SOLUTIONS TEST BANK FOR
m m m
Advanced Financial Accounting 13th Edition By Theodore Christensen
m m m m m m m
Chapter 1 Intercorporate Acquisitions and Investments in Other Entities
m m m m m m m
1) Assumingmnom impairmentm inmvaluempriormtomtransfer,massetsmtransferredmbymamparentmcompany
mtom
anothermentitymitm hasmcreatedmshouldm bemrecordedmbymthemnewlymcreatedmentitymatmthemassets':
A) costmtomthemparentmcompany.
B) bookmvaluemonmthemparentmcompany'smbooksmatmthemdatemofmtransfer.
C) fairmvaluematmthemdatemofmtransfer.
D) fairmvaluemofmconsiderationmexchangedmbymthemnewlymcreatedmentity.
Answer:m BmDiffic
ulty:m1mEasy
Topic:m InternalmExpansion:mCreatingmamBusinessmEntity;mValuationmofmBusinessmEntitiesmLearn
ingmObjective:m 01-
01mUnderstandmandmexplainmthemreasonsmformandmdifferentmmethodsmofmbusinessmexpansion,mthem
typesmofmorganizationalmstructures,mandmthemtypesmofmacquisitions.;m01-
03mMakemcalculationsmandmpreparemjournalmentriesmformthemcreationmofmambusinessmentity.
Bloom's:
RemembermAACS
B:m ReflectivemThinkingmAICP
A:m FNmDecisionmMaking
2) Givenmthemincreasedmdevelopmentmofmcomplexmbusinessmstructures,mwhichmofmthemfollowi
ngmregulatorsmismresponsiblemformthemcontinuedmusefulnessmofmaccountingmreports?
A) SecuritiesmandmExchangemCommissionm(SEC)
B) PublicmCompanymAccountingmOversightmBoardm(PCAOB)
C) FinancialmAccountingmStandardsmBoardm(FASB)
D) Allmofmthemothermanswersmaremcorrect
Answer:m DmDiffi
culty:m1mEasy
Topic:m AnmIntroductionmtomComplexmBusinessmStructures
LearningmObjective:m01-
01mUnderstandmandmexplainmthemreasonsmformandmdifferentmmethodsmofmbusinessmexpansion,mthemtyp
esmofmorganizationalmstructures,mandmthemtypesmofmacquisitions.
Bloom's:
RemembermAACS
B:mReflectivemThinkingmAICP
A:m FNmReporting
3) Ambusinessmcombinationminmwhichmthemacquiredmcompany'smassetsmandmliabilitiesmaremcombin
edmwithmthosemofmthemacquiringmcompanymintomamsinglementitymismdefinedmas:
A) Stockmacquisition
B) Leveragedmbuyout
C) StatutorymMerger
,D) Reversemstatutorymrollup
,Answer:m CmDiffic
ulty:m1mEasy
Topic:m OrganizationalmStructuremandmFinancialmReporting
LearningmObjective: 01-
04mUnderstandmandmexplainmthemdifferencesmbetweenmdifferentmformsmofmbusinessmcombinations.
Bloom's:
RemembermAACS
B:m ReflectivemThinkingmAICP
A:m FNmDecisionmMaking
4) Inmwhichmofmthemfollowingmsituationsmdomaccountingmstandardsmnotmrequiremthatmthemfinanc
ialmstatementsmofmthemparentm andmsubsidiarymbemconsolidated?
A) Amcorporationmcreatesmamnewm100mpercentmownedmsubsidiary
B) Amcorporationmpurchasesm90mpercentmofmthemvotingmstockmofmanothermcompany
C) Amcorporationmhasmbothmcontrolmandm majoritymownershipmofmanmunincorporatedmcompany
D) Amcorporationmownsmless-thanmamcontrollingminterestminmanmunincorporatedmcompany
Answer:m DmDiffi
culty:m1mEasy
Topic:m OrganizationalmStructuremandmFinancialmReporting
LearningmObjective:m 01-
01mUnderstandmandmexplainmthemreasonsmformandmdifferentmmethodsmofmbusinessmexpansion,mthemtype
smofmorganizationalmstructures,mandmthemtypesmofmacquisitions.
Bloom's:
RemembermAACS
B:m ReflectivemThinkingmAICP
A:m FNmDecisionmMaking
Duringmitsminception,mDevonmCompanympurchasedmlandmform$100,000mandmambuildingmform$180,0
00.mAftermexactlym3myears,mitmtransferredmthesemassetsmandmcashmofm$50,000mtomamnewlymcreatedmsubs
idiary,mReganmCompany,minmexchangemform15,000msharesmofmRegan'sm$10mparmvaluemstock.mDevonm
usesmstraight-
linemdepreciation.mUsefulmlifemformthembuildingmism30myears,mwithmzeromresidualmvalue.mAnmapprais
almrevealedmthatmthembuildingmhasmamfairm valuemofm$200,000.
5) Basedmonmtheminformationmprovided,matmthemtimemofmthemtransfer,mReganmCompanymshouldm recor
d:
A) Buildingmatm$180,000mandmnomaccumulatedmdepreciation.
B) Buildingmatm$162,000mandmnomaccumulatedmdepreciation.
C) Buildingmatm$200,000mandmaccumulatedmdepreciationmofm$24,000.
D) Buildingmatm$180,000mandmaccumulatedmdepreciationmofm$18,000.
Answer:m DmDifficult
y:m2mMedium
Topic:m ValuationmofmBusinessmEntities;mAccountingmformInternalmExpansion:mCreatingmBusinessmEnt
ities
LearningmObjective:m 01-
04mUnderstandmandmexplainmthemdifferencesmbetweenmdifferentmformsmofmbusinessmcombinations.;
m01-03mMakemcalculationsmandmpreparemjournalmentriesmformthemcreationmofmam
businessmentity.
Bloom's:
UnderstandmAACS
, B:mAnalyticalmThinkingmAICP
A:m FNmMeasurement
m m m
Advanced Financial Accounting 13th Edition By Theodore Christensen
m m m m m m m
Chapter 1 Intercorporate Acquisitions and Investments in Other Entities
m m m m m m m
1) Assumingmnom impairmentm inmvaluempriormtomtransfer,massetsmtransferredmbymamparentmcompany
mtom
anothermentitymitm hasmcreatedmshouldm bemrecordedmbymthemnewlymcreatedmentitymatmthemassets':
A) costmtomthemparentmcompany.
B) bookmvaluemonmthemparentmcompany'smbooksmatmthemdatemofmtransfer.
C) fairmvaluematmthemdatemofmtransfer.
D) fairmvaluemofmconsiderationmexchangedmbymthemnewlymcreatedmentity.
Answer:m BmDiffic
ulty:m1mEasy
Topic:m InternalmExpansion:mCreatingmamBusinessmEntity;mValuationmofmBusinessmEntitiesmLearn
ingmObjective:m 01-
01mUnderstandmandmexplainmthemreasonsmformandmdifferentmmethodsmofmbusinessmexpansion,mthem
typesmofmorganizationalmstructures,mandmthemtypesmofmacquisitions.;m01-
03mMakemcalculationsmandmpreparemjournalmentriesmformthemcreationmofmambusinessmentity.
Bloom's:
RemembermAACS
B:m ReflectivemThinkingmAICP
A:m FNmDecisionmMaking
2) Givenmthemincreasedmdevelopmentmofmcomplexmbusinessmstructures,mwhichmofmthemfollowi
ngmregulatorsmismresponsiblemformthemcontinuedmusefulnessmofmaccountingmreports?
A) SecuritiesmandmExchangemCommissionm(SEC)
B) PublicmCompanymAccountingmOversightmBoardm(PCAOB)
C) FinancialmAccountingmStandardsmBoardm(FASB)
D) Allmofmthemothermanswersmaremcorrect
Answer:m DmDiffi
culty:m1mEasy
Topic:m AnmIntroductionmtomComplexmBusinessmStructures
LearningmObjective:m01-
01mUnderstandmandmexplainmthemreasonsmformandmdifferentmmethodsmofmbusinessmexpansion,mthemtyp
esmofmorganizationalmstructures,mandmthemtypesmofmacquisitions.
Bloom's:
RemembermAACS
B:mReflectivemThinkingmAICP
A:m FNmReporting
3) Ambusinessmcombinationminmwhichmthemacquiredmcompany'smassetsmandmliabilitiesmaremcombin
edmwithmthosemofmthemacquiringmcompanymintomamsinglementitymismdefinedmas:
A) Stockmacquisition
B) Leveragedmbuyout
C) StatutorymMerger
,D) Reversemstatutorymrollup
,Answer:m CmDiffic
ulty:m1mEasy
Topic:m OrganizationalmStructuremandmFinancialmReporting
LearningmObjective: 01-
04mUnderstandmandmexplainmthemdifferencesmbetweenmdifferentmformsmofmbusinessmcombinations.
Bloom's:
RemembermAACS
B:m ReflectivemThinkingmAICP
A:m FNmDecisionmMaking
4) Inmwhichmofmthemfollowingmsituationsmdomaccountingmstandardsmnotmrequiremthatmthemfinanc
ialmstatementsmofmthemparentm andmsubsidiarymbemconsolidated?
A) Amcorporationmcreatesmamnewm100mpercentmownedmsubsidiary
B) Amcorporationmpurchasesm90mpercentmofmthemvotingmstockmofmanothermcompany
C) Amcorporationmhasmbothmcontrolmandm majoritymownershipmofmanmunincorporatedmcompany
D) Amcorporationmownsmless-thanmamcontrollingminterestminmanmunincorporatedmcompany
Answer:m DmDiffi
culty:m1mEasy
Topic:m OrganizationalmStructuremandmFinancialmReporting
LearningmObjective:m 01-
01mUnderstandmandmexplainmthemreasonsmformandmdifferentmmethodsmofmbusinessmexpansion,mthemtype
smofmorganizationalmstructures,mandmthemtypesmofmacquisitions.
Bloom's:
RemembermAACS
B:m ReflectivemThinkingmAICP
A:m FNmDecisionmMaking
Duringmitsminception,mDevonmCompanympurchasedmlandmform$100,000mandmambuildingmform$180,0
00.mAftermexactlym3myears,mitmtransferredmthesemassetsmandmcashmofm$50,000mtomamnewlymcreatedmsubs
idiary,mReganmCompany,minmexchangemform15,000msharesmofmRegan'sm$10mparmvaluemstock.mDevonm
usesmstraight-
linemdepreciation.mUsefulmlifemformthembuildingmism30myears,mwithmzeromresidualmvalue.mAnmapprais
almrevealedmthatmthembuildingmhasmamfairm valuemofm$200,000.
5) Basedmonmtheminformationmprovided,matmthemtimemofmthemtransfer,mReganmCompanymshouldm recor
d:
A) Buildingmatm$180,000mandmnomaccumulatedmdepreciation.
B) Buildingmatm$162,000mandmnomaccumulatedmdepreciation.
C) Buildingmatm$200,000mandmaccumulatedmdepreciationmofm$24,000.
D) Buildingmatm$180,000mandmaccumulatedmdepreciationmofm$18,000.
Answer:m DmDifficult
y:m2mMedium
Topic:m ValuationmofmBusinessmEntities;mAccountingmformInternalmExpansion:mCreatingmBusinessmEnt
ities
LearningmObjective:m 01-
04mUnderstandmandmexplainmthemdifferencesmbetweenmdifferentmformsmofmbusinessmcombinations.;
m01-03mMakemcalculationsmandmpreparemjournalmentriesmformthemcreationmofmam
businessmentity.
Bloom's:
UnderstandmAACS
, B:mAnalyticalmThinkingmAICP
A:m FNmMeasurement
