Test Bank for Advanced Financial Accounting 13t
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h Edition
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By Theodore Christensen
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,TEST BANK FOR nz nz
Advanced Financial Accounting 13th Edition By Theodore Christensen
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Chapter 1 Intercorporate Acquisitions and Investments in Other Entities
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1) Assuming no impairment in value prior to transfer, assets transferred by a parent company t
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o another entity it has created should be recorded by the newly created entity at the assets':
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A) cost to the parent company. nz nz nz nz
B) book value on the parent company's books at the date of transfer.
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C) fair value at the date of transfer.
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D) fair value of consideration exchanged by the newly created entity.
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Answer: B Diffic nz nz
ulty: 1 Easy nz nz
Topic: Internal Expansion: Creating a Business Entity; Valuation of Business Entities Lear
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ning Objective:nz 01-
01 Understand and explain the reasons for and different methods of business expansion, the
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types of organizational structures, and the types of acquisitions.; 01 -
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03 Make calculations and prepare journal entries for the creation of a business entity.
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Bloom's:
Remember AACSB: nz
n Reflective Thinking AICPA
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:
FN Decision Makin nz nz
g
2) Given the increased development of complex business structures, which of the followin
nz nz nz nz nz nz nz nz nz nz nz
g regulators is responsible for the continued usefulness of accounting reports?
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A) Securities and Exchange Commission (SEC) nz n z nz nz
B) Public Company Accounting Oversight Board (PCAOB)
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C) Financial Accounting Standards Board (FASB) nz nz nz nz
D) All of the other answers are correct
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Answer: D Diffi nz nz
culty: 1 Easy nz nz
Topic: An Introduction to Complex Business Structuresnz nz nz nz nz
Learning Objective: 01- nz
01 Understand and explain the reasons for and different methods of business expansion, th
nz nz nz nz nz nz nz nz nz nz nz nz nz
e types of organizational structures, and the types of acquisitions.
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Bloom's:
Remember AACSB nz
: Reflective Thinking AICP
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A: FN Reporting nz
3) A business combination in which the acquired company's assets and liabilities are combine
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d with those of the acquiring company into a single entity is defined as:
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A) Stock acquisition nz
,B) Leveraged buyout
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C) Statutory Merger
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D) Reverse statutory rollup
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, Answer: C Diffic nz nz
ulty: 1 Easy nz nz
Topic: Organizational Structure and Financial Reporting nz nz nz nz
Learning Objective: 01- nz
04 Understand and explain the differences between different forms of business combinations.
nz nz nz nz nz nz nz nz nz nz nz
Bloom's:
Remember AACSB: nz
n Reflective Thinking AICPA
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:
FN Decision Makin nz nz
g
4) In which of the following situations do accounting standards not require that the financi
nz nz nz nz nz nz nz nz nz nz nz nz nz
al statements of the parent and subsidiary be consolidated?
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A) A corporation creates a new 100 percent owned subsidiary
nz nz nz nz nz nz nz nz
B) A corporation purchases 90 percent of the voting stock of another company
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C) A corporation has both control and majority ownership of an unincorporated company
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D) A corporation owns less-than a controlling interest in an unincorporated company
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Answer: D Diffi nz nz
culty: 1 Easy nz nz
Topic: Organizational Structure and Financial Reporting nz nz nz nz
Learning Objective: 01- nz
01 Understand and explain the reasons for and different methods of business expansion, the
nz nz nz nz nz nz nz nz nz nz nz nz nz
nztypes of organizational structures, and the types of acquisitions.
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Bloom's:
Remember AACSB: nz
n Reflective Thinking AICPA
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:
FN Decision Makin nz nz
g
During its inception, Devon Company purchased land for $100,000 and a building for $180,00
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0. After exactly 3 years, it transferred these assets and cash of $50,000 to a newly created subsidi
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ary, Regan Company, in exchange for 15,000 shares of Regan's $10 par value stock. Devon u
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ses straight- nz
line depreciation. Useful life for the building is 30 years, with zero residual value. An apprais
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al revealed that the building has a fair value of $200,000.
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5) Based on the information provided, at the time of the transfer, Regan Company should record:
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A) Building at $180,000 and no accumulated depreciation.
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B) Building at $162,000 and no accumulated depreciation.
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C) Building at $200,000 and accumulated depreciation of $24,000.
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D) Building at $180,000 and accumulated depreciation of $18,000.
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Answer: D Difficult nz nz
y: 2 Medium
nz nz
Topic:
Valuation of Business Entities; Accounting for Internal Expansion: Creating Business
nz nz nz nz nz nz nz nz nz
Entities
nz
Learning Objective: 01- nz
nz nz nz nz nz nzn z
h Edition
nz n z
By Theodore Christensen
n z n z
,TEST BANK FOR nz nz
Advanced Financial Accounting 13th Edition By Theodore Christensen
nz nz nz nz nz nz nz
Chapter 1 Intercorporate Acquisitions and Investments in Other Entities
nz n z n z nz n z nz nz
1) Assuming no impairment in value prior to transfer, assets transferred by a parent company t
nz nz nz nz nz nz nz nz nz nz nz nz nz nz
o another entity it has created should be recorded by the newly created entity at the assets':
nz nz nz nz nz nz nz nz nz nz nz nz nz nz nz nz
A) cost to the parent company. nz nz nz nz
B) book value on the parent company's books at the date of transfer.
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C) fair value at the date of transfer.
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D) fair value of consideration exchanged by the newly created entity.
nz nz nz nz nz nz nz nz nz
Answer: B Diffic nz nz
ulty: 1 Easy nz nz
Topic: Internal Expansion: Creating a Business Entity; Valuation of Business Entities Lear
n z nz nz nz nz nz nz nz nz nz nz
ning Objective:nz 01-
01 Understand and explain the reasons for and different methods of business expansion, the
nz nz nz nz nz nz nz nz nz nz nz nz nz nz
types of organizational structures, and the types of acquisitions.; 01 -
nz nz nz nz nz nz nz nz nz nz
03 Make calculations and prepare journal entries for the creation of a business entity.
nz nz nz nz nz nz nz nz nz nz nz nz nz
Bloom's:
Remember AACSB: nz
n Reflective Thinking AICPA
z nz nz
:
FN Decision Makin nz nz
g
2) Given the increased development of complex business structures, which of the followin
nz nz nz nz nz nz nz nz nz nz nz
g regulators is responsible for the continued usefulness of accounting reports?
nz nz nz nz nz nz nz nz nz nz
A) Securities and Exchange Commission (SEC) nz n z nz nz
B) Public Company Accounting Oversight Board (PCAOB)
nz n z nz n z nz
C) Financial Accounting Standards Board (FASB) nz nz nz nz
D) All of the other answers are correct
nz nz nz nz nz nz
Answer: D Diffi nz nz
culty: 1 Easy nz nz
Topic: An Introduction to Complex Business Structuresnz nz nz nz nz
Learning Objective: 01- nz
01 Understand and explain the reasons for and different methods of business expansion, th
nz nz nz nz nz nz nz nz nz nz nz nz nz
e types of organizational structures, and the types of acquisitions.
nz nz nz nz nz nz nz nz nz
Bloom's:
Remember AACSB nz
: Reflective Thinking AICP
n z nz nz
A: FN Reporting nz
3) A business combination in which the acquired company's assets and liabilities are combine
nz nz nz nz nz nz nz nz nz nz nz nz
d with those of the acquiring company into a single entity is defined as:
nz nz nz nz nz nz nz nz nz nz nz nz nz
A) Stock acquisition nz
,B) Leveraged buyout
n z
C) Statutory Merger
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D) Reverse statutory rollup
nz nz
, Answer: C Diffic nz nz
ulty: 1 Easy nz nz
Topic: Organizational Structure and Financial Reporting nz nz nz nz
Learning Objective: 01- nz
04 Understand and explain the differences between different forms of business combinations.
nz nz nz nz nz nz nz nz nz nz nz
Bloom's:
Remember AACSB: nz
n Reflective Thinking AICPA
z nz nz
:
FN Decision Makin nz nz
g
4) In which of the following situations do accounting standards not require that the financi
nz nz nz nz nz nz nz nz nz nz nz nz nz
al statements of the parent and subsidiary be consolidated?
nz nz nz nz nz nz nz nz
A) A corporation creates a new 100 percent owned subsidiary
nz nz nz nz nz nz nz nz
B) A corporation purchases 90 percent of the voting stock of another company
nz nz nz nz nz nz nz nz nz nz nz
C) A corporation has both control and majority ownership of an unincorporated company
nz nz nz nz nz n z nz nz nz nz nz
D) A corporation owns less-than a controlling interest in an unincorporated company
nz nz nz nz n z nz n z nz nz nz
Answer: D Diffi nz nz
culty: 1 Easy nz nz
Topic: Organizational Structure and Financial Reporting nz nz nz nz
Learning Objective: 01- nz
01 Understand and explain the reasons for and different methods of business expansion, the
nz nz nz nz nz nz nz nz nz nz nz nz nz
nztypes of organizational structures, and the types of acquisitions.
nz nz nz nz nz nz nz nz
Bloom's:
Remember AACSB: nz
n Reflective Thinking AICPA
z nz nz
:
FN Decision Makin nz nz
g
During its inception, Devon Company purchased land for $100,000 and a building for $180,00
nz nz nz nz nz nz nz nz nz nz nz nz nz
0. After exactly 3 years, it transferred these assets and cash of $50,000 to a newly created subsidi
nz nz nz nz nz nz nz nz nz nz nz nz nz nz nz nz nz
ary, Regan Company, in exchange for 15,000 shares of Regan's $10 par value stock. Devon u
nz nz nz nz nz nz nz nz nz nz nz nz nz nz nz
ses straight- nz
line depreciation. Useful life for the building is 30 years, with zero residual value. An apprais
nz nz nz nz nz nz nz nz nz nz nz nz nz nz nz
al revealed that the building has a fair value of $200,000.
nz nz nz nz nz nz nz nz nz nz
5) Based on the information provided, at the time of the transfer, Regan Company should record:
nz nz nz nz nz nz nz nz nz nz nz nz nz nz
A) Building at $180,000 and no accumulated depreciation.
nz n z nz nz nz nz
B) Building at $162,000 and no accumulated depreciation.
nz nz nz nz nz nz
C) Building at $200,000 and accumulated depreciation of $24,000.
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D) Building at $180,000 and accumulated depreciation of $18,000.
nz n z nz nz nz nz nz
Answer: D Difficult nz nz
y: 2 Medium
nz nz
Topic:
Valuation of Business Entities; Accounting for Internal Expansion: Creating Business
nz nz nz nz nz nz nz nz nz
Entities
nz
Learning Objective: 01- nz
