Test Bank For Advanced Accounting Joe Ben Hoyle 13e

Test Bank For Advanced Accounting Joe Ben Hoyle 13e

File: Chapter 03 – Consolidations – Subsequent to the Date of Acquisition

Multiple Choice:

[QUESTION]

1.  Which one of the following accounts would not appear in the consolidated financial statements at the end of the first fiscal period of the combination? 

A) Goodwill. 

B) Equipment. 

C) Investment in Subsidiary. 

D) Common Stock. 

E) Additional Paid-In Capital. 

Answer: C

Learning Objective: 03-01   

Topic: Consolidation―Overall effects

Difficulty: 2 Medium 

Blooms: Understand

AACSB: Reflective Thinking

AICPA BB: Critical Thinking

AICPA FN: Measurement

  

[QUESTION]

2.  Which of the following internal record-keeping methods can a parent choose to account for a subsidiary acquired in a business combination? 

A) Initial value or book value. 

B) Initial value, lower-of-cost-or-market-value, or equity. 

C) Initial value, equity, or partial equity. 

D) Initial value, equity, or book value. 

E) Initial value, lower-of-cost-or-market-value, or partial equity. 

Answer: C

Learning Objective: 03-02   

Topic: Investment methods―Identify and differentiate

Difficulty: 1 Easy 

Blooms: Remember

AACSB: Reflective Thinking

AICPA BB: Critical Thinking

AICPA FN: Measurement

  

[QUESTION]

3.  Which one of the following varies between the equity, initial value, and partial equity methods of accounting for an investment? 

A) The amount of consolidated net income. 

B) Total assets on the consolidated balance sheet. 

C) Total liabilities on the consolidated balance sheet. 

D) The balance in the investment account on the parent’s books. 

E) The amount of consolidated cost of goods sold. 

Answer: D

Learning Objective: 03-02   

Topic: Investment methods―Identify and differentiate

Difficulty: 2 Medium 

Blooms: Understand

AACSB: Reflective Thinking

AICPA BB: Critical Thinking

AICPA FN: Measurement  

[QUESTION]

4.  Under the partial equity method, the parent recognizes income when 

A) Dividends are received from the investee. 

B) Dividends are declared by the investee. 

C) The related expense has been incurred. 

D) The related contract is signed by the subsidiary. 

E) It is earned by the subsidiary. 

Answer: E 

Learning Objective: 03-02 

Learning Objective: 03-03c

Topic:  Investment methods―Identify and differentiate

Topic: Investment and income―Partial equity method

Difficulty: 1 Easy  

Blooms: Remember

AACSB: Reflective Thinking

AICPA BB: Critical Thinking

AICPA FN: Measurement

 

[QUESTION]

5.  An impairment model is used 

A)  To assess whether asset write-downs are appropriate for indefinite-lived assets. 

B)  To calculate the fair value of intangible assets. 

C)  To calculate the amortization of indefinite-lived assets over their useful lives. 

D)  To determine whether the fair value of assets should be recognized. 

E)  To determine the likelihood that the fair value of an assumed liability will increase. 

Answer: A

Learning Objective: 03-05

Learning Objective: 03-07  

Topic: Impairment―Goodwill―Rationale

Topic: Impairment―Intangibles other than goodwill 

Difficulty: 2 Medium

Blooms: Remember

AACSB: Reflective Thinking

AICPA BB: Critical Thinking

AICPA FN: Measurement