ADVANCED ACCOUNTING AND FINANCIAL
REPORTING EXAMINATION [2025/2026]
Comprehensive Assessment in Financial Reporting,
International Standards, Consolidation Techniques, and
Strategic Corporate Accounting
SPRING SEMESTER EXAM 2026
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.
B) 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.
1
Page
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.
C) 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.
C) 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 worksheet?
A) Parent company net income equals 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 equal consolidated dividends.
2
E) Goodwill needs to be recognized on the parent's books.
Page
, D) Parent company dividends equal consolidated dividends.
5. When a subsidiary is acquired sometime after the first day of the fiscal year, which of the
following statements is true?
A) Income from subsidiary is not recognized until there is an entire year of consolidated
operations.
B) Income from subsidiary is recognized from date of acquisition to year-end.
C) Excess cost over acquisition value is recognized at the beginning of the fiscal year.
D) No goodwill can be recognized.
E) Income from subsidiary is recognized for the entire year.
B) Income from subsidiary is recognized from date of acquisition to year-end.
6. When a parent uses the acquisition method for business combinations and sells shares of its
subsidiary, which of the following statements is false?
A) If majority control is still maintained, consolidated financial statements are still required.
B) If majority control is not maintained but significant influence exists, the equity method to
account for the investment is still used but consolidated financial statements are not required.
C) If majority control is not maintained but significant influence exists, the equity method is still
used to account for the investment and consolidated financial statements are still required.
D) If majority control is not maintained and significant influence no longer exists, a prospective
change in accounting principle to the fair value method is required.
E) A gain or loss calculation must be prepared if control is lost.
C) If majority control is not maintained but significant influence exists, the equity method is still
3
used to account for the investment and consolidated financial statements are still required.
Page
REPORTING EXAMINATION [2025/2026]
Comprehensive Assessment in Financial Reporting,
International Standards, Consolidation Techniques, and
Strategic Corporate Accounting
SPRING SEMESTER EXAM 2026
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.
B) 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.
1
Page
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.
C) 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.
C) 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 worksheet?
A) Parent company net income equals 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 equal consolidated dividends.
2
E) Goodwill needs to be recognized on the parent's books.
Page
, D) Parent company dividends equal consolidated dividends.
5. When a subsidiary is acquired sometime after the first day of the fiscal year, which of the
following statements is true?
A) Income from subsidiary is not recognized until there is an entire year of consolidated
operations.
B) Income from subsidiary is recognized from date of acquisition to year-end.
C) Excess cost over acquisition value is recognized at the beginning of the fiscal year.
D) No goodwill can be recognized.
E) Income from subsidiary is recognized for the entire year.
B) Income from subsidiary is recognized from date of acquisition to year-end.
6. When a parent uses the acquisition method for business combinations and sells shares of its
subsidiary, which of the following statements is false?
A) If majority control is still maintained, consolidated financial statements are still required.
B) If majority control is not maintained but significant influence exists, the equity method to
account for the investment is still used but consolidated financial statements are not required.
C) If majority control is not maintained but significant influence exists, the equity method is still
used to account for the investment and consolidated financial statements are still required.
D) If majority control is not maintained and significant influence no longer exists, a prospective
change in accounting principle to the fair value method is required.
E) A gain or loss calculation must be prepared if control is lost.
C) If majority control is not maintained but significant influence exists, the equity method is still
3
used to account for the investment and consolidated financial statements are still required.
Page
