TEST BANK For Advanced Financial Accounting 13th Edition By Theodore Christensen Chapter 1 - 20 |Complete Newest Version

SOLUTIONS TEST BANK FOR h1 h1 h1



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
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company to another entity it has created should be recorded by the newly created entity
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at the assets':
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A) cost to the parent company.
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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 h1


Difficulty: 1 Easy
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Topic: Internal Expansion: Creating a Business Entity; Valuation of Business Entities
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Learning Objective:
h1 01-01 Understand and explain the reasons for and different
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methods of business expansion, the types of organizational structures, and the types of
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acquisitions.; 01-03 Make calculations and prepare journal entries for the creation of a
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business entity.
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Bloom's: Remember
AACSB: Reflective
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Thinking AICPA:
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Decision Making
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2) Given the increased development of complex business structures, which of the
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following regulators is responsible for the continued usefulness of accounting
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reports?
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A) Securities and Exchange Commission (SEC) h1 h1 h1 h1


B) Public Company Accounting Oversight Board (PCAOB)
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C) Financial Accounting Standards Board (FASB) h1 h1 h1 h1


D) All of the other answers are correct
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Answer: D h1


Difficulty: 1 Easy
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Topic: An Introduction to Complex Business Structures
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Learning Objective: 01-01 Understand and explain the reasons for and different methods
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of business expansion, the types of organizational structures, and the types of acquisitions.
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Bloom's: Remember
AACSB: Reflective
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Thinking AICPA: FN
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Reporting
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3) A business combination in which the acquired company's assets and liabilities are
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combined with those of the acquiring company into a single entity is defined as:
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,A) Stock acquisition
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B) Leveraged buyout h1


C) Statutory Merger
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D) Reverse statutory rollup
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,Answer: C h1


Difficulty: 1 Easy
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Topic: Organizational Structure and Financial Reporting
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Learning Objective: 01-04 Understand and explain the differences between different forms
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of business combinations.
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Bloom's: Remember
AACSB: Reflective
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Thinking AICPA:
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Decision Making
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4) In which of the following situations do accounting standards not require that the
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financial statements of the parent and subsidiary be consolidated?
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A) A corporation creates a new 100 percent owned subsidiary
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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 h1


Difficulty: 1 Easy
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Topic: Organizational Structure and Financial Reporting
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Learning Objective: 01-01 Understand and explain the reasons for and different methods of
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business expansion, the types of organizational structures, and the types of acquisitions.
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Bloom's: Remember
AACSB: Reflective
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Thinking AICPA:
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Decision Making
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During its inception, Devon Company purchased land for $100,000 and a building for
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$180,000. After exactly 3 years, it transferred these assets and cash of $50,000 to a newly
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created subsidiary, Regan Company, in exchange for 15,000 shares of Regan's $10 par
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value stock. Devon uses straight-line depreciation. Useful life for the building is 30 years,
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with zero residual value. An appraisal revealed that the building has a fair value of
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$200,000.
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5) Based on the information provided, at the time of the transfer, Regan Company should
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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 h1


Difficulty: 2
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Medium
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Topic: Valuation of Business Entities; Accounting for Internal Expansion: Creating
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Business Entities
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Learning Objective: 01-04 Understand and explain the differences between different
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forms of business combinations.; 01-03 Make calculations and prepare journal entries for the
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creation of a business entity.
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Bloom's: Understand
AACSB: Analytical
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, Thinking AICPA:
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Measurement
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