Question 1

The parent company concept of consolidated financial statements considers the noncontroling interest in net assets of a subsidiary to be:

Accepted Answer

A)  A liability 
B)  A part of consolidated stockholders' equity 
C)  An item between liabilities and stockholders' equity 
D)  Some other classification

Question 2

A sale of goods, denominated in a currency other than the entity's functional currency, resulted in a receivable that was fixed in terms of the amount of foreign currency that would be received. Exchange rates between the functional currency and the currency in which the transaction was denominated changed. The resulting gain should be included as a (an)

Accepted Answer

A)  Other comprehensive income 
B)  Deferred credit 
C)  Component of income from continuing operations 
D)  Discontinued operations

Question 3

Goodwill represents the excess of the cost of an acquired company over the

Accepted Answer

A)  Sum of the fair values assigned to identifiable assets acquired less liabilities assumed 
B)  Sum of the fair values assigned to tangible assets acquired less liabilities assumed 
C)  Sum of the fair values assigned to intangible assets acquired less liabilities assumed 
D)  Book value of an acquired company

Question 4

In financial reporting for segments of a business enterprise, the operating profit or loss of a segment should include 
Allocated
Corporate			                 
 Overhead	                                  Operating expenses

Accepted Answer

A) No    No 
B) No     Yes 
C) Yes     No 
D) Yes     Yes

Question 5

Meredith Company and Kyle Company were combined in an acquisition transaction. Meredith was able to acquire Kyle at a bargain price. The sum of the market or appraised values of identifiable assets acquired less the fair value of liabilities assumed exceeded the cost to Meredith. After revaluing noncurrent assets to zero there was still some of the bargain purchase amount remaining (formerly termed negative goodwill). Proper accounting treatment by Meredith is to report the amount as

Accepted Answer

A)  A discontinued operations item 
B)  Part of current income in the year of combination 
C)  A deferred credit and amortize it 
D)  Paid-in capital

Question 6

IFRS No. 10 changes the method of reporting noncontrolling interests from what was previously required in IAS No.27. How are noncontrolling interest now defined and where are they to be disclosed?

Accepted Answer

The answer of IFRS No. 10 changes the method of...

Question 7

Discuss the difference between translation and remeasurement.

Accepted Answer

The answer of Discuss the difference between translation and remeasurement....

Question 8

Discuss the purpose of SFAS No. 167.

Accepted Answer

The answer of Discuss the purpose of SFAS No. 167....

Question 9

Discuss how foreign currency translation occurs under each of the following methods: 
a. Current - noncurrent
b. Monetary - nonmonetary
c. Current
d. Temporal

Accepted Answer

The answer of Discuss how foreign currency translation occurs under...

Question 10

Discuss the issues that are to be addressed in an acquisition method business combination effected by an exchange of equity shares.

Accepted Answer

The answer of Discuss the issues that are to be...

Question 11

Discuss the following two theories of consolidation:
a. Entity
b. Patent company

Accepted Answer

The answer of Discuss the following two theories of consolidation:
a....

Question 12

Under the acquisition method of accounting for a business combination when the parent company has acquired only 90% of the voting stock of a subsidiary,

Accepted Answer

A)  10% of the goodwill will be reported in a separate section of the balance sheet because it belongs to the noncontrolling interest. 
B)  The consolidated balance sheet will report 100% of the value of goodwill. 
C)  The consolidated balance sheet will report 90% of the value of goodwill. 
D)  Goodwill will be amortized over its useful life or 40 years whichever comes first.

Question 13

A foreign subsidiary's function currency is its local currency that has not experienced significant inflation. The average exchange rate for the current year would be the appropriate exchange rate for translating 
Wages expense                  	Sales to Customers

Accepted Answer

A) No      No 
B) No      Yes 
C) Yes      No 
D) Yes      Yes

Question 14

The theoretically preferred method of presenting noncontrolling interest on a consolidated balance sheet is

Accepted Answer

A)  As a separate item with the deferred credits section 
B)  As a reduction from (contra to) goodwill from consolidation, if any 
C)  By means of notes or footnotes to the balance sheet 
D)  As a separate item within the stockholders' equity section

Question 15

How are operating segments defined by SFAS No. 131 (FASB ASC 280-10-50-1)?

Accepted Answer

The answer of How are operating segments defined by SFAS...

Question 16

The acquisition method of accounting for a business combination is consistent with

Accepted Answer

A)  Entity theory. 
B)  Proprietary theory. 
C)  Parent company theory. 
D)  Residual interest theory.

Question 17

According to SFAS No. 131(FASB ASC 280-10-50-20 to 25), what information should be disclosed for each operating segment?

Accepted Answer

The answer of According to SFAS No. 131(FASB ASC 280-10-50-20...

Question 18

Under the acquisition method of accounting for a business combination, goodwill is equal to

Accepted Answer

A)  The acquired company's ability to generate excess profits. 
B)  The excess of the cost of the acquisition plus the fair value of the noncontrolling interest over the fair value of the acquiree's net assets. 
C)  The excess of the cost of the acquisition over the fair value of the acquiree's net assets. 
D)  The excess of the fair value of acquiree's net assets over the cost of acquisition.

Question 19

In a business combination that is accounted for under the acquisition method, the entity that obtains control over one or more businesses and establishes the acquisition date that control was achieved is called the

Accepted Answer

A)  Controller. 
B)  Acquirer. 
C)  Proprietor. 
D)  Controlling interest.

Question 20

Which of the following is not a consideration in segment reporting for diversified enterprises?

Accepted Answer

A)  Allocation of joint costs 
B)  Transfer pricing 
C)  Defining the segments 
D)  Consolidation policy

Exam 16: Accounting for Multiple Entities