Test Bank for Advanced Financial Accounting
C C C C C C
C 13th Edition
C C
By Theodore Christensen
C C
,TEST BANK FOR
C C
Advanced Financial Accounting 13th Edition By Theodore Christensen
C C C C C C C
Chapter C 1 Intercorporate C Acquisitions C and C Investments C in C Other C Entities
1) Assuming Cno Cimpairment Cin Cvalue Cprior Cto Ctransfer, Cassets Ctransferred Cby Ca Cparent
Ccompany Cto Canother Centity Cit Chas Ccreated Cshould Cbe Crecorded Cby Cthe Cnewly Ccreated Centity
Cat Cthe Cassets':
A) cost Cto Cthe Cparent Ccompany.
B) book Cvalue Con Cthe Cparent C company's Cbooks Cat Cthe Cdate Cof Ctransfer.
C) fair Cvalue Cat Cthe Cdate Cof Ctransfer.
D) fair Cvalue Cof Cconsideration Cexchanged Cby Cthe Cnewly Ccreated Centity.
Answer: CB
C Difficulty: C1
CEasy
Topic: C Internal CExpansion: CCreating Ca CBusiness CEntity; CValuation Cof CBusiness CEntities
C Learning C Objective: 01-01 C Understand Cand Cexplain Cthe Creasons Cfor Cand Cdifferent Cmethods
Cof Cbusiness Cexpansion, Cthe Ctypes Cof Corganizational Cstructures, Cand Cthe Ctypes Cof Cacquisitions.;
C01 C-03 C Make Ccalculations Cand Cprepare Cjournal Centries Cfor Cthe Ccreation Cof Ca Cbusiness Centity.
Bloom's: Remember
CAACSB: C Reflective
CThinking CAICPA: FN
C Decision C Making
2) Given Cthe Cincreased Cdevelopment Cof Ccomplex Cbusiness Cstructures, Cwhich Cof Cthe
Cfollowing Cregulators Cis Cresponsible Cfor Cthe Ccontinued Cusefulness Cof Caccounting
Creports?
A) Securities C and C Exchange C Commission C (SEC)
B) Public C Company C Accounting C Oversight C Board C (PCAOB)
C) Financial C Accounting C Standards C Board C (FASB)
D) All Cof Cthe Cother Canswers Care Ccorrect
Answer: CD
C Difficulty: C1
CEasy
Topic: An C Introduction C to C Complex C Business C Structures
Learning CObjective: 01-01 CUnderstand Cand Cexplain Cthe Creasons Cfor Cand Cdifferent Cmethods
Cof Cbusiness Cexpansion, Cthe Ctypes Cof Corganizational Cstructures, Cand Cthe Ctypes Cof
Cacquisitions.
Bloom's: Remember
CAACSB: C Reflective
CThinking C AICPA: FN
CReporting
3) A Cbusiness Ccombination Cin Cwhich Cthe Cacquired Ccompany's Cassets Cand Cliabilities Care
Ccombined C with Cthose Cof Cthe Cacquiring Ccompany Cinto Ca Csingle Centity Cis Cdefined Cas:
,A) Stock Cacquisition
B) Leveraged C buyout
C) Statutory C Merger
D) Reverse C statutory C rollup
, Answer: CC
C Difficulty: C1
CEasy
Topic: Organizational C Structure C and C Financial C Reporting
Learning CObjective: 01-04 CUnderstand Cand Cexplain Cthe Cdifferences Cbetween Cdifferent Cforms
Cof Cbusiness Ccombinations.
Bloom's: Remember
CAACSB: C Reflective
CThinking CAICPA: FN
C Decision C Making
4) In Cwhich Cof Cthe Cfollowing Csituations Cdo Caccounting Cstandards Cnot Crequire Cthat Cthe
Cfinancial Cstatements Cof Cthe Cparent Cand Csubsidiary Cbe Cconsolidated?
A) A Ccorporation Ccreates Ca Cnew C100 Cpercent Cowned Csubsidiary
B) A Ccorporation Cpurchases C90 Cpercent Cof Cthe Cvoting Cstock Cof Canother Ccompany
C) A C corporation C has C both C control C and C majority C ownership C of Can C unincorporated C company
D) A C corporation C owns C less-than Ca C controlling C interest C in C an C unincorporated C company
Answer: CD
C Difficulty: C1
CEasy
Topic: Organizational C Structure C and C Financial C Reporting
Learning CObjective: 01-01 CUnderstand Cand Cexplain Cthe Creasons Cfor Cand Cdifferent Cmethods
Cof Cbusiness Cexpansion, Cthe Ctypes Cof Corganizational Cstructures, Cand Cthe Ctypes Cof
Cacquisitions.
Bloom's: Remember
CAACSB: C Reflective
CThinking CAICPA: FN
C Decision C Making
During Cits Cinception, CDevon CCompany Cpurchased Cland Cfor C$100,000 Cand Ca Cbuilding Cfor
C$180,000. C After Cexactly C3 Cyears, Cit Ctransferred Cthese Cassets Cand Ccash CofC$50,000 Cto Ca Cnewly
Ccreated Csubsidiary, CRegan CCompany, Cin Cexchange Cfor C15,000 Cshares Cof CRegan's C$10 Cpar
Cvalue Cstock. CDevon Cuses Cstraight-line Cdepreciation. C Useful Clife Cfor Cthe Cbuilding Cis C30 Cyears,
C with Czero Cresidual Cvalue. C An Cappraisal Crevealed Cthat Cthe Cbuilding Chas Ca Cfair Cvalue Cof
C$200,000.
5) Based Con Cthe Cinformation Cprovided, Cat Cthe Ctime Cof Cthe Ctransfer, CRegan CCompany Cshould Crecord:
A) Building C at C $180,000 C and C no C accumulated C depreciation.
B) Building C at C $162,000 C and C no C accumulated C depreciation.
C) Building C at C $200,000 C and C accumulated C depreciation C of C$24,000.
D) Building C at C $180,000 C and C accumulated C depreciation C of C $18,000.
Answer: CD
C Difficulty: C2
CMedium
Topic: Valuation Cof CBusiness CEntities; CAccounting Cfor CInternal CExpansion: CCreating
CBusiness C Entities
Learning CObjective: 01-04 CUnderstand Cand Cexplain Cthe Cdifferences Cbetween Cdifferent Cforms
Cof Cbusiness Ccombinations.; C01-03 CMake Ccalculations Cand Cprepare Cjournal Centries Cfor Cthe
Ccreation Cof Ca Cbusiness Centity.
C C C C C C
C 13th Edition
C C
By Theodore Christensen
C C
,TEST BANK FOR
C C
Advanced Financial Accounting 13th Edition By Theodore Christensen
C C C C C C C
Chapter C 1 Intercorporate C Acquisitions C and C Investments C in C Other C Entities
1) Assuming Cno Cimpairment Cin Cvalue Cprior Cto Ctransfer, Cassets Ctransferred Cby Ca Cparent
Ccompany Cto Canother Centity Cit Chas Ccreated Cshould Cbe Crecorded Cby Cthe Cnewly Ccreated Centity
Cat Cthe Cassets':
A) cost Cto Cthe Cparent Ccompany.
B) book Cvalue Con Cthe Cparent C company's Cbooks Cat Cthe Cdate Cof Ctransfer.
C) fair Cvalue Cat Cthe Cdate Cof Ctransfer.
D) fair Cvalue Cof Cconsideration Cexchanged Cby Cthe Cnewly Ccreated Centity.
Answer: CB
C Difficulty: C1
CEasy
Topic: C Internal CExpansion: CCreating Ca CBusiness CEntity; CValuation Cof CBusiness CEntities
C Learning C Objective: 01-01 C Understand Cand Cexplain Cthe Creasons Cfor Cand Cdifferent Cmethods
Cof Cbusiness Cexpansion, Cthe Ctypes Cof Corganizational Cstructures, Cand Cthe Ctypes Cof Cacquisitions.;
C01 C-03 C Make Ccalculations Cand Cprepare Cjournal Centries Cfor Cthe Ccreation Cof Ca Cbusiness Centity.
Bloom's: Remember
CAACSB: C Reflective
CThinking CAICPA: FN
C Decision C Making
2) Given Cthe Cincreased Cdevelopment Cof Ccomplex Cbusiness Cstructures, Cwhich Cof Cthe
Cfollowing Cregulators Cis Cresponsible Cfor Cthe Ccontinued Cusefulness Cof Caccounting
Creports?
A) Securities C and C Exchange C Commission C (SEC)
B) Public C Company C Accounting C Oversight C Board C (PCAOB)
C) Financial C Accounting C Standards C Board C (FASB)
D) All Cof Cthe Cother Canswers Care Ccorrect
Answer: CD
C Difficulty: C1
CEasy
Topic: An C Introduction C to C Complex C Business C Structures
Learning CObjective: 01-01 CUnderstand Cand Cexplain Cthe Creasons Cfor Cand Cdifferent Cmethods
Cof Cbusiness Cexpansion, Cthe Ctypes Cof Corganizational Cstructures, Cand Cthe Ctypes Cof
Cacquisitions.
Bloom's: Remember
CAACSB: C Reflective
CThinking C AICPA: FN
CReporting
3) A Cbusiness Ccombination Cin Cwhich Cthe Cacquired Ccompany's Cassets Cand Cliabilities Care
Ccombined C with Cthose Cof Cthe Cacquiring Ccompany Cinto Ca Csingle Centity Cis Cdefined Cas:
,A) Stock Cacquisition
B) Leveraged C buyout
C) Statutory C Merger
D) Reverse C statutory C rollup
, Answer: CC
C Difficulty: C1
CEasy
Topic: Organizational C Structure C and C Financial C Reporting
Learning CObjective: 01-04 CUnderstand Cand Cexplain Cthe Cdifferences Cbetween Cdifferent Cforms
Cof Cbusiness Ccombinations.
Bloom's: Remember
CAACSB: C Reflective
CThinking CAICPA: FN
C Decision C Making
4) In Cwhich Cof Cthe Cfollowing Csituations Cdo Caccounting Cstandards Cnot Crequire Cthat Cthe
Cfinancial Cstatements Cof Cthe Cparent Cand Csubsidiary Cbe Cconsolidated?
A) A Ccorporation Ccreates Ca Cnew C100 Cpercent Cowned Csubsidiary
B) A Ccorporation Cpurchases C90 Cpercent Cof Cthe Cvoting Cstock Cof Canother Ccompany
C) A C corporation C has C both C control C and C majority C ownership C of Can C unincorporated C company
D) A C corporation C owns C less-than Ca C controlling C interest C in C an C unincorporated C company
Answer: CD
C Difficulty: C1
CEasy
Topic: Organizational C Structure C and C Financial C Reporting
Learning CObjective: 01-01 CUnderstand Cand Cexplain Cthe Creasons Cfor Cand Cdifferent Cmethods
Cof Cbusiness Cexpansion, Cthe Ctypes Cof Corganizational Cstructures, Cand Cthe Ctypes Cof
Cacquisitions.
Bloom's: Remember
CAACSB: C Reflective
CThinking CAICPA: FN
C Decision C Making
During Cits Cinception, CDevon CCompany Cpurchased Cland Cfor C$100,000 Cand Ca Cbuilding Cfor
C$180,000. C After Cexactly C3 Cyears, Cit Ctransferred Cthese Cassets Cand Ccash CofC$50,000 Cto Ca Cnewly
Ccreated Csubsidiary, CRegan CCompany, Cin Cexchange Cfor C15,000 Cshares Cof CRegan's C$10 Cpar
Cvalue Cstock. CDevon Cuses Cstraight-line Cdepreciation. C Useful Clife Cfor Cthe Cbuilding Cis C30 Cyears,
C with Czero Cresidual Cvalue. C An Cappraisal Crevealed Cthat Cthe Cbuilding Chas Ca Cfair Cvalue Cof
C$200,000.
5) Based Con Cthe Cinformation Cprovided, Cat Cthe Ctime Cof Cthe Ctransfer, CRegan CCompany Cshould Crecord:
A) Building C at C $180,000 C and C no C accumulated C depreciation.
B) Building C at C $162,000 C and C no C accumulated C depreciation.
C) Building C at C $200,000 C and C accumulated C depreciation C of C$24,000.
D) Building C at C $180,000 C and C accumulated C depreciation C of C $18,000.
Answer: CD
C Difficulty: C2
CMedium
Topic: Valuation Cof CBusiness CEntities; CAccounting Cfor CInternal CExpansion: CCreating
CBusiness C Entities
Learning CObjective: 01-04 CUnderstand Cand Cexplain Cthe Cdifferences Cbetween Cdifferent Cforms
Cof Cbusiness Ccombinations.; C01-03 CMake Ccalculations Cand Cprepare Cjournal Centries Cfor Cthe
Ccreation Cof Ca Cbusiness Centity.
