Advanced Accounting Chapter 4 Quiz
Please complete all answers! Correctly.
1. For business combinations involving less than 100% ownership be
acquirer recognizes and measures all of the following at the acquisition
date except:
a. Identifiable assets acquired at fair value
b. Liabilities assumed and book value
c. Goodwill or a gain from a bargain purchase
d. Non controlling interests at fair value
e. None of these choices are correct
2. When jolt co. acquired 75% of the common stock of Yeltz corp. Yeltz
owned land with a book value of $70,000 and a fair value of $100,000.
What is the amount of excess land allocation attributed to the
controlling interest at the acquisition date?
a. $0
b. $30,000
c. $22,500
d. $25,000
e. $17,500
3. Perch Co. acquired 80% of the common stock of float corp. for
$1,600,000. The fair value of floats net assets was $1,850,000 and the
book value was $1,500,000. The non controlling interest shares of float
corp are not actively traded. What is the total amount of goodwill
recognized at the date of acquisition?
a. $150,000
b. $250,000
c. $0
d. $120,000
e. $170,000
4. Perch Co. acquired 80% of the common stock of Float corp. for
$1,650,000 and the book value was $1,500,000. The non controlling
interest shares of float corp were no actively traded. What is the dollar
amount of fair value over book value differences attributed to Perch at
the date of acquisition?
a. $120,000
b. $150,000
c. $280,000
d. $350,000
e. $370,000
5. Perch co acquired 80% of the common stock of float corp for $. The fair
value of floats net assets was $1,850,000 and the book value was
$1,500,000. The non controlling interest shares of float corp are not
actively traded. What is the dollar amount of non controlling interests
that should appear in a consolidated balance sheet prepared at the
date of acquisition?
a. $350,000
b. $300,000
c. $400,000
d. $370,000
e. $0
6. Femur co. acquired 70% of the voting common stock of arbor corp on
1/1/2014. During 2014 Arbor had revenues of $2,500,000 and
expenses of $2,000,000. The amortization of excess costs allocations
totals of $60,000 in 2014. The non controlling interests share of the
earnings of arbor corp. is calculated to be:
a. $132,000
b. $150,000
c. $168,000
d. $160,000
e. $0
7. Denver co. acquired 80% of the common stock of Haley corp. on
September 1 2014. For 2014 Haley recorded revenues of $810,000 and
expenses of $630,000. All reflected evenly throughout the year. The
annual amount of amortization related to this acquisition was $15,000.
What is the effect of including Haley in consolidated net income for
2014?
a. $31,000
b. $33,000
c. $55,000
d. $60,000
e. $39,000
8. In measuring non controlling interest at the date of acquisition which of
the following would not be indicating of the value attributed to the non
controlling interests?
a. Fair value based on stock trades of the acquired company
b. Subsidiary cash flows discounted to present value
c. Book value of subsidiary net assets
d. Projections of residual income
e. Consideration transferred by the parent company that implies a
total subsidiary value
9. When a parent uses there initial value method throughout the year to
account for its investment in an acquired subsidiary which of the
following statements is true before making adjustments on the
consolidated worksheet?
a. Parent company net income equals consolidated net income
b. Parent company retained earnings equals consolidated retained
earnings
c. Parent company total assets equals consolidated total assets
d. Parent company dividends equal consolidated dividends
e. Goodwill needs to be recognized on the parents books
10.
When a parent uses the partial equity method throughout the
year to account for its investment in an acquired subsidiary which of
the following statements is false before making adjustments on the
consolidated worksheet.
a. Parent company net income will equal controlling interests in
consolidated net income when initial value, book value, and fair value
of the investment are equal
b. Parent company net income will exceed controlling interests in
consolidated net income when fair value of depreciable assets acquired
exceeds book value of depreciable assets
c. Parent company net income will be less than controlling interests in
consolidated net income when fair value of net assets acquired
exceeds book value of net assets acquired
d. Goodwill will recognize in acquisition value exceeds fair value of net
assets acquired
e. Subsidiary net assets are valued at there book values before
consolidating entrys are made
11.
When a subsidiary is acquired sometime after the first day of the
fiscal year which of the following statements is true?
a. Income from subsidiary is not recognized until there is an entire
year on consolidated operations
b. Income from subsidiary is recognized from date of acquisition
through year end
c. Excess costs over acquisition value is recognized at the beginning of
the fiscal year
d. No goodwill can be recognized the income from subsidiary is
recognized for the entire year
e. Income from subsidiary is recognized for the entire year
12.
Which of the following statements is true regarding the sale of
subsidiary shares when using the acquisition method for accounting for
business combination
a. If control continues the difference between selling price and
acquisition value is recorded as realized gain or loss
b. If control continues the difference between selling price and
acquisition value is an unrealized gain or loss
c. If control continues the difference between selling price and
carrying value is recorded as an adjustment to additional paid in
capital
d. If control continues the difference between selling price and
carrying value is recorded as a realized gain or loss
e. If control continues the difference between selling price and
carrying value is recorded as an adjustment to retained earnings.
13.
Jacks co. used the acquisition method for accounting for its
investment in Saxton co. Jacks sells some of its shares of Saxton such
that neither control nor significant influence exists. Which of the
following statements is true?
a. The difference between selling price and acquisition value is recorded
as a realized gain or loss
b. The difference between selling price and acquisition value is recorded
as an unrealized gain or loss
c. The difference between selling price and carrying value is recorded as
a realized gain or loss
d. The difference between selling price and carrying value is recorded as
an unrealized gain or loss
e. The difference between selling price and carrying value is recorded as
an adjustment to retained earnings
