Advanced Financial Accounting 13th Edition By Theodore Christensen

,1) Assuming jno j impairment j in jvalue jprior jto jtransfer, jassets jtransferred jby ja jparent
jcompany jtojanother jentity jit j has jcreated jshould jbe jrecorded jby jthe jnewly jcreated jentity jat
jthe jassets':
A) cost jto jthe jparent jcompany.
B) book jvalue jon jthe jparent jcompany's jbooks jat jthe jdate jof jtransfer.
C) fair jvalue jat jthe jdate jof jtransfer.
D) fair jvalue jof jconsideration jexchanged jby jthe jnewly jcreated jentity.

Answer: j B
jDifficulty: j1
jEasy
Topic: j Internal jExpansion: jCreating ja jBusiness jEntity; jValuation jof jBusiness jEntities
jLearning jObjective: 01-01 jUnderstand jand jexplain jthe jreasons jfor jand jdifferent jmethods
jof jbusiness jexpansion, jthe jtypes jof jorganizational jstructures, jand jthe jtypes jof jacquisitions.;
j01-03jMake jcalculations jand jprepare jjournal jentries jfor jthe jcreation jof ja jbusiness jentity.
Bloom's: Remember
jAACSB: Reflective
jThinkingjAICPA: FN
jDecision jMaking


2) Given jthe jincreased jdevelopment jof jcomplex jbusiness jstructures, jwhich jof jthe
jfollowingjregulators jis jresponsible j for jthe jcontinued jusefulness jof jaccounting jreports?
A) Securities jand jExchange jCommission j(SEC)
B) Public jCompany jAccounting jOversight jBoard j(PCAOB)
C) Financial jAccounting jStandards jBoard j(FASB)
D) All jof jthe jother janswers jare jcorrect

Answer: j D
jDifficulty: j1
jEasy
Topic: An jIntroduction jto jComplex jBusiness jStructures
Learning jObjective: 01-01 jUnderstand jand jexplain jthe jreasons jfor jand jdifferent jmethods
jofjbusiness jexpansion, jthe jtypes jof jorganizational jstructures, jand jthe jtypes jof jacquisitions.
Bloom's: Remember
jAACSB: Reflective
jThinkingjAICPA: FN
jReporting


3) A jbusiness jcombination jin jwhich jthe jacquired jcompany's jassets jand jliabilities jare
jcombinedjwith jthose jof jthe jacquiring jcompany jinto j a jsingle jentity jis jdefined jas:
A) Stock jacquisition
B) Leveraged jbuyout
C) Statutory jMerger
D) Reverse jstatutory jrollup

,Answer: j C
jDifficulty: j1
jEasy
Topic: Organizational jStructure jand jFinancial jReporting
Learning jObjective: 01-04 jUnderstand jand jexplain jthe jdifferences jbetween jdifferent jforms
jofjbusiness jcombinations.
Bloom's: Remember
jAACSB: Reflective
jThinkingjAICPA: FN
jDecision jMaking


4) In jwhich jof jthe jfollowing jsituations jdo jaccounting jstandards jnot jrequire jthat jthe
jfinancialjstatements jof jthe jparent j and jsubsidiary jbe jconsolidated?
A) A jcorporation jcreates ja jnew j100 jpercent jowned jsubsidiary
B) A jcorporation jpurchases j90 jpercent jof jthe jvoting jstock jof janother jcompany
C) A jcorporation jhas jboth jcontrol jand j majority jownership jof jan junincorporated jcompany
D) A jcorporation jowns jless-than ja jcontrolling jinterest jin jan junincorporated jcompany

Answer: j D
jDifficulty: j1
jEasy
Topic: Organizational jStructure jand jFinancial jReporting
Learning jObjective: 01-01 jUnderstand jand jexplain jthe jreasons jfor jand jdifferent jmethods
jofjbusiness jexpansion, jthe jtypes jof jorganizational jstructures, jand jthe jtypes jof jacquisitions.
Bloom's: Remember
jAACSB: Reflective
jThinkingjAICPA: FN
jDecision jMaking


During jits jinception, jDevon jCompany jpurchased jland jfor j$100,000 jand ja jbuilding jfor
j$180,000. jAfter jexactly j3 jyears, jit jtransferred jthese jassets jand jcash jof j$50,000 jto ja jnewly
jcreated jsubsidiary,jRegan jCompany, jin jexchange jfor j15,000 jshares jof jRegan's j$10 jpar jvalue
jstock. jDevon juses jstraight-line jdepreciation. jUseful jlife jfor jthe jbuilding jis j30 jyears, jwith
jzero jresidual jvalue. jAn jappraisal jrevealed jthat jthe jbuilding j has ja jfair j value jof j$200,000.


5) Based jon jthe jinformation jprovided, jat jthe jtime jof jthe jtransfer, jRegan jCompany jshould j record:
A) Building jat j$180,000 jand jno jaccumulated jdepreciation.
B) Building jat j$162,000 jand jno jaccumulated jdepreciation.
C) Building jat j$200,000 jand jaccumulated jdepreciation jof j$24,000.
D) Building jat j$180,000 jand jaccumulated jdepreciation jof j$18,000.

Answer: j D
jDifficulty: j2
jMedium
Topic: Valuation jof jBusiness jEntities; jAccounting jfor jInternal jExpansion: jCreating
jBusinessjEntities
Learning jObjective: 01-04 jUnderstand jand jexplain jthe jdifferences jbetween jdifferent jforms
jof jbusiness jcombinations.; j01-03 jMake jcalculations jand jprepare jjournal jentries jfor jthe
jcreation jof jajbusiness jentity.
Bloom's: Understand
jAACSB: Analytical

, jThinkingjAICPA: FN
jMeasurement