Test Bank for Advanced Financial Accounting
gU gU gU gU gU gU
g U 13th Edition
gU g U
By Theodore Christensen
g U g U
,TEST BANK FOR
gU gU
Advanced Financial Accounting 13th Edition By Theodore Christensen
gU gU gU gU gU gU gU
Chapter g U 1 Intercorporate g U Acquisitions g U and g U Investments g U in g U Other g U Entities
1) Assuming gUno gUimpairment gUin gUvalue gUprior gUto gUtransfer, gUassets gUtransferred gUby gUa gUparent
gUcompany gUto gUanother gUentity gUit gUhas gUcreated gUshould gUbe gUrecorded gUby gUthe gUnewly gUcreated
gUentity gUat gUthe gUassets':
A) cost gUto gUthe gUparent gUcompany.
B) book gUvalue gUon gUthe gUparent gUcompany's gUbooks gUat gUthe gUdate gUof gUtransfer.
C) fair gUvalue gUat gUthe gUdate gUof gUtransfer.
D) fair gUvalue gUof gUconsideration gUexchanged gUby gUthe gUnewly gUcreated gUentity.
Answer: gUB
gUDifficulty: gU1
gUEasy
Topic: g U Internal gUExpansion: gUCreating gUa gUBusiness gUEntity; gUValuation gUof gUBusiness
gUEntities gULearning gUObjective: 01-01 gUUnderstand gUand gUexplain gUthe gUreasons gUfor gUand
gUdifferent gUmethods gUof gUbusiness gUexpansion, gUthe gUtypes gUof gUorganizational gUstructures, gUand
gUthe gUtypes gUof gUacquisitions.; gU01 gU-03 gU Make gUcalculations gUand gUprepare gUjournal gUentries gUfor
gUthe gUcreation gUof gUa gUbusiness gUentity.
Bloom's: Remember
gUAACSB: g U Reflective
gUThinking gUAICPA: FN
gU Decision g U Making
2) Given gUthe gUincreased gUdevelopment gUof gUcomplex gUbusiness gUstructures, gUwhich gUof gUthe
gUfollowing gUregulators gUis gUresponsible gUfor gUthe gUcontinued gUusefulness gUof gUaccounting
gUreports?
A) Securities g U and g U Exchange g U Commission g U (SEC)
B) Public g U Company g U Accounting g U Oversight g U Board g U (PCAOB)
C) Financial g U Accounting g U Standards g U Board g U (FASB)
D) All gUof gUthe gUother gUanswers gUare gUcorrect
Answer: gUD
gUDifficulty: gU1
gUEasy
Topic: An g U Introduction g U to g U Complex g U Business g U Structures
Learning gUObjective: 01-01 gUUnderstand gUand gUexplain gUthe gUreasons gUfor gUand gUdifferent
gUmethods gUof gUbusiness gUexpansion, gUthe gUtypes gUof gUorganizational gUstructures, gUand gUthe
gUtypes gUof gUacquisitions.
Bloom's: Remember
gUAACSB: g U Reflective
gUThinking gUAICPA: FN
gUReporting
3) A gUbusiness gUcombination gUin gUwhich gUthe gUacquired gUcompany's gUassets gUand gUliabilities gUare
, combined gUwith gUthose gUof gUthe gUacquiring gUcompany gUinto gUa gUsingle gUentity gUis gUdefined gUas:
gU
A) Stock gUacquisition
B) Leveraged g U buyout
C) Statutory g U Merger
D) Reverse g U statutory g U rollup
, Answer: gUC
gUDifficulty: gU1
gUEasy
Topic: Organizational g U Structure g U and g U Financial g U Reporting
Learning gUObjective: 01-04 gUUnderstand gUand gUexplain gUthe gUdifferences gUbetween gUdifferent
gUforms gUof gUbusiness gUcombinations.
Bloom's: Remember
gUAACSB: g U Reflective
gUThinking gUAICPA: FN
gU Decision g U Making
4) In gUwhich gUof gUthe gUfollowing gUsituations gUdo gUaccounting gUstandards gUnot gUrequire gUthat gUthe
gUfinancial gUstatements gUof gUthe gUparent gUand gUsubsidiary gUbe gUconsolidated?
A) A gUcorporation gUcreates gUa gUnew gU100 gUpercent gUowned gUsubsidiary
B) A gUcorporation gUpurchases gU90 gUpercent gUof gUthe gUvoting gUstock gUof gUanother gUcompany
C) A g U corporation g U has g U both g U control gUand g U majority g U ownership g U of gUan g U unincorporated g U company
D) A g U corporation g U owns g U less-than gUa g U controlling g U interest g U in gUan gUunincorporated g U company
Answer: gUD
gUDifficulty: gU1
gUEasy
Topic: Organizational g U Structure g U and g U Financial g U Reporting
Learning gUObjective: 01-01 gUUnderstand gUand gUexplain gUthe gUreasons gUfor gUand gUdifferent
gUmethods gUof gUbusiness gUexpansion, gUthe gUtypes gUof gUorganizational gUstructures, gUand gUthe
gUtypes gUof gUacquisitions.
Bloom's: Remember
gUAACSB: g U Reflective
gUThinking gUAICPA: FN
gU Decision g U Making
During gUits gUinception, gUDevon gUCompany gUpurchased gUland gUfor gU$100,000 gUand gUa gUbuilding gUfor
gU$180,000. gUAfter gUexactly gU3 gUyears, gUit gUtransferred gUthese gUassets gUand gUcash gUofgU$50,000 gUto gUa
gUnewly gUcreated gUsubsidiary, gURegan gUCompany, gUin gUexchange gUfor gU15,000 gUshares gUof gURegan's
gU$10 gUpar gUvalue gUstock. gUDevon gUuses gUstraight-line gUdepreciation. gUUseful gUlife gUfor gUthe
gUbuilding gUis gU30 gUyears, gUwith gUzero gUresidual gUvalue. gUAn gUappraisal gUrevealed gUthat gUthe
gUbuilding gUhas gUa gUfair gUvalue gUof gU$200,000.
5) Based gUon gUthe gUinformation gUprovided, gUat gUthe gUtime gUof gUthe gUtransfer, gURegan gUCompany gUshould
gUrecord:
A) Building gUat g U $180,000 g U and g U no g U accumulated g U depreciation.
B) Building gUat g U $162,000 g U and g U no g U accumulated g U depreciation.
C) Building g U at g U $200,000 g U and g U accumulated g U depreciation g U of gU$24,000.
D) Building g U at g U $180,000 g U and g U accumulated g U depreciation g U of g U $18,000.
Answer: gUD
gUDifficulty: gU2
gUMedium
Topic: Valuation gUof gUBusiness gUEntities; gUAccounting gUfor gUInternal gUExpansion: gUCreating
gUBusiness gUEntities
Learning gUObjective: 01-04 gUUnderstand gUand gUexplain gUthe gUdifferences gUbetween gUdifferent
gUforms gUof gUbusiness gUcombinations.; gU01-03 gUMake gUcalculations gUand gUprepare gUjournal gUentries
gU gU gU gU gU gU
g U 13th Edition
gU g U
By Theodore Christensen
g U g U
,TEST BANK FOR
gU gU
Advanced Financial Accounting 13th Edition By Theodore Christensen
gU gU gU gU gU gU gU
Chapter g U 1 Intercorporate g U Acquisitions g U and g U Investments g U in g U Other g U Entities
1) Assuming gUno gUimpairment gUin gUvalue gUprior gUto gUtransfer, gUassets gUtransferred gUby gUa gUparent
gUcompany gUto gUanother gUentity gUit gUhas gUcreated gUshould gUbe gUrecorded gUby gUthe gUnewly gUcreated
gUentity gUat gUthe gUassets':
A) cost gUto gUthe gUparent gUcompany.
B) book gUvalue gUon gUthe gUparent gUcompany's gUbooks gUat gUthe gUdate gUof gUtransfer.
C) fair gUvalue gUat gUthe gUdate gUof gUtransfer.
D) fair gUvalue gUof gUconsideration gUexchanged gUby gUthe gUnewly gUcreated gUentity.
Answer: gUB
gUDifficulty: gU1
gUEasy
Topic: g U Internal gUExpansion: gUCreating gUa gUBusiness gUEntity; gUValuation gUof gUBusiness
gUEntities gULearning gUObjective: 01-01 gUUnderstand gUand gUexplain gUthe gUreasons gUfor gUand
gUdifferent gUmethods gUof gUbusiness gUexpansion, gUthe gUtypes gUof gUorganizational gUstructures, gUand
gUthe gUtypes gUof gUacquisitions.; gU01 gU-03 gU Make gUcalculations gUand gUprepare gUjournal gUentries gUfor
gUthe gUcreation gUof gUa gUbusiness gUentity.
Bloom's: Remember
gUAACSB: g U Reflective
gUThinking gUAICPA: FN
gU Decision g U Making
2) Given gUthe gUincreased gUdevelopment gUof gUcomplex gUbusiness gUstructures, gUwhich gUof gUthe
gUfollowing gUregulators gUis gUresponsible gUfor gUthe gUcontinued gUusefulness gUof gUaccounting
gUreports?
A) Securities g U and g U Exchange g U Commission g U (SEC)
B) Public g U Company g U Accounting g U Oversight g U Board g U (PCAOB)
C) Financial g U Accounting g U Standards g U Board g U (FASB)
D) All gUof gUthe gUother gUanswers gUare gUcorrect
Answer: gUD
gUDifficulty: gU1
gUEasy
Topic: An g U Introduction g U to g U Complex g U Business g U Structures
Learning gUObjective: 01-01 gUUnderstand gUand gUexplain gUthe gUreasons gUfor gUand gUdifferent
gUmethods gUof gUbusiness gUexpansion, gUthe gUtypes gUof gUorganizational gUstructures, gUand gUthe
gUtypes gUof gUacquisitions.
Bloom's: Remember
gUAACSB: g U Reflective
gUThinking gUAICPA: FN
gUReporting
3) A gUbusiness gUcombination gUin gUwhich gUthe gUacquired gUcompany's gUassets gUand gUliabilities gUare
, combined gUwith gUthose gUof gUthe gUacquiring gUcompany gUinto gUa gUsingle gUentity gUis gUdefined gUas:
gU
A) Stock gUacquisition
B) Leveraged g U buyout
C) Statutory g U Merger
D) Reverse g U statutory g U rollup
, Answer: gUC
gUDifficulty: gU1
gUEasy
Topic: Organizational g U Structure g U and g U Financial g U Reporting
Learning gUObjective: 01-04 gUUnderstand gUand gUexplain gUthe gUdifferences gUbetween gUdifferent
gUforms gUof gUbusiness gUcombinations.
Bloom's: Remember
gUAACSB: g U Reflective
gUThinking gUAICPA: FN
gU Decision g U Making
4) In gUwhich gUof gUthe gUfollowing gUsituations gUdo gUaccounting gUstandards gUnot gUrequire gUthat gUthe
gUfinancial gUstatements gUof gUthe gUparent gUand gUsubsidiary gUbe gUconsolidated?
A) A gUcorporation gUcreates gUa gUnew gU100 gUpercent gUowned gUsubsidiary
B) A gUcorporation gUpurchases gU90 gUpercent gUof gUthe gUvoting gUstock gUof gUanother gUcompany
C) A g U corporation g U has g U both g U control gUand g U majority g U ownership g U of gUan g U unincorporated g U company
D) A g U corporation g U owns g U less-than gUa g U controlling g U interest g U in gUan gUunincorporated g U company
Answer: gUD
gUDifficulty: gU1
gUEasy
Topic: Organizational g U Structure g U and g U Financial g U Reporting
Learning gUObjective: 01-01 gUUnderstand gUand gUexplain gUthe gUreasons gUfor gUand gUdifferent
gUmethods gUof gUbusiness gUexpansion, gUthe gUtypes gUof gUorganizational gUstructures, gUand gUthe
gUtypes gUof gUacquisitions.
Bloom's: Remember
gUAACSB: g U Reflective
gUThinking gUAICPA: FN
gU Decision g U Making
During gUits gUinception, gUDevon gUCompany gUpurchased gUland gUfor gU$100,000 gUand gUa gUbuilding gUfor
gU$180,000. gUAfter gUexactly gU3 gUyears, gUit gUtransferred gUthese gUassets gUand gUcash gUofgU$50,000 gUto gUa
gUnewly gUcreated gUsubsidiary, gURegan gUCompany, gUin gUexchange gUfor gU15,000 gUshares gUof gURegan's
gU$10 gUpar gUvalue gUstock. gUDevon gUuses gUstraight-line gUdepreciation. gUUseful gUlife gUfor gUthe
gUbuilding gUis gU30 gUyears, gUwith gUzero gUresidual gUvalue. gUAn gUappraisal gUrevealed gUthat gUthe
gUbuilding gUhas gUa gUfair gUvalue gUof gU$200,000.
5) Based gUon gUthe gUinformation gUprovided, gUat gUthe gUtime gUof gUthe gUtransfer, gURegan gUCompany gUshould
gUrecord:
A) Building gUat g U $180,000 g U and g U no g U accumulated g U depreciation.
B) Building gUat g U $162,000 g U and g U no g U accumulated g U depreciation.
C) Building g U at g U $200,000 g U and g U accumulated g U depreciation g U of gU$24,000.
D) Building g U at g U $180,000 g U and g U accumulated g U depreciation g U of g U $18,000.
Answer: gUD
gUDifficulty: gU2
gUMedium
Topic: Valuation gUof gUBusiness gUEntities; gUAccounting gUfor gUInternal gUExpansion: gUCreating
gUBusiness gUEntities
Learning gUObjective: 01-04 gUUnderstand gUand gUexplain gUthe gUdifferences gUbetween gUdifferent
gUforms gUof gUbusiness gUcombinations.; gU01-03 gUMake gUcalculations gUand gUprepare gUjournal gUentries
