Advanced Financial Accounting 13th Edition

TEST BANK FOR Advanced Financial Accounting 13th Edition By Theodore Christensen Chapter 1 Intercorporate Acquisitions and Investments in Other Entities 1) Assuming no impairment in value prior to transfer, assetstransferred by a parent company to another entity it has created should be recorded by the newly created entity at the assets': A) cost to the parent company. B) book value on the parent company's books at the date of transfer. C) fair value at the date oftransfer. D) fair value of consideration exchanged by the newly created entity. Answer: B Difficulty: 1 Easy Topic: Internal Expansion: Creating a Business Entity; Valuation of Business Entities Learning Objective: 01-01 Understand and explain the reasons for and different methods of business expansion, the types of organizational structures, and the types of acquisitions.; 01-03 Make calculations and prepare journal entries for the creation of a business entity. Bloom's: Remember AACSB: Reflective Thinking AICPA: FN Decision Making 2) Given the increased development of complex business structures, which ofthe 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 ofthe other answers are correct Answer: D Difficulty: 1 Easy Topic: An Introduction to Complex Business Structures Learning Objective: 01-01 Understand and explain the reasons for and different methods of business expansion, the types of organizational structures, and the types of acquisitions. Bloom's: Remember AACSB: Reflective Thinking AICPA: FN Reporting 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) StatutoryMerger D) Reverse statutory rollup