Advanced Accounting exam 2 with verified solutions

Advanced Accounting exam 2 with verified solutions Stock given as consideration is valued at: - ANSWERfair market value Which of the following advantages and/or disadvantages of stock acquisitions relative to asset acquisitions (and subsequent consolidated financial statements) is misstated? - ANSWERConsolidated statements need not be produced as long as a parent company owns less than 50% of the voting shares of the subsidiary. Which of the following is not (generally) an advantage of stock acquisitions over asset acquisitions? - ANSWERAnonymity In its conceptual framework, the FASB set out a number of principles to be adhered to in standard setting and in interpreting financial statements. The decision to require a consolidated statement, rather than separate financial statements, for a parent firm and its subsidiary best illustrates which of the following principles or concepts? - ANSWEREconomic entity Which of the following adjustments do not occur in the consolidating process? - ANSWERElimination of parent's retained earnings The noncontrolling interest in the subsidiary is reported as: - ANSWERequity (T/F) In computing the difference between the implied and book values, the implied value of the acquired entity will always equal the purchase price to the parent. - ANSWERFalse (T/F) In the Computation and Allocation of Difference (between implied value and book value) schedule for a stock acquisition, the implied value of subsidiary equity is computed as: (purchase price) divided by (percentage acquired by parent). - ANSWERTrue (T/F) Once the eliminating/adjusting entry columns of the worksheet are completed, the entries are posted to the books of the company's general ledger and therefore need not be repeated in the following year in the consolidating process. - ANSWERFalse