TEST BANK FOR
Advanced Financial Accounting 13th Edition By Theodore Christensen, ALL Chapters (1 - 20)
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TABLE OF CONTENTS
- Intercorporate Acquisitions and Investments in Other Entities
- Reporting Intercorporate Investments and Consolidation of Wholly Owned Subsidiaries with No
- The Reporting Entity and the Consolidation of Less-Than-Wholly-Owned Subsidiaries with
- Consolidation of Wholly Owned Subsidiaries Acquired at More Than Book Value
- Consolidation of Less-Than-Wholly-Owned Subsidiaries Acquired at More Than Book Value
- Intercompany Inventory Transactions
- Intercompany Transfers of Services and Noncurrent Assets
- Intercompany Indebtedness
- Consolidation Ownership Issues
- Additional Consolidation Reporting Issues
- Multinational Accounting: Foreign Currency Transactions and Financial Instruments
- Multinational Accounting: Issues in Financial Reporting and Translation of Foreign Entity
- Segment and Interim Reporting
- SEC Reporting
Differential
NoDifferential
Statements
15. Partnerships: Formation, Operation, and Changes in Membership
16. Partnerships: Liquidation
17. Governmental Entities: Introduction and General Fund Accounting
- Governmental Entities: Special Funds and Governmentwide Financial Statements
- Not-for-Profit Entities
- Corporations in Financial Difficulty
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TEST BANK FOR
Advanced Financial Accounting 13th Edition By Theodore Christensen
Chapter 1 Intercorporate Acquisitions and Investments in Other Entities
1) Assuming no impairment in value prior to transfer, assets transferred by a parent company to another entity it has created should be recorded by the newly created entity at the assets':
- cost to the parent company.
- book value on the parent company's books at the date of transfer.
- fair value at the date of transfer.
- fair value of consideration exchanged by the newly created entity.
Answer: B
Difficulty: 1 Easy
Topic: Internal Expansion: Creating a Business Entity; Valuation of Business Entities Learning Objective: 01-01 Understand and explain the reasons for and different methods of business expansion, the types of organizational structures, and the types of acquisitions.; 01-03 Make calculations and prepare journal entries for the creation of a business entity.
Bloom's: Remember
AACSB: Reflective Thinking
AICPA: FN Decision Making
2) Given the increased development of complex business structures, which of the following regulators is responsible for the continued usefulness of accounting reports?
- Securities and Exchange Commission (SEC)
- Public Company Accounting Oversight Board (PCAOB)
- Financial Accounting Standards Board (FASB)
- All of the other answers are correct
Answer: D
Difficulty: 1 Easy
Topic: An Introduction to Complex Business Structures
Learning Objective: 01-01 Understand and explain the reasons for and different methods of business expansion, the types of organizational structures, and the types of acquisitions.
Bloom's: Remember
AACSB: Reflective Thinking
AICPA: FN Reporting
3) A business combination in which the acquired company's assets and liabilities are combined
with those of the acquiring company into a single entity is defined as:
- Stock acquisition
- Leveraged buyout
- Statutory Merger
- Reverse statutory rollup 3 / 4
Answer: C
Difficulty: 1 Easy
Topic: Organizational Structure and Financial Reporting
Learning Objective: 01-04 Understand and explain the differences between different forms of business combinations.
Bloom's: Remember
AACSB: Reflective Thinking
AICPA: FN Decision Making
4) In which of the following situations do accounting standards not require that the financial statements of the parent and subsidiary be consolidated?
- A corporation creates a new 100 percent owned subsidiary
- A corporation purchases 90 percent of the voting stock of another company
- A corporation has both control and majority ownership of an unincorporated company
- A corporation owns less-than a controlling interest in an unincorporated company
Answer: D
Difficulty: 1 Easy
Topic: Organizational Structure and Financial Reporting
Learning Objective: 01-01 Understand and explain the reasons for and different methods of business expansion, the types of organizational structures, and the types of acquisitions.
Bloom's: Remember
AACSB: Reflective Thinking
AICPA: FN Decision Making
During its inception, Devon Company purchased land for $100,000 and a building for $180,000.After exactly 3 years, it transferred these assets and cash of $50,000 to a newly created subsidiary, Regan Company, in exchange for 15,000 shares of Regan's $10 par value stock. Devon uses straight-line depreciation. Useful life for the building is 30 years, with zero residual value. An appraisal revealed that the building has a fair value of $200,000.
5) Based on the information provided, at the time of the transfer, Regan Company should record:
- Building at $180,000 and no accumulated depreciation.
- Building at $162,000 and no accumulated depreciation.
- Building at $200,000 and accumulated depreciation of $24,000.
- Building at $180,000 and accumulated depreciation of $18,000.
Answer: D
Difficulty: 2 Medium
Topic: Valuation of Business Entities; Accounting for Internal Expansion: Creating Business Entities Learning Objective: 01-04 Understand and explain the differences between different forms of business combinations.; 01-03 Make calculations and prepare journal entries for the creation of a business entity.
Bloom's: Understand
AACSB: Analytical Thinking
AICPA: FN Measurement
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