-than a controlling interest in an
unincorporated company
Answer: D
⩥ During its inception, Devon Company purchased land for $100,000
and a building for $180,000. After exactly 3 years, it transferred these
assets and cash of $50,000 to a newly created subsidiary, Regan
Company, in exchange for 15,000 shares of Regan's $10 par value stock.
Devon uses straight-line depreciation. Useful life for the building is 30
years, with zero residual value. An appraisal revealed that the building
has a fair value of $200,000.
5) Based on the information provided, at the time of the transfer, Regan
Company should record:
A) Building at $180,000 and no accumulated depreciation.
B) Building at $162,000 and no accumulated depreciation.
, C) Building at $200,000 and accumulated depreciation of $24,000.
D) Building at $180,000 and accumulated depreciation of $18,000.
Answer: D
⩥ During its inception, Devon Company purchased land for $100,000
and a building for $180,000. After exactly 3 years, it transferred these
assets and cash of $50,000 to a newly created subsidiary, Regan
Company, in exchange for 15,000 shares of Regan's $10 par value stock.
Devon uses straight-line depreciation. Useful life for the building is 30
years, with zero residual value. An appraisal revealed that the building
has a fair value of $200,000.
6) Based on the information provided, what amount would be reported
by Devon Company as investment in Regan Company common stock?
A) $312,000
B) $180,000
C) $330,000
D) $150,000
Answer: A
⩥ During its inception, Devon Company purchased land for $100,000
and a building for $180,000. After exactly 3 years, it transferred these
assets and cash of $50,000 to a newly created subsidiary, Regan
Company, in exchange for 15,000 shares of Regan's $10 par value stock.
Devon uses straight-line depreciation. Useful life for the building is 30
SCHAEFER DOUPNIK FIFTEENTH EDITION
UPDATED ACTUAL QUESTIONS AND
CORRECT ANSWERS WITH FULL SOLUTION
⩥ 2) Given the increased development of complex business structures,
which of the following regulators is responsible for the continued
usefulness of accounting reports?
A) Securities and Exchange Commission (SEC)
B) Public Company Accounting Oversight Board (PCAOB)
C) Financial Accounting Standards Board (FASB)
D) All of the other answers are correct
Answer: D
⩥ 3) A business combination in which the acquired company's assets and
liabilities are combined with those of the acquiring company into a
single entity is defined as:
A) Stock acquisition
B) Leveraged buyout
C) Statutory Merger
D) Reverse statutory rollup
Answer: C
,⩥ 4) In which of the following situations do accounting standards not
require that the financial statements of the parent and subsidiary be
consolidated?
A) A corporation creates a new 100 percent owned subsidiary
B) A corporation purchases 90 percent of the voting stock of another
company
C) A corporation has both control and majority ownership of an
unincorporated company
D) A corporation owns less-than a controlling interest in an
unincorporated company
Answer: D
⩥ During its inception, Devon Company purchased land for $100,000
and a building for $180,000. After exactly 3 years, it transferred these
assets and cash of $50,000 to a newly created subsidiary, Regan
Company, in exchange for 15,000 shares of Regan's $10 par value stock.
Devon uses straight-line depreciation. Useful life for the building is 30
years, with zero residual value. An appraisal revealed that the building
has a fair value of $200,000.
5) Based on the information provided, at the time of the transfer, Regan
Company should record:
A) Building at $180,000 and no accumulated depreciation.
B) Building at $162,000 and no accumulated depreciation.
, C) Building at $200,000 and accumulated depreciation of $24,000.
D) Building at $180,000 and accumulated depreciation of $18,000.
Answer: D
⩥ During its inception, Devon Company purchased land for $100,000
and a building for $180,000. After exactly 3 years, it transferred these
assets and cash of $50,000 to a newly created subsidiary, Regan
Company, in exchange for 15,000 shares of Regan's $10 par value stock.
Devon uses straight-line depreciation. Useful life for the building is 30
years, with zero residual value. An appraisal revealed that the building
has a fair value of $200,000.
6) Based on the information provided, what amount would be reported
by Devon Company as investment in Regan Company common stock?
A) $312,000
B) $180,000
C) $330,000
D) $150,000
Answer: A
⩥ During its inception, Devon Company purchased land for $100,000
and a building for $180,000. After exactly 3 years, it transferred these
assets and cash of $50,000 to a newly created subsidiary, Regan
Company, in exchange for 15,000 shares of Regan's $10 par value stock.
Devon uses straight-line depreciation. Useful life for the building is 30
