Exercise 1 Submitted Sep 18 at 9: 45am Question 1

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Exercise 1
9781285867045 TB Chapter 1 Data and Statistics, ch3

Question 18

Exercise 1

Submitted Sep 18 at 9:45am

Question 1

If AA Company acquires 80 percent of the stock of BB Company on January 1, 20x2, immediately after the acquisition consolidated retained earnings will be equal to the combined retained earnings of the two companies.

True

False

Question 2

On the consolidated balance sheet, consolidated stockholders' equity is equal to the sum of the parent and subsidiary stockholders' equity.

True

False

Question 3

The goal of the consolidation process is for asset acquisitions and 100% stock acquisitions to result in the same balance sheet.

True

False

Question 4

When companies employ push-down accounting all consolidation elimination entries are made on the books of the subsidiary rather than in consolidated workpapers.

True

False

Question 5

How is the portion of consolidated earnings to be assigned to non-controlling interest in consolidated financial statements determined the amount of the subsidiary's earnings is mutiplied by the non- controlling's percentage ownership and is adjusted for the excess cost amortization applicable to the NCI.

True

False

Question 6

In a business combination accounted for as an acquisition, registration costs related to common stock issued by the parent company are deducted from other contributed capital.

True

False

Question 7

When the implied value exceeds the aggregate fair values of identifiable net assets, the residual difference is accounted for as goodwill.

True

False

Question 8

Majority-owned subsidiaries should be excluded from the consolidated statements when control does not rest with the majority owner.

True

False

Question 9

JJ Company acquired 85% of MR Company on April 1. On its December 31,consolidated income statement, how should JJ account for MR's revenues and expenses that occurred before April 1 include 100 percent of MR's revenue and expenses and deduct the pre-acquisition portion as non-controlling interest in net income.

True

False

Question 10

Under the economic entity concept, consolidated financial statements are intended primarily for the benefit of the minority stockholders.

True

False

Question 11

The primary beneficiary of a variable interest entity (VIE) must consolidate the VIE into its financial statements whenever the voting rights are not proportional to the obligations to absorb the expected losses or receive expected residual returns.

True

False

Question 12

Goodwill represents the excess of the implied value of an acquired company over the aggregate fair values of tangible asset less liabilities assumed.

True

False

Question 13

Goodwill is reported when the fair value of the acquire is greater than the fair value of the net identifiable assets acquired.

True

False

Question 14

When a company purchases another company that has existing goodwill and the transaction is accounted for as a stock acquisition, the goodwill should be treated in the following manner goodwill on the books of an acquired company should be disregarded.

True

False

Question 15

True

False

Question 16

Presenting consolidated financial statements this year when statements of individual companies were presented last year is the correction of an error.

True

False

Question 17

Dividends declared by a subsidiary are eliminated against dividend income recorded by the parent under the equity method.

True

False

Question 18

Goodwill is seldom reported because it is too difficult to measure.

True

False

Question 19

The SEC requires the use of push down accounting when the ownership change is greater than 90%.

True

False

Question 20

A new acquired subsidiary has pre-existing goodwill on its books. The parent company's consolidated balance sheet will do an impairment test to see if any of it has been impaired.

True

False

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