Test Bank for Advanced Financial Accounting1
k k k k k k
3th Edition
k k
By Theodore Christensen
k k
,TEST BANK FOR
k k
Advanced Financial Accounting 13th Edition By Theodore Christensen
k k k k k k k
Chapterk1 Intercorporatek Acquisitionsk andk Investmentsk ink Otherk Entities
1) Assumingk nok impairmentk ink valuek priork tok transfer,k assetsktransferredk bykak parentk companyk toka
notherk entityk itk hask createdk shouldk bek recordedk bykthek newlyk createdk entitykatk thek assets':
A) costk tok thek parentk company.
B) bookk valuek onkthek parentk company'sk booksk atk thek datek ofktransfer.
C) fairk valuek atk thek datek ofktransfer.
D) fairkvaluekofkconsiderationkexchangedkbyktheknewlykcreatedkentity.
Answer:k BkDiffic
ulty:k1kEasy
Topic:kInternalkExpansion:kCreatingkakBusinesskEntity;kValuationkofkBusinesskEntitieskLearnin
gkObjective: 01-
01kUnderstandkandkexplainkthekreasonskforkandkdifferentkmethodskofkbusinessk expansion,k thek typ
esk ofk organizationalk structures,k andk thek typesk ofk acquisitions.;k 01k-
03kMakek calculationskandk preparek journalk entriesk fork thek creationk ofkak businessk entity.
Bloom's:
RememberkAACSB:
k ReflectivekThinking kAICPA:
FNk Decisionk Making
2) Givenkthekincreasedkdevelopmentkofkcomplexkbusinesskstructures,kwhichkofkthekfollowingkreg
ulatorskiskresponsiblek forkthekcontinuedkusefulnesskofkaccountingkreports?
A) Securitiesk andk Exchangek Commissionk (SEC)
B) Publick Companyk Accountingk Oversightk Boardk (PCAOB)
C) Financialk Accountingk Standardsk Boardk (FASB)
D) Allk ofkthek otherk answersk arek correct
Answer:k DkDiffic
ulty:k1kEasy
Topic: Ank Introductionk tok Complexk Businessk Structures
LearningkObjective: 01-
01kUnderstandkandkexplainkthekreasonskforkandkdifferentkmethodskofkbusinessk expansion,k thek typ
esk ofkorganizationalk structures,k andk thek typesk ofkacquisitions.
Bloom's:
RememberkAACSB
:k ReflectivekThinkingkAICPA:
FNkReporting
3) Akbusinesskcombinationkinkwhichkthekacquiredkcompany'skassetskandkliabilitieskarekcombinedkwit
hkthosekofkthekacquiringk companykintokak singlek entitykiskdefinedkas:
A) Stockkacquisition
B) Leveragedkbuyout
C) StatutorykMerger
,D) Reversek statutoryk rollup
, Answer:k CkDiffic
ulty:k1kEasy
Topic: Organizationalk Structurek andk Financialk Reporting
LearningkObjective: 01-
04kUnderstandkandkexplainkthekdifferenceskbetweenkdifferentkformskofkbusinesskcombinations.
Bloom's:
RememberkAACSB:
k ReflectivekThinking kAICPA:
FNk Decisionk Making
4) Ink whichk ofkthek followingk situationsk dok accountingk standardsk notk requirek thatk thek financialks
tatementskofkthek parentk andk subsidiarykbekconsolidated?
A) Akcorporationkcreateskaknewk100kpercentk ownedksubsidiary
B) Ak corporationk purchasesk 90k percentk ofkthek votingk stockk ofk anotherk company
C) Ak corporationk hask bothk controlk andk majorityk ownershipk ofk ank unincorporatedk company
D) Ak corporationk ownsk less-thank ak controllingk interestk ink ank unincorporatedk company
Answer:k DkDiffic
ulty:k1kEasy
Topic: Organizationalk Structurek andk Financialk Reporting
LearningkObjective: 01-
01kUnderstandkandkexplainkthekreasonskforkandkdifferentkmethodskofkbusinessk expansion,k thek types
k ofk organizationalk structures,k andk thek typesk ofkacquisitions.
Bloom's:
RememberkAACSB:
k ReflectivekThinking kAICPA:
FNk Decisionk Making
Duringkitskinception,kDevonkCompanykpurchasedklandkfork$100,000kandkakbuildingkfork$180,000.k
Afterkexactlyk3kyears,kitktransferredkthesekassetskandkcashkofk$50,000ktokaknewlykcreatedksubsidiary,kRe
gankCompany,kinkexchangekfork15,000kshareskofkRegan'sk$10kparkvaluekstock.kDevonkuseskstraight
-
linekdepreciation.kUsefulklifekforkthekbuildingkisk30kyears,kwithkzerokresidualkvalue.kAnkappraisalkre
vealedkthatkthekbuildingkhaskak fairk valuekofk$200,000.
5) Basedk onkthek informationk provided,k atk thek timek ofk thek transfer,k Regank Companyk shouldk record:
A) Buildingk atk $180,000k andk nok accumulatedk depreciation.
B) Buildingk atk $162,000k andk nok accumulatedk depreciation.
C) Buildingk atk $200,000k andk accumulatedk depreciationk ofk $24,000.
D) Buildingk atk $180,000k andk accumulatedk depreciationk ofk $18,000.
Answer:kkDkDifficulty
:k 2k Medium
Topic:
Valuationk ofk Businessk Entities;k Accountingk fork Internalk Expansion:k Creatingk Businessk
Entities
LearningkObjective: 01-
04kUnderstandkandkexplainkthekdifferenceskbetweenkdifferentkformskofkbusinessk combinations.;k 01
-03k Makek calculationsk andk preparek journalk entriesk fork thek creationk ofkakbusinesskentity.
Bloom's:
UnderstandkAACSB
k k k k k k
3th Edition
k k
By Theodore Christensen
k k
,TEST BANK FOR
k k
Advanced Financial Accounting 13th Edition By Theodore Christensen
k k k k k k k
Chapterk1 Intercorporatek Acquisitionsk andk Investmentsk ink Otherk Entities
1) Assumingk nok impairmentk ink valuek priork tok transfer,k assetsktransferredk bykak parentk companyk toka
notherk entityk itk hask createdk shouldk bek recordedk bykthek newlyk createdk entitykatk thek assets':
A) costk tok thek parentk company.
B) bookk valuek onkthek parentk company'sk booksk atk thek datek ofktransfer.
C) fairk valuek atk thek datek ofktransfer.
D) fairkvaluekofkconsiderationkexchangedkbyktheknewlykcreatedkentity.
Answer:k BkDiffic
ulty:k1kEasy
Topic:kInternalkExpansion:kCreatingkakBusinesskEntity;kValuationkofkBusinesskEntitieskLearnin
gkObjective: 01-
01kUnderstandkandkexplainkthekreasonskforkandkdifferentkmethodskofkbusinessk expansion,k thek typ
esk ofk organizationalk structures,k andk thek typesk ofk acquisitions.;k 01k-
03kMakek calculationskandk preparek journalk entriesk fork thek creationk ofkak businessk entity.
Bloom's:
RememberkAACSB:
k ReflectivekThinking kAICPA:
FNk Decisionk Making
2) Givenkthekincreasedkdevelopmentkofkcomplexkbusinesskstructures,kwhichkofkthekfollowingkreg
ulatorskiskresponsiblek forkthekcontinuedkusefulnesskofkaccountingkreports?
A) Securitiesk andk Exchangek Commissionk (SEC)
B) Publick Companyk Accountingk Oversightk Boardk (PCAOB)
C) Financialk Accountingk Standardsk Boardk (FASB)
D) Allk ofkthek otherk answersk arek correct
Answer:k DkDiffic
ulty:k1kEasy
Topic: Ank Introductionk tok Complexk Businessk Structures
LearningkObjective: 01-
01kUnderstandkandkexplainkthekreasonskforkandkdifferentkmethodskofkbusinessk expansion,k thek typ
esk ofkorganizationalk structures,k andk thek typesk ofkacquisitions.
Bloom's:
RememberkAACSB
:k ReflectivekThinkingkAICPA:
FNkReporting
3) Akbusinesskcombinationkinkwhichkthekacquiredkcompany'skassetskandkliabilitieskarekcombinedkwit
hkthosekofkthekacquiringk companykintokak singlek entitykiskdefinedkas:
A) Stockkacquisition
B) Leveragedkbuyout
C) StatutorykMerger
,D) Reversek statutoryk rollup
, Answer:k CkDiffic
ulty:k1kEasy
Topic: Organizationalk Structurek andk Financialk Reporting
LearningkObjective: 01-
04kUnderstandkandkexplainkthekdifferenceskbetweenkdifferentkformskofkbusinesskcombinations.
Bloom's:
RememberkAACSB:
k ReflectivekThinking kAICPA:
FNk Decisionk Making
4) Ink whichk ofkthek followingk situationsk dok accountingk standardsk notk requirek thatk thek financialks
tatementskofkthek parentk andk subsidiarykbekconsolidated?
A) Akcorporationkcreateskaknewk100kpercentk ownedksubsidiary
B) Ak corporationk purchasesk 90k percentk ofkthek votingk stockk ofk anotherk company
C) Ak corporationk hask bothk controlk andk majorityk ownershipk ofk ank unincorporatedk company
D) Ak corporationk ownsk less-thank ak controllingk interestk ink ank unincorporatedk company
Answer:k DkDiffic
ulty:k1kEasy
Topic: Organizationalk Structurek andk Financialk Reporting
LearningkObjective: 01-
01kUnderstandkandkexplainkthekreasonskforkandkdifferentkmethodskofkbusinessk expansion,k thek types
k ofk organizationalk structures,k andk thek typesk ofkacquisitions.
Bloom's:
RememberkAACSB:
k ReflectivekThinking kAICPA:
FNk Decisionk Making
Duringkitskinception,kDevonkCompanykpurchasedklandkfork$100,000kandkakbuildingkfork$180,000.k
Afterkexactlyk3kyears,kitktransferredkthesekassetskandkcashkofk$50,000ktokaknewlykcreatedksubsidiary,kRe
gankCompany,kinkexchangekfork15,000kshareskofkRegan'sk$10kparkvaluekstock.kDevonkuseskstraight
-
linekdepreciation.kUsefulklifekforkthekbuildingkisk30kyears,kwithkzerokresidualkvalue.kAnkappraisalkre
vealedkthatkthekbuildingkhaskak fairk valuekofk$200,000.
5) Basedk onkthek informationk provided,k atk thek timek ofk thek transfer,k Regank Companyk shouldk record:
A) Buildingk atk $180,000k andk nok accumulatedk depreciation.
B) Buildingk atk $162,000k andk nok accumulatedk depreciation.
C) Buildingk atk $200,000k andk accumulatedk depreciationk ofk $24,000.
D) Buildingk atk $180,000k andk accumulatedk depreciationk ofk $18,000.
Answer:kkDkDifficulty
:k 2k Medium
Topic:
Valuationk ofk Businessk Entities;k Accountingk fork Internalk Expansion:k Creatingk Businessk
Entities
LearningkObjective: 01-
04kUnderstandkandkexplainkthekdifferenceskbetweenkdifferentkformskofkbusinessk combinations.;k 01
-03k Makek calculationsk andk preparek journalk entriesk fork thek creationk ofkakbusinesskentity.
Bloom's:
UnderstandkAACSB
