Exam (elaborations) TEST BANK FOR Advanced Accounting Joe Ben Hoyle 13th Edition

Multiple Choice: [QUESTION] 1. Which one of the following accounts would not appear in the consolidated financial statements at the end of the first fiscal period of the combination? 2. A) Goodwill. 3. B) Equipment. 4. C) Investment in Subsidiary. 5. D) Common Stock. 6. E) Additional Paid-In Capital. Answer: C Learning Objective: 03-01 Topic: Consolidation―Overall effects Difficulty: 2 Medium Blooms: Understand AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement [QUESTION] 2. Which of the following internal record-keeping methods can a parent choose to account for a subsidiary acquired in a business combination? 3. A) Initial value or book value. 4. B) Initial value, lower-of-cost-or-market-value, or equity. 5. C) Initial value, equity, or partial equity. 6. D) Initial value, equity, or book value. 7. E) Initial value, lower-of-cost-or-market-value, or partial equity. Answer: C Learning Objective: 03-02 Topic: Investment methods―Identify and differentiate Difficulty: 1 Easy Blooms: Remember AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement [QUESTION] 3. Which one of the following varies between the equity, initial value, and partial equity methods of accounting for an investment? 4. A) The amount of consolidated net income. 5. B) Total assets on the consolidated balance sheet. 6. C) Total liabilities on the consolidated balance sheet. 7. D) The balance in the investment account on the parent’s books. 8. E) The amount of consolidated cost of goods sold. Answer: D Learning Objective: 03-02 Topic: Investment methods―Identify and differentiate Difficulty: 2 Medium Blooms: Understand AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement [QUESTION] 4. Under the partial equity method, the parent recognizes income when 5. A) Dividends are received from the investee. 6. B) Dividends are declared by the investee. 7. C) The related expense has been incurred. 8. D) The related contract is signed by the subsidiary. 9. E) It is earned by the subsidiary. Answer: E Learning Objective: 03-02 Learning Objective: 03-03c Topic: Investment methods―Identify and differentiate Topic: Investment and income―Partial equity method Difficulty: 1 Easy Blooms: Remember AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement [QUESTION] 5. An impairment model is used 6. A) To assess whether asset write-downs are appropriate for indefinite-lived assets. 7. B) To calculate the fair value of intangible assets. 8. C) To calculate the amortization of indefinite-lived assets over their useful lives. 9. D) To determine whether the fair value of assets should be recognized. 10. E) To determine the likelihood that the fair value of an assumed liability will increase. Answer: A Learning Objective: 03-05 Learning Objective: 03-07 Topic: Impairment―Goodwill―Rationale Topic: Impairment―Intangibles other than goodwill Difficulty: 2 Medium Blooms: Remember AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement [QUESTION] 6. Racer Corp. acquired all of the common stock of Tangiers Co. in 2016. Tangiers maintained its incorporation. Which of Racer’s account balances would vary between the equity method and the initial value method? 7. A) Goodwill, Investment in Tangiers , and Retained Earnings. 8. B) Expenses, Investment in Tangiers , and Equity in Subsidiary Earnings. 9. C) Investment in Tangiers Co., Equity in Subsidiary Earnings, and Retained Earnings. 10. D) Common Stock, Goodwill, and Investment in Tangiers Co. 11. E) Expenses, Goodwill, and Investment in Tangiers Co. Answer: C Learning Objective: 03-02 Learning Objective: 03-03a Learning Objective: 03-03b Topic: Investment methods―Identify and differentiate Difficulty: 3 Hard Blooms: Understand AACSB: Reflective Thinking