Acc407 Advanced Accounting: Week 2 Quiz (Version 2)

Acc407 Advanced Accounting

Week 2 Quiz (Version 2)
1. The consolidation process consists of all the following except: (Points : 1)
Adding together the financial statements of two or more legally separate companies.
Eliminating intercompany transactions and holdings.
Closing the subsidiary's earnings into the parent's retained earnings.
Combining the accounts of separate companies, creating a single set of financial statements.

2. FASB 141R (ASC 805) requires contingent consideration in a business combination to be classified as: (Points : 1)
An asset
A liability or equity
An asset or equity
An asset or a liability

3. Usually, an investment of 20 to 50 percent in another company's voting stock is reported under the: (Points : 1)
cost method.
equity method.
Full consolidation method.
fair value method.

4. For all acquired contingencies, the acquirer should do all of the following except: (Points : 1)
Provide documentation from the acquirer's attorney regarding pending lawsuits and loan
Provide a description of each contingency
Disclose the amount recognized at the acquisition date
Describe the estimated range of possible undiscounted outcomes of the contingency

5. The fair value of net identifiable assets of a reporting unit of Y Company is $270,000. The carrying value of the reporting unit's net assets on Y Company's books is $320,000, including $50,000 goodwill. If the reported goodwill impairment for the unit is $10,000, what would be the fair value of the reporting unit? (Points : 1)

6. Burrough Corporation paid $80,000 to acquire all of Helyar Company's net assets. Helyar reported assets with a book value of $60,000 and fair value of $98,000 and liabilities with a book value and fair value of $23,000 on the date of combination. Burrough also paid $3,000 to a search firm for finder's fees related to the acquisition. What amount will be recorded
as goodwill by Burrough Corporation while recording its investment in Helyar? (Points : 1)

7. FASB 141R (ASC 805) requires that ongoing research and development projects be treated in all of the following ways except: (Points : 1)
Recorded at acquisition-date fair values
Classified as intangible assets having indefinite lives
Expensed immediately
Tested for impairment periodically

8. From an investor's point of view, a liquidating dividend from an investee is: (Points : 1)
A dividend declared by the investee in excess of its earnings in the current year.
A dividend declared by the investee in excess of its earnings since acquisition by the investor.
Any dividend declared by the investee since acquisition.
A dividend declared by the investee in excess of the investee's retained earnings.

9. Point Co. purchased 90% of Sharpe Corp.'s voting stock on January 1, 20X2 for $5,580,000. Prior to the acquisition, Point held a 10% equity position in Sharpe Company. On January 1, 20X2 Point's 10% investment in Sharpe has a book value of $340,000 and a fair value of $620,000. On January 1, 20X2 Point records the following: (Points : 1)
Debit Gain on revaluation of Sharpe's stock $280,000
Credit Gain on revaluation of Sharpe's stock $280,000
Credit Investment in Sharpe stock $5,860,000
Debit Investment in Sharpe stock $6,200,000

10. If Push Company owned 51 percent of the outstanding common stock of Shove Company, which reporting method would be appropriate? (Points : 1)
Cost method
Equity method
Merger method
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