DOWNLOAD THE Test Bank for Fundamentals of Advanced Accounting 7th Editi
b b b b b b b b b b
on Hoyle b
File:bChapterb02b-
ConsolidationbofbFinancialbInformationbMultiplebChoice:
b
[QUESTION]
1. Atbthebdatebofbanbacquisitionbwhichbisbnotbabbargainbpurchase,bthebacquisitionbmethod
A) Consolidatesbthebsubsidiary’sbassetsbatbfairbvaluebandbthebliabilitiesbatbbookbvalue.
B) Consolidatesballbsubsidiarybassetsbandbliabilitiesbatbbookbvalue.
C) Consolidatesballbsubsidiarybassetsbandbliabilitiesbatbfairbvalue.
D) Consolidatesbcurrentbassetsbandbliabilitiesbatbbookbvalue,bandblong-
termbassetsbandbliabilitiesbatbfairbvalue.
E) Consolidatesbthebsubsidiary’sbassetsbatbbookbvaluebandbthebliabilitiesbatbfairbvalue.b
Answer:bC
LearningbObjective:b02-04
LearningbObjective:b02-05
Topic:bAcquisition―ValuationbprinciplesbTo
pic:bAcquisition―AllocatebfairbvaluebDifficul
ty:b1bEasy
Blooms:bRemember
AACSB:bReflectivebThinkingb
AICPA:bBBbCriticalbThinkingb
AICPA:bFNbMeasurement
[QUESTION]
2. Inbanbacquisitionbwhereb100%bcontrolbisbacquired,bhowbwouldbtheblandbaccountsbofbthebparentb
andbtheblandbaccountsbofbthebsubsidiarybbebreportedbonbconsolidatedbfinancialbstatements?
Parent Subsidiary
A) BookbValue BookbValue
B) BookbValue FairbValue
C) FairbValue FairbValue
D) FairbValue BookbValue
E) Cost Cost
Answer:bB
LearningbObjective:b02-04
LearningbObjective:b02-05
Topic:bAcquisition―ValuationbprinciplesbTo
pic:bAcquisition―AllocatebfairbvaluebDifficul
ty:b2bMedium
Blooms:bRemember
AACSB:bReflectivebThinkingb
AICPA:bBBbCriticalbThinkingb
AICPA:bFNbMeasurement
[QUESTION]
3. LisabCo.bpaidbcashbforballbofbthebvotingbcommonbstockbofbVictoriabCorp.b Victoriabwillbcontinuebt
obexistbasbabseparatebcorporation.bEntriesbforbthebconsolidationbofbLisabandbVictoriabwouldbbebrecor
dedbin
Copyrightb©b2018bMcGraw-HillbEducation.bAllbrightsbreserved.
NobreproductionborbdistributionbwithoutbthebpriorbwrittenbconsentbofbMcGraw-HillbEducation.
Pageb2-1
mynursytest.store
,DOWNLOAD THE Test Bank for Fundamentals of Advanced Accounting 7th Editi
b b b b b b b b b b
on Hoyle b
A) Abworksheet.
B) Lisa'sbgeneralbjournal.
C) Victoria'sbgeneralbjournal.
D) Victoria'sbsecretbconsolidationbjournal.
E) Thebgeneralbjournalsbofbbothbcompanies.b
Answer:bA
LearningbObjective:b02-
07bTopic:bConsolidationbworksh
eetbDifficulty:b1bEasy
Blooms:bRemember
AACSB:bReflectivebThinkingb
AICPA:bBBbCriticalbThinkingb
AICPA:bFNbMeasurement
[QUESTION]
4. Usingbthebacquisitionbmethodbforbabbusinessbcombination,bgoodwillbisbgenerallybcalculatedbasb
the:
A) Costbofbthebinvestmentblessbthebsubsidiary'sbbookbvaluebatbthebbeginningbofbthebyear.
B) Costbofbthebinvestmentblessbthebsubsidiary'sbbookbvaluebatbthebacquisitionbdate.
C) Costbofbthebinvestmentblessbthebsubsidiary'sbfairbvaluebatbthebbeginningbofbthebyear.
D) Costbofbthebinvestmentblessbthebsubsidiary'sbfairbvaluebatbacquisitionbdate.
E) Zero,bitbisbnoblongerballowedbunderbfederalblaw.b
Answer:bD
LearningbObjective:b02-04
LearningbObjective:b02-05
Topic:bAcquisition―Valuationbprinciples
Topic:bAcquisition―Calculatebgoodwillborbbargain
Difficulty:b2bMediumbBloom
s:bRemember
AACSB:bReflectivebThinkingb
AICPA:bBBbCriticalbThinkingb
AICPA:bFNbMeasurement
[QUESTION]
5. Directbcombinationbcostsbandbamountsbincurredbtobregisterbandbissuebstockbinbconnectionbwithbab
businessbcombination.b Howbshouldbthosebcostsbbebaccountedbforbinbabpre-
2009bbusinessbcombination?
DirectbCombinationbCosts StockbIssuanceb Costs
A) Increaseb Investment Decreaseb Investment
B) Increaseb Investment DecreasebAdditionalbPaid-inbCapital
C) Increaseb Investment Increaseb Expenses
D) DecreasebAdditionalbPaid-inbCapital Increaseb Investment
E) Increaseb Expenses Decreaseb Investment
Answer:bB
LearningbObjective:b02-09
Topic:bLegacybmethods―Purchasebandbpooling
Difficulty:b2bMediumbBloom
s:bRemember
AACSB:bReflectivebThinking
Copyrightb©b2018bMcGraw-HillbEducation.bAllbrightsbreserved.
NobreproductionborbdistributionbwithoutbthebpriorbwrittenbconsentbofbMcGraw-HillbEducation.
Pageb2-2
mynursytest.store
,DOWNLOAD THE Test Bank for Fundamentals of Advanced Accounting 7th Editi
b b b b b b b b b b
on Hoyle b
AICPA:bBBbCriticalbThinkingbAI
CPA:bFNbMeasurement
[QUESTION]
6. Howbarebdirectbandbindirectbcostsbaccountedbforbwhenbapplyingbthebacquisitionbmethodbforbab
businessbcombination?
Answer:bA
LearningbObjective:b02-
06bbTopic:bCostsbofbcombination
bDifficulty:b1bEasy
Blooms:bRemember
AACSB:bReflectivebThinkingb
AICPA:bBBbCriticalbThinkingb
AICPA:bFNbMeasurement
[QUESTION]
7. Whatbisbthebprimarybdifferencebbetween:b(i)baccountingbforbabbusinessbcombinationbwhenbtheb
subsidiarybisbdissolved;bandb(ii)baccountingbforbabbusinessbcombinationbwhenbthebsubsidiarybretai
nsbitsbincorporation?
A) Ifbthebsubsidiarybisbdissolved,bitbwillbnotbbeboperatedbasbabseparatebdivision.
B) Ifbthebsubsidiarybisbdissolved,bassetsbandbliabilitiesbarebconsolidatedbatbtheirbbookbvalues.
C) Ifbthebsubsidiarybretainsbitsbincorporation,btherebwillbbebnobgoodwillbassociatedbwithbtheb
acquisition.
D) Ifbthebsubsidiarybretainsbitsbincorporation,bassetsbandbliabilitiesbarebconsolidatedbatbtheirbbookb
values.
E) Ifbthebsubsidiarybretainsbitsbincorporation,bthebconsolidationbisbnotbformallybrecordedbinbtheb
accountingbrecordsbofbthebacquiringbcompany.
Answer:bE
LearningbObjective:b02-
03bLearningbObjective:b02-
06abLearningbObjective:b02-06c
Topic:bBusinessbcombination―DifferentiatebacrossbformsbTo
pic:bJournalbentry―Dissolution
Topic:bJournalbentry―Investmentbwithbnobdissolution
Difficulty:b2bMediumbBlooms
:bUnderstandb AACSB:bRefle
ctivebThinkingbAICPA:bBBbC
riticalbThinkingbAICPA:bFNb
Measurement
[QUESTION]
8. AccordingbtobGAAP,bwhichbofbthebfollowingbisbtruebwithbrespectbtobthebpoolingbofbinterestb
methodbofbaccountingbforbbusinessbcombinations?
A) Itbwasbthebonlybmethodbusedbpriorbtob2002.
Copyrightb©b2018bMcGraw-HillbEducation.bAllbrightsbreserved.
NobreproductionborbdistributionbwithoutbthebpriorbwrittenbconsentbofbMcGraw-HillbEducation.
Pageb2-3
mynursytest.store
, DOWNLOAD THE Test Bank for Fundamentals of Advanced Accounting 7th Editi
b b b b b b b b b b
on Hoyle b
B) Itbmustbbebusedbforballbnewbacquisitions.
C) GAAPballowedbitsbusebpriorbtob2002.
D) It,borbthebacquisitionbmethod,bmaybbebusedbatbthebacquirer’sbdiscretion.
E) GAAPbrequiresbitbtobbebusedbinsteadbofbthebacquisitionbmethodbforbbusinessbcombinationsbforb
whichb$50bbillionborbmorebinbconsiderationbisbtransferred.
Answer:bC
LearningbObjective:b02-09
Topic:bLegacybmethods―Purchasebandbpooling
Difficulty:b1bEasybB
looms:bRemember
AACSB:bReflectivebThinkingb
AICPA:bBBbCriticalbThinkingb
AICPA:bFNbMeasurement
[QUESTION]
9. Whichbofbthebfollowingbexamplesbaccuratelybdescribesbabdifferencebinbthebtypesbofbbusinessb
combinations?
A) Abstatutorybmergerbcanbonlybbebeffectedbthroughbanbassetbacquisitionbwhilebabstatutoryb
consolidationbcanbonlybbebeffectedbthroughbabcapitalbstockbacquisition.
B) Abstatutorybmergerbcanbonlybbebeffectedbthroughbabcapitalbstockbacquisitionbwhilebabstatutoryb
consolidationbcanbonlybbebeffectedbthroughbanbassetbacquisition.
C) Abstatutorybmergerbrequiresbthebdissolutionbofbthebacquiredbcompanybwhilebabstatutorybcons
olidationbrequiresbdissolutionbofbthebcompaniesbinvolvedbinbthebcombinationbfollowingbthebtrans
ferbofbassetsborbstockbtobabnewlybformedbentity.
D) Abstatutorybconsolidationbrequiresbdissolutionbofbthebacquiredbcompanybwhilebabstatutoryb
mergerbdoesbnotbrequirebdissolution.
E) Bothbabstatutorybmergerbandbabstatutorybconsolidationbcanbonlybbebeffectedbthroughbanbassetb
acquisitionbbutbonlybabstatutorybconsolidationbrequiresbdissolutionbofbthebacquiredbcompany.bA
nswer:bC
LearningbObjective:b02-03
Topic:bBusinessbcombination―Differentiatebacrossbforms
Difficulty:b3bHardb
Blooms:bRemember
AACSB:bReflectivebThinkingb
AICPA:bBBbCriticalbThinkingb
AICPA:bFNbMeasurement
[QUESTION]
10. Acquiredbin-processbresearchbandbdevelopmentbisbconsideredbas
A) Abdefinite-livedbassetbsubjectbtobamortization.
B) Abdefinite-livedbassetbsubjectbtobtestingbforbimpairment.
C) Anbindefinite-livedbassetbsubjectbtobamortization.
D) Anbindefinite-livedbassetbsubjectbtobtestingbforbimpairment.
E) Abresearchbandbdevelopmentbexpensebatbthebdatebofbacquisition.b
Answer:bD
LearningbObjective:b02-08
Topic:bIn-
processbresearchbandbdevelopmentbDifficulty:b
1bEasy
Blooms:bRemember
AACSB:bReflectivebThinkingbAI
Copyrightb©b2018bMcGraw-HillbEducation.bAllbrightsbreserved.
NobreproductionborbdistributionbwithoutbthebpriorbwrittenbconsentbofbMcGraw-HillbEducation.
Pageb2-4
mynursytest.store
b b b b b b b b b b
on Hoyle b
File:bChapterb02b-
ConsolidationbofbFinancialbInformationbMultiplebChoice:
b
[QUESTION]
1. Atbthebdatebofbanbacquisitionbwhichbisbnotbabbargainbpurchase,bthebacquisitionbmethod
A) Consolidatesbthebsubsidiary’sbassetsbatbfairbvaluebandbthebliabilitiesbatbbookbvalue.
B) Consolidatesballbsubsidiarybassetsbandbliabilitiesbatbbookbvalue.
C) Consolidatesballbsubsidiarybassetsbandbliabilitiesbatbfairbvalue.
D) Consolidatesbcurrentbassetsbandbliabilitiesbatbbookbvalue,bandblong-
termbassetsbandbliabilitiesbatbfairbvalue.
E) Consolidatesbthebsubsidiary’sbassetsbatbbookbvaluebandbthebliabilitiesbatbfairbvalue.b
Answer:bC
LearningbObjective:b02-04
LearningbObjective:b02-05
Topic:bAcquisition―ValuationbprinciplesbTo
pic:bAcquisition―AllocatebfairbvaluebDifficul
ty:b1bEasy
Blooms:bRemember
AACSB:bReflectivebThinkingb
AICPA:bBBbCriticalbThinkingb
AICPA:bFNbMeasurement
[QUESTION]
2. Inbanbacquisitionbwhereb100%bcontrolbisbacquired,bhowbwouldbtheblandbaccountsbofbthebparentb
andbtheblandbaccountsbofbthebsubsidiarybbebreportedbonbconsolidatedbfinancialbstatements?
Parent Subsidiary
A) BookbValue BookbValue
B) BookbValue FairbValue
C) FairbValue FairbValue
D) FairbValue BookbValue
E) Cost Cost
Answer:bB
LearningbObjective:b02-04
LearningbObjective:b02-05
Topic:bAcquisition―ValuationbprinciplesbTo
pic:bAcquisition―AllocatebfairbvaluebDifficul
ty:b2bMedium
Blooms:bRemember
AACSB:bReflectivebThinkingb
AICPA:bBBbCriticalbThinkingb
AICPA:bFNbMeasurement
[QUESTION]
3. LisabCo.bpaidbcashbforballbofbthebvotingbcommonbstockbofbVictoriabCorp.b Victoriabwillbcontinuebt
obexistbasbabseparatebcorporation.bEntriesbforbthebconsolidationbofbLisabandbVictoriabwouldbbebrecor
dedbin
Copyrightb©b2018bMcGraw-HillbEducation.bAllbrightsbreserved.
NobreproductionborbdistributionbwithoutbthebpriorbwrittenbconsentbofbMcGraw-HillbEducation.
Pageb2-1
mynursytest.store
,DOWNLOAD THE Test Bank for Fundamentals of Advanced Accounting 7th Editi
b b b b b b b b b b
on Hoyle b
A) Abworksheet.
B) Lisa'sbgeneralbjournal.
C) Victoria'sbgeneralbjournal.
D) Victoria'sbsecretbconsolidationbjournal.
E) Thebgeneralbjournalsbofbbothbcompanies.b
Answer:bA
LearningbObjective:b02-
07bTopic:bConsolidationbworksh
eetbDifficulty:b1bEasy
Blooms:bRemember
AACSB:bReflectivebThinkingb
AICPA:bBBbCriticalbThinkingb
AICPA:bFNbMeasurement
[QUESTION]
4. Usingbthebacquisitionbmethodbforbabbusinessbcombination,bgoodwillbisbgenerallybcalculatedbasb
the:
A) Costbofbthebinvestmentblessbthebsubsidiary'sbbookbvaluebatbthebbeginningbofbthebyear.
B) Costbofbthebinvestmentblessbthebsubsidiary'sbbookbvaluebatbthebacquisitionbdate.
C) Costbofbthebinvestmentblessbthebsubsidiary'sbfairbvaluebatbthebbeginningbofbthebyear.
D) Costbofbthebinvestmentblessbthebsubsidiary'sbfairbvaluebatbacquisitionbdate.
E) Zero,bitbisbnoblongerballowedbunderbfederalblaw.b
Answer:bD
LearningbObjective:b02-04
LearningbObjective:b02-05
Topic:bAcquisition―Valuationbprinciples
Topic:bAcquisition―Calculatebgoodwillborbbargain
Difficulty:b2bMediumbBloom
s:bRemember
AACSB:bReflectivebThinkingb
AICPA:bBBbCriticalbThinkingb
AICPA:bFNbMeasurement
[QUESTION]
5. Directbcombinationbcostsbandbamountsbincurredbtobregisterbandbissuebstockbinbconnectionbwithbab
businessbcombination.b Howbshouldbthosebcostsbbebaccountedbforbinbabpre-
2009bbusinessbcombination?
DirectbCombinationbCosts StockbIssuanceb Costs
A) Increaseb Investment Decreaseb Investment
B) Increaseb Investment DecreasebAdditionalbPaid-inbCapital
C) Increaseb Investment Increaseb Expenses
D) DecreasebAdditionalbPaid-inbCapital Increaseb Investment
E) Increaseb Expenses Decreaseb Investment
Answer:bB
LearningbObjective:b02-09
Topic:bLegacybmethods―Purchasebandbpooling
Difficulty:b2bMediumbBloom
s:bRemember
AACSB:bReflectivebThinking
Copyrightb©b2018bMcGraw-HillbEducation.bAllbrightsbreserved.
NobreproductionborbdistributionbwithoutbthebpriorbwrittenbconsentbofbMcGraw-HillbEducation.
Pageb2-2
mynursytest.store
,DOWNLOAD THE Test Bank for Fundamentals of Advanced Accounting 7th Editi
b b b b b b b b b b
on Hoyle b
AICPA:bBBbCriticalbThinkingbAI
CPA:bFNbMeasurement
[QUESTION]
6. Howbarebdirectbandbindirectbcostsbaccountedbforbwhenbapplyingbthebacquisitionbmethodbforbab
businessbcombination?
Answer:bA
LearningbObjective:b02-
06bbTopic:bCostsbofbcombination
bDifficulty:b1bEasy
Blooms:bRemember
AACSB:bReflectivebThinkingb
AICPA:bBBbCriticalbThinkingb
AICPA:bFNbMeasurement
[QUESTION]
7. Whatbisbthebprimarybdifferencebbetween:b(i)baccountingbforbabbusinessbcombinationbwhenbtheb
subsidiarybisbdissolved;bandb(ii)baccountingbforbabbusinessbcombinationbwhenbthebsubsidiarybretai
nsbitsbincorporation?
A) Ifbthebsubsidiarybisbdissolved,bitbwillbnotbbeboperatedbasbabseparatebdivision.
B) Ifbthebsubsidiarybisbdissolved,bassetsbandbliabilitiesbarebconsolidatedbatbtheirbbookbvalues.
C) Ifbthebsubsidiarybretainsbitsbincorporation,btherebwillbbebnobgoodwillbassociatedbwithbtheb
acquisition.
D) Ifbthebsubsidiarybretainsbitsbincorporation,bassetsbandbliabilitiesbarebconsolidatedbatbtheirbbookb
values.
E) Ifbthebsubsidiarybretainsbitsbincorporation,bthebconsolidationbisbnotbformallybrecordedbinbtheb
accountingbrecordsbofbthebacquiringbcompany.
Answer:bE
LearningbObjective:b02-
03bLearningbObjective:b02-
06abLearningbObjective:b02-06c
Topic:bBusinessbcombination―DifferentiatebacrossbformsbTo
pic:bJournalbentry―Dissolution
Topic:bJournalbentry―Investmentbwithbnobdissolution
Difficulty:b2bMediumbBlooms
:bUnderstandb AACSB:bRefle
ctivebThinkingbAICPA:bBBbC
riticalbThinkingbAICPA:bFNb
Measurement
[QUESTION]
8. AccordingbtobGAAP,bwhichbofbthebfollowingbisbtruebwithbrespectbtobthebpoolingbofbinterestb
methodbofbaccountingbforbbusinessbcombinations?
A) Itbwasbthebonlybmethodbusedbpriorbtob2002.
Copyrightb©b2018bMcGraw-HillbEducation.bAllbrightsbreserved.
NobreproductionborbdistributionbwithoutbthebpriorbwrittenbconsentbofbMcGraw-HillbEducation.
Pageb2-3
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, DOWNLOAD THE Test Bank for Fundamentals of Advanced Accounting 7th Editi
b b b b b b b b b b
on Hoyle b
B) Itbmustbbebusedbforballbnewbacquisitions.
C) GAAPballowedbitsbusebpriorbtob2002.
D) It,borbthebacquisitionbmethod,bmaybbebusedbatbthebacquirer’sbdiscretion.
E) GAAPbrequiresbitbtobbebusedbinsteadbofbthebacquisitionbmethodbforbbusinessbcombinationsbforb
whichb$50bbillionborbmorebinbconsiderationbisbtransferred.
Answer:bC
LearningbObjective:b02-09
Topic:bLegacybmethods―Purchasebandbpooling
Difficulty:b1bEasybB
looms:bRemember
AACSB:bReflectivebThinkingb
AICPA:bBBbCriticalbThinkingb
AICPA:bFNbMeasurement
[QUESTION]
9. Whichbofbthebfollowingbexamplesbaccuratelybdescribesbabdifferencebinbthebtypesbofbbusinessb
combinations?
A) Abstatutorybmergerbcanbonlybbebeffectedbthroughbanbassetbacquisitionbwhilebabstatutoryb
consolidationbcanbonlybbebeffectedbthroughbabcapitalbstockbacquisition.
B) Abstatutorybmergerbcanbonlybbebeffectedbthroughbabcapitalbstockbacquisitionbwhilebabstatutoryb
consolidationbcanbonlybbebeffectedbthroughbanbassetbacquisition.
C) Abstatutorybmergerbrequiresbthebdissolutionbofbthebacquiredbcompanybwhilebabstatutorybcons
olidationbrequiresbdissolutionbofbthebcompaniesbinvolvedbinbthebcombinationbfollowingbthebtrans
ferbofbassetsborbstockbtobabnewlybformedbentity.
D) Abstatutorybconsolidationbrequiresbdissolutionbofbthebacquiredbcompanybwhilebabstatutoryb
mergerbdoesbnotbrequirebdissolution.
E) Bothbabstatutorybmergerbandbabstatutorybconsolidationbcanbonlybbebeffectedbthroughbanbassetb
acquisitionbbutbonlybabstatutorybconsolidationbrequiresbdissolutionbofbthebacquiredbcompany.bA
nswer:bC
LearningbObjective:b02-03
Topic:bBusinessbcombination―Differentiatebacrossbforms
Difficulty:b3bHardb
Blooms:bRemember
AACSB:bReflectivebThinkingb
AICPA:bBBbCriticalbThinkingb
AICPA:bFNbMeasurement
[QUESTION]
10. Acquiredbin-processbresearchbandbdevelopmentbisbconsideredbas
A) Abdefinite-livedbassetbsubjectbtobamortization.
B) Abdefinite-livedbassetbsubjectbtobtestingbforbimpairment.
C) Anbindefinite-livedbassetbsubjectbtobamortization.
D) Anbindefinite-livedbassetbsubjectbtobtestingbforbimpairment.
E) Abresearchbandbdevelopmentbexpensebatbthebdatebofbacquisition.b
Answer:bD
LearningbObjective:b02-08
Topic:bIn-
processbresearchbandbdevelopmentbDifficulty:b
1bEasy
Blooms:bRemember
AACSB:bReflectivebThinkingbAI
Copyrightb©b2018bMcGraw-HillbEducation.bAllbrightsbreserved.
NobreproductionborbdistributionbwithoutbthebpriorbwrittenbconsentbofbMcGraw-HillbEducation.
Pageb2-4
mynursytest.store
