Question 1

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

Accepted Answer

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. 
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.

Question 2

When consolidating a subsidiary under the equity method, which of the following statements is true with regard to the subsidiary subsequent to the year of acquisition?

Accepted Answer

A) All net assets are revalued to fair value and must be amortized over their useful lives. 
B) Only net assets that had excess fair value over book value when acquired by the parent must be amortized over their useful lives. 
C) All depreciable net assets are revalued to fair value at date of acquisition and must be amortized over their useful lives. 
D) Only depreciable net assets that have excess fair value over book value must be amortized over their useful lives. 
E) Only assets that have excess fair value over book value must be amortized over their useful lives. 
A) All net assets are revalued to fair value and must be amortized over their useful lives. 
B) Only net assets that had excess fair value over book value when acquired by the parent must be amortized over their useful lives. 
C) All depreciable net assets are revalued to fair value at date of acquisition and must be amortized over their useful lives. 
D) Only depreciable net assets that have excess fair value over book value must be amortized over their useful lives. 
E) Only assets that have excess fair value over book value must be amortized over their useful lives.

Question 3

One company acquires another company in a combination accounted for under the acquisition method. The acquiring company decides to apply the equity method in accounting for the combination. What is one reason the acquiring company might have made this decision?

Accepted Answer

A) It is the only method allowed by the SEC. 
B) It is relatively easy to apply. 
C) It is the only internal reporting method allowed by generally accepted accounting principles. 
D) Operating results on the parent's financial records reflect consolidated totals. 
E) When the equity method is used, no worksheet entries are required in the consolidation process. 
A) It is the only method allowed by the SEC. 
B) It is relatively easy to apply. 
C) It is the only internal reporting method allowed by generally accepted accounting principles. 
D) Operating results on the parent's financial records reflect consolidated totals. 
E) When the equity method is used, no worksheet entries are required in the consolidation process.

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

When consolidating a subsidiary under the equity method, which of the following statements is true with regard to the subsidiary subsequent to the year of acquisition?

One company acquires another company in a combination accounted for under the acquisition method. The acquiring company decides to apply the equity method in accounting for the combination. What is one reason the acquiring company might have made this decision?

The Equity Method of Accounting for Investments

Consolidation of Financial Information

Consolidated Financial Statements and Outside Ownership

Consolidated Financial Statements Intra-Entity Asset Transactions

Variable Interest Entities, Intra-Entity Debt, Consolidated Cash Flows, and Other Issues

Foreign Currency Transactions and Hedging Foreign Exchange Risk

Translation of Foreign Currency Financial Statements

Partnerships: Formation and Operation

Partnerships: Termination and Liquidation

Accounting for State and Local Governments Part 1

Accounting for State and Local Governments Part 2

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Exam 3: Consolidationssubsequent to the Date of Acquisition

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

When consolidating a subsidiary under the equity method, which of the following statements is true with regard to the subsidiary subsequent to the year of acquisition?

One company acquires another company in a combination accounted for under the acquisition method. The acquiring company decides to apply the equity method in accounting for the combination. What is one reason the acquiring company might have made this decision?

The Equity Method of Accounting for Investments

Consolidation of Financial Information

Consolidated Financial Statements and Outside Ownership

Consolidated Financial Statements Intra-Entity Asset Transactions

Variable Interest Entities, Intra-Entity Debt, Consolidated Cash Flows, and Other Issues

Foreign Currency Transactions and Hedging Foreign Exchange Risk

Translation of Foreign Currency Financial Statements

Partnerships: Formation and Operation

Partnerships: Termination and Liquidation

Accounting for State and Local Governments Part 1

Accounting for State and Local Governments Part 2

Filters