Exam 14: Audit of Longer-Term Liabilities, equity, acquisitions, and Related-Entity Transactions, long-Term Liabilities, and Equity

Bond issuers typically engage the services of a bond trustee for what purpose?

Common Stock and Owners' Equity State the transactions that affect stockholders' equity that should be addressed during an audit.

All of the following represent equity issuance requiring prominent accounting,presentation and disclosure treatment,except

Rapture,Inc.compares the fair value of the reporting unit related to goodwill to the reporting unit's carrying value,including goodwill.The fair value is less than the carrying value.This implies which of the following?

In acquisitions that are material to the purchasing entity,the auditor can just accept the specialist's appraisal and management's assessment of the fair value of the assets.

Which of the following best represents the period in which testing will be performed for goodwill impairment by an audit client?

The purchase of another company or division must be recorded on which basis?

Which of the following factors would most likely trigger the need for impairment testing on the recorded goodwill of a nutritional products company?

Simco's shaving products division was acquired over ten years ago in a purchase transaction by BlizzardCraft.The related goodwill was amortized until 2002 and $4.5 million remained on the books thereafter.In 2008,Simco's production machinery was assessed for impairment as a long-lived asset because of obsolescence issues.What relationship will the auditors most likely make between the facts stated above?

The reputation and independence of the valuation expert directly affect the competency of the evidence utilized for audit purposes.

The purchase of a company by the acquirer through stock presents valuation issues related to the market price of the stock on the date of closing.

Significant,unanticipated and effective competition that enhances the value of the products and services of a company are events that require the recording of an increase to the goodwill of the related operating unit.

Which of the following defines goodwill resulting from an acquisition?

Common stock During the period ended December 31,2011,Eggball Company issued one million shares of its common stock in an offering for $9 million.What are the major tests of details that will be performed related to the paid-in capital accounts of Eggball in the year-end audit?

Performance terms in the acquisition agreement will usually not result in additional payments as the risks have already passed to the buyer.

Mergers and Acquisitions Identify the major valuation issues associated with mergers and acquisitions..

Related entity transactions are fraudulent in nature.

Which of the following best represents a complex valuation issue in the acquisition of a new entity?

Goodwill impairment What is the two-step process necessary to evaluate the impairment of goodwill?

Audit tests for goodwill and other asset impairments will require considerable judgment on the part of the auditor.