Advanced Accounting Exam 2 Multiple Choice

Advanced Accounting Exam 2 Multiple Choice 1. For business combinations involving less than 100 percent ownership, the acquirer recognizes and measures all of the following at the acquisition date except: A) identifiable assets acquired, at fair value. B) liabilities assumed, at book value. C) non-controlling interest, at fair value. D) goodwill or a gain from bargain purchase. E) none of these choices is correct. - ANSWERB) liabilities assumed, at book value. 2. In measuring non-controlling interest at the date of acquisition, which of the following would not be indicative of the value attributed to the non-controlling interest? A) Fair value based on stock trades of the acquired company. B) Subsidiary cash flows discounted to present value. C) Book value of subsidiary net assets. D) Projections of residual income. E) Consideration transferred by the parent company that implies a total subsidiary value. - ANSWERC) Book value of subsidiary net assets. 3.When a parent uses the equity method throughout the year to account for its investment in an acquired subsidiary, which of the following statements is false before making adjustments on the consolidated worksheet? A) Parent company net income equals controlling interest in consolidated net income. B) Parent company retained earnings equals consolidated retained earnings. C) Parent company total assets equals consolidated total assets. D) Parent company dividends equals consolidated dividends. E) Goodwill will not be recorded on the parent's books. - ANSWERC) Parent company total assets equals consolidated total assets. 4. When a parent uses the initial value method throughout the year to account for its investment in an acquired subsidiary, which of the following statements is true before making adjustments on the consolidated