Test Bank for Advanced Accounting, 5th Edition by Hopkins Halsey.pdf

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Chapter 02 Co i i




nsolidation of Financial Information
i i i




MultipleiChoice iQuestions


1. Atitheidateio fi ani acquisition i whichiis i not ia i bargainipurchase,i theiacqu
isitionimethod



A. consolidates itheisubsidiary's iassets iati fairi value iandi the i liabilities iati booki
value.
B. consolidates i alli subsidiaryiassets i andi liabilities i at
booki value.
C. consolidates iallisubsidiaryi assets iandi liabilities iati fai
rivalue.
D. consolidates icurrentiassets i andi liabilities iati bookivalue,i long-term
assets iandiliabilities iati fairivalue.
E. consolidates itheisubsidiary's iassets iati booki valuei andi the i liabilities iati fai
rivalue.

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2. Inianiacquisition i wherei controliis iachieved,i how i wouldi thei landiaccou
nts iofithei parenti andi thei landiaccounts io fi theisubsidiaryi beicom bined?




A. Option
iA

B. Option
B
C. Option
iC


D. Option
D
E. Option
iE




3. Lisa iCo.ipaidicashi for iallio fi the ivo tingi commo nistockio fi Victoria iCorp.i Victor
ia iwillicontinuei to iexistias ia iseparateico rpo ration.i Entries i fori the iconso lidat
ioniofiLisa iandi Victo ria i wouldi bei recordediin


A. a
worksheet.
B. Lisa's igenerali j
ournal.
C. Victoria's i general
journal.
D. Victoria's isecret iconso lidation i j
ournal.
E. theigeneralijournals io fiboth
companies.

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4. Usingithei acquisition i methodi foria i business i com bination,i goodwilliis i gen
erallyi definedias:



A. Costiofitheiinvestm enti less i theisubsidiary's i bookivalueiati the ibegin
ningiofithei year.
B. Costi ofi thei investm enti less i thei subsidiary's i booki valuei ati the
acquisitionidate.
C. Costiofitheiinvestmentiless itheisubsidiary's ifairivalueiatitheibeg
inningiofitheiyear.
D. Costi ofi thei investm enti less i thei subsidiary's i fairi valuei at
acquisitionidate.
E. is ino ilongeriallowediunderi f
ederali law.

5. Directicombinationicosts iandistockiissuanceicosts iareiofteniincurrediinithei
process iofimakingiaicontrollingiinvestmentiinianothericompany.iHowisho
uldithoseicosts ibeiaccountediforiiniaipre-2009ipurchaseitransaction?




A. Option
iA


B. Option
B
C. Option
iC

D. Option
D
E. Option
iE

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6. Howiareidirectiandiindirecti costs iacco untedi fori wheni applyingi theiacq
uisitionimethodi foria i business i com bination?




A. Option
iA

B. Option
B
C. Option
iC

D. Option
D
E. Option
iE




7. Whatiis i thei primary iacco untingidifference ibetweeniaccountingi fo ri whe
ni theisubsidiaryiis idissolvedi andi wheni thei subsidiaryi retains iits iincorpora
tion?


A. Ifitheisubsidiaryiis i disso lved,iiti willi noti beioperatedi as ia isepa
rateidivision.
B. Ifitheisubsidiary iis i disso lved, iassets i andi liabilities iare iconsolidated
atitheiribookivalues.
C. Ifitheisubsidiaryi retains iits iinco rporation,itherei willi beino igoodwilliasso
ciatediwithi thei acquisition.
D. Ifitheisubsidiaryi retains iits iinco rporation,iassets iandi liabilities iare
consolidatediati theiri bookivalues.
E. Ifitheisubsidiaryi retains iits iincorporation,i thei conso lidation iis i noti for
mallyirecordediini theiaccounting irecords io fi thei acquiringi company.