Question 1

There are severe governmentally imposed uncertainties.

Accepted Answer

In some cases,control may exit...

Question 2

The parent company concept of consolidated financial statements considers the noncontroling interest in net assets of a subsidiary to be:

Accepted Answer

A)  A liability
B)  A part of consolidated stockholders' equity
C)  An item between liabilities and stockholders' equity
D)  Some other classificationE) B) and C)
F) A) and B)

Question 3

IFRS No.10 changes the method of reporting noncontrolling interests from what was previously required in IAS No.27.How are noncontrolling interest now defined and where are they to be disclosed?

Accepted Answer

Noncontrolling interests are now defined...

Question 4

Which of the following is the appropriate basis for valuing fixed assets acquired in a business combination carried out by exchanging cash for common stock?

Accepted Answer

A)  Historic cost
B)  Book value
C)  Cost plus any excess of purchase price over book value of asset acquired
D)  Fair valueE) B) and D)
F) None of the above

Question 5

Under the acquisition method of accounting for a business combination,a bargain purchase is

Accepted Answer

A)  Reported as goodwill in the balance sheet.
B)  Tested annually for impairment.
C)  Reported as a gain in the income statement.
D)  Reported as an adjustment to other comprehensive income.E) B) and C)
F) B) and D)

Question 6

Under the acquisition method of accounting for a business combination when the parent company has acquired only 90% of the voting stock of a subsidiary,

Accepted Answer

A)  10% of the goodwill will be reported in a separate section of the balance sheet because it belongs to the noncontrolling interest.
B)  The consolidated balance sheet will report 100% of the value of goodwill.
C)  The consolidated balance sheet will report 90% of the value of goodwill.
D)  Goodwill will be amortized over its useful life or 40 years whichever comes first.E) None of the above
F) A) and B)

Question 7

A foreign subsidiary's function currency is its local currency that has not experienced significant inflation.The weighted average exchange rate for the current year would be the appropriate exchange rate for translating Sales to
Wages expense Customers

Accepted Answer

A)  Yes Yes
B)  Yes No
C)  No No
D)  No YesE) C) and D)
F) A) and B) A

Question 8

The profitability information that should be reported for each reportable segment of a business enterprise consists of

Accepted Answer

A)  An operating profit-or-loss figure consisting of segment revenues less traceable costs and allocated common costs
B)  An operating profit-or-loss figure consisting of segment revenues less traceable costs but not allocated common costs
C)  An operating profit-or-loss figure consisting of segment revenues less allocated common costs but not traceable costs
D)  Segment revenues onlyE) C) and D)
F) B) and D)

Question 9

Consolidated financial statements are typically prepared when one company has a controlling interest in another unless:

Accepted Answer

A)  The subsidiary is a finance company
B)  The fiscal year-ends of the companies are more than three months apart.
C)  Circumstance prevent the exercise of control
D)  The two company are in unrelated industries,such as real estate and manufacturing.E) A) and B)
F) A) and C)

Question 10

Under the acquisition method of accounting for a business combination,restructuring costs are

Accepted Answer

A)  Capitalized and amortized over a period not exceeding ten years.
B)  Fees paid to lawyers and accountants to bring about the business combination.
C)  Costs incurred to effect the business combination.
D)  Treated as post acquisition expenses.E) All of the above
F) A) and C)

Question 11

Consolidated statements are proper for Neely,Inc. ,Randle,Inc. ,and Walker,Inc. ,if

Accepted Answer

A)  Neely owns 80 percent of the outstanding common stock of Randle and 40 percent of Walker;Randle owns 30 percent of Walker.
B)  Neely owns 100 percent of the outstanding common stock of Randle and 90 percent of Walker;Neely bought the stock of Walker one month before the balance sheet date and sold it seven weeks later.
C)  Neely owns 100 percent of the outstanding common stock of Randle and Walker;Walker is in legal reorganization.
D)  Neely owns 80 percent of the outstanding common stock of Randle and 40 percent of Walker;Reeves,Inc. ,owns 55 percent of Walker.E) All of the above
F) None of the above A

Question 12

The theoretically preferred method of presenting noncontrolling interest on a consolidated balance sheet is

Accepted Answer

A)  As a separate item with the deferred credits section
B)  As a reduction from contra to) goodwill from consolidation,if any
C)  By means of notes or footnotes to the balance sheet
D)  As a separate item within the stockholders' equity sectionE) A) and D)
F) B) and C)

Question 13

On October 1,Company X acquired for cash all of the outstanding common stock of Company Y.Both companies have a December 31 year-end and have been in business for many years.Consolidated net income for the year ended December 31 should include net income of

Accepted Answer

A)  Company X for3 months and Company Y for 3 months
B)  Company X for 12 months and Company Y for 3 months
C)  Company X for 12 months and Company Y for 12 months
D)  Company X for 12 months,but no income from Company Y until Company Y distributed a dividendE) C) and D)
F) B) and D)

Question 14

The noncontrolling interest in a subsidiary is reported in the consolidated balance sheet

Accepted Answer

A)  As an investment.
B)  As a liability.
C)  At fair value,as determined on the acquisition date.
D)  As an element of stockholders' equity.E) C) and D)
F) B) and D)

Question 15

In financial reporting for segments of a business enterprise,the operating profit or loss of a segment should include Reasonably allocated
Common Traceable
Operating costs operating costs

Accepted Answer

A)  No No
B)  No Yes
C)  Yes No
D)  Yes YesE) A) and B)
F) All of the above

Question 16

What are the two principles that are used to guide the preparation of consolidated financial statements?

Accepted Answer

In the preparation of consolid...

Question 17

When a parent-subsidiary relation exists,consolidated financial statements are prepared in recognition of the accounting concept of:

Accepted Answer

A)  Reliability
B)  Materiality
C)  Legal entity
D)  Economic entityE) B) and C)
F) A) and D)

Question 18

U.S.GAAP requires a reporting entity to consolidate an entity in which it has a controlling financial interest.There are two primary models for assessing whether there is a controlling financial interest.Identify and discuss the accounting treatment required by each.

Accepted Answer

The two primary models for assessing whe...

Question 19

Meredith Company and Kyle Company were combined in an acquisition transaction.Meredith was able to acquire Kyle at a bargain price.The sum of the market or appraised values of identifiable assets acquired less the fair value of liabilities assumed exceeded the cost to Meredith.After revaluing noncurrent assets to zero there was still some of the bargain purchase amount remaining formerly termed negative goodwill) .Proper accounting treatment by Meredith is to report the amount as

Accepted Answer

A)  A discontinued operations item
B)  Part of current income in the year of combination
C)  A deferred credit and amortize it
D)  Paid-in capitalE) C) and D)
F) B) and D)

Question 20

The composition of senior management of the combined entity.All else being equal,the acquiring entity's senior management would dominate that of the combined entity.

Accepted Answer

The terms of exchange of equity securities.All else being equal,the acquiring entity would be the one that pays a premium over the market value of the equity securities of the other combining entities.

Exam 16: Accounting for Multiple Entities

There are severe governmentally imposed uncertainties.

Correct Answer
verified
In some cases,control may exit...
View Answer

The parent company concept of consolidated financial statements considers the noncontroling interest in net assets of a subsidiary to be:

Correct Answer
verified

IFRS No.10 changes the method of reporting noncontrolling interests from what was previously required in IAS No.27.How are noncontrolling interest now defined and where are they to be disclosed?

Correct Answer
verified
Noncontrolling interests are now defined...
View Answer

Which of the following is the appropriate basis for valuing fixed assets acquired in a business combination carried out by exchanging cash for common stock?

Correct Answer
verified

Under the acquisition method of accounting for a business combination,a bargain purchase is

Correct Answer
verified

Under the acquisition method of accounting for a business combination when the parent company has acquired only 90% of the voting stock of a subsidiary,

Correct Answer
verified

A foreign subsidiary's function currency is its local currency that has not experienced significant inflation.The weighted average exchange rate for the current year would be the appropriate exchange rate for translating Sales to Wages expense Customers

Correct Answer
verified
A

The profitability information that should be reported for each reportable segment of a business enterprise consists of

Correct Answer
verified

Consolidated financial statements are typically prepared when one company has a controlling interest in another unless:

Correct Answer
verified

Under the acquisition method of accounting for a business combination,restructuring costs are

Correct Answer
verified

Consolidated statements are proper for Neely,Inc. ,Randle,Inc. ,and Walker,Inc. ,if

Correct Answer
verified
A

The theoretically preferred method of presenting noncontrolling interest on a consolidated balance sheet is

Correct Answer
verified

On October 1,Company X acquired for cash all of the outstanding common stock of Company Y.Both companies have a December 31 year-end and have been in business for many years.Consolidated net income for the year ended December 31 should include net income of

Correct Answer
verified

The noncontrolling interest in a subsidiary is reported in the consolidated balance sheet

Correct Answer
verified

In financial reporting for segments of a business enterprise,the operating profit or loss of a segment should include Reasonably allocated Common Traceable Operating costs operating costs

Correct Answer
verified

What are the two principles that are used to guide the preparation of consolidated financial statements?

Correct Answer
verified
In the preparation of consolid...
View Answer

When a parent-subsidiary relation exists,consolidated financial statements are prepared in recognition of the accounting concept of:

Correct Answer
verified

U.S.GAAP requires a reporting entity to consolidate an entity in which it has a controlling financial interest.There are two primary models for assessing whether there is a controlling financial interest.Identify and discuss the accounting treatment required by each.

Correct Answer
verified
The two primary models for assessing whe...
View Answer

Correct Answer
verified

The composition of senior management of the combined entity.All else being equal,the acquiring entity's senior management would dominate that of the combined entity.

Correct Answer
verified
The terms of exchange of equity securities.All else being equal,the acquiring entity would be the one that pays a premium over the market value of the equity securities of the other combining entities.

Exam 16: Accounting for Multiple Entities

There are severe governmentally imposed uncertainties.

Correct AnswerverifiedIn some cases,control may exit...View AnswerShow Answer

The parent company concept of consolidated financial statements considers the noncontroling interest in net assets of a subsidiary to be:

Correct AnswerverifiedShow Answer

IFRS No.10 changes the method of reporting noncontrolling interests from what was previously required in IAS No.27.How are noncontrolling interest now defined and where are they to be disclosed?

Correct AnswerverifiedNoncontrolling interests are now defined...View AnswerShow Answer

Which of the following is the appropriate basis for valuing fixed assets acquired in a business combination carried out by exchanging cash for common stock?

Correct AnswerverifiedShow Answer

Under the acquisition method of accounting for a business combination,a bargain purchase is

Correct AnswerverifiedShow Answer

Under the acquisition method of accounting for a business combination when the parent company has acquired only 90% of the voting stock of a subsidiary,

Correct AnswerverifiedShow Answer

A foreign subsidiary's function currency is its local currency that has not experienced significant inflation.The weighted average exchange rate for the current year would be the appropriate exchange rate for translating Sales to Wages expense Customers

Correct AnswerverifiedA

The profitability information that should be reported for each reportable segment of a business enterprise consists of

Correct AnswerverifiedShow Answer

Consolidated financial statements are typically prepared when one company has a controlling interest in another unless:

Correct AnswerverifiedShow Answer

Under the acquisition method of accounting for a business combination,restructuring costs are

Correct AnswerverifiedShow Answer

Consolidated statements are proper for Neely,Inc. ,Randle,Inc. ,and Walker,Inc. ,if

Correct AnswerverifiedA

The theoretically preferred method of presenting noncontrolling interest on a consolidated balance sheet is

Correct AnswerverifiedShow Answer

On October 1,Company X acquired for cash all of the outstanding common stock of Company Y.Both companies have a December 31 year-end and have been in business for many years.Consolidated net income for the year ended December 31 should include net income of

Correct AnswerverifiedShow Answer

The noncontrolling interest in a subsidiary is reported in the consolidated balance sheet

Correct AnswerverifiedShow Answer

In financial reporting for segments of a business enterprise,the operating profit or loss of a segment should include Reasonably allocated Common Traceable Operating costs operating costs

Correct AnswerverifiedShow Answer

What are the two principles that are used to guide the preparation of consolidated financial statements?

Correct AnswerverifiedIn the preparation of consolid...View AnswerShow Answer

When a parent-subsidiary relation exists,consolidated financial statements are prepared in recognition of the accounting concept of:

Correct AnswerverifiedShow Answer

U.S.GAAP requires a reporting entity to consolidate an entity in which it has a controlling financial interest.There are two primary models for assessing whether there is a controlling financial interest.Identify and discuss the accounting treatment required by each.

Correct AnswerverifiedThe two primary models for assessing whe...View AnswerShow Answer

Correct AnswerverifiedShow Answer

The composition of senior management of the combined entity.All else being equal,the acquiring entity's senior management would dominate that of the combined entity.

Correct AnswerverifiedThe terms of exchange of equity securities.All else being equal,the acquiring entity would be the one that pays a premium over the market value of the equity securities of the other combining entities.

Correct Answer
verified
In some cases,control may exit...
View Answer

Correct Answer
verified

Correct Answer
verified
Noncontrolling interests are now defined...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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A

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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A

Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
In the preparation of consolid...
View Answer

Correct Answer
verified

Correct Answer
verified
The two primary models for assessing whe...
View Answer

Correct Answer
verified

Correct Answer
verified
The terms of exchange of equity securities.All else being equal,the acquiring entity would be the one that pays a premium over the market value of the equity securities of the other combining entities.