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Question;if the parent company uses the complete equity method when accounting for its wholly-owned subsidiary on its own booksthe parent's total assets will equal consolidated assets.the parent's net income will equal consolidated net incomethe parent's revenues will equal consolidated revenues.the parent's total long-term assets will equal consolidated long-term assets.2. Topic: Goodwill impairmentA division's goodwill is not impaired, per U. S. GAAP, if:the fair value of the division is less than the book value of the division.the fair value of the division is more than the book value of the division.the fair value of the identifiable net assets of the division is less than the fair value of the division.the fair value of the identifiable net assets of the division is more than the fair value of the division.3. Topic: Goodwill impairment, IFRSA division's goodwill is not impaired, per IFRS, if:the fair value of the division is less than the book value of the division.the fair value of the division is more than the book value of the division.the fair value of the identifiable net assets of the division is less than the fair value of the division.the fair value of the identifiable net assets of the division is more than the fair value of the division.4. Topic: Impairment of identifiable intangibles, goodwillWhich of the following intangible assets, recognized in an acquisition, are not amortized, but are regularly tested for impairment?only goodwillonly goodwill and identifiable intangibles with indefinite livesonly identifiable intangibles with indefinite livesonly identifiable intangibles with limited lives and with indefinite lives5. Topic: Goodwill impairmentAnnual goodwill impairment loss, if significant, must be reported on a company's income statementafter income from continuing operations.as part of other comprehensive income.as a separate line item in operating expenses.as a component of selling and administrative expenses.6. Topic: Revaluation write-offsAn acquiring company wants to maximize its consolidated current and future income. It acquires another company for a price well in excess of the company's book value. Which allocation of the excess of acquisition cost over book value will best meet the company's earnings goals?Allocate the excess to goodwill.Allocate the excess to trademarks with indefinite lives.Allocate the excess to land.Allocate the excess to in-process research and development.7. Topic: Goodwill impairmentGoodwill acquired in a merger must be allocated to business units before it can be tested for impairment. How are these "business units" defined?The choice of business units is at the discretion of management.The business units are defined geographically.The business units are defined by product line.The business units are the reportable units used for segment reporting.8. Topic: Goodwill impairmentWhich one of the following actions will maximize the amount of reported goodwill impairment?Allocate as much goodwill as possible to the most profitable business units.Allocate as much goodwill as possible to the least profitable business units.Allocate as much excess of acquisition cost over book value as possible to identifiable intangibles.Allocate as much excess of acquisition cost over book value as possible to tangible assets.9. Topic: Goodwill impairmentWhen SFAS 142 went into effect, requiring companies to report goodwill impairment losses for the first time, many companies reported large impairment losses. Reasons for this include all of the following except:Goodwill reported under previous practice overstated its actual market value.Impairment losses were required to be reported as ordinary operating expenses.Goodwill was allocated to poorly performing reporting units.Acquisition cost exceeded the actual value of the acquired company.10. Topic: Goodwill impairmentFor goodwill impairment testing per U. S. GAAP, the fair value of a reporting unit's goodwill is calculated as:the fair value of the unit less its book value.the fair value of the unit's identifiable net assets.the fair value of the unit less the fair value of its identifiable net assets.the fair value of the unit's total assets less the book value of its liabilities.11. Topic: Revaluations of identifiable net assets, subsequent yearsIn an acquisition, a subsidiary's land, inventory (FIFO), and fixed assets (12 year life) are revalued. It is now 15 years after the acquisition. In consolidation, elimination entry (R) affectsnone of the assets.only land.only land and fixed assets.land, fixed assets and inventory.12. Topic: Valuation of noncontrolling interestWhich is the best measure of fair value per share for the noncontrolling interest in a subsidiary at the date of acquisition, if the subsidiary's stock is actively traded?The parent's acquisition cost per share.The market value per share.The parent's acquisition cost per share less a discount per share for noncontrolling interest.The present value of the subsidiary's future cash flows, on a per share basis.13. Topic: Display of noncontrolling interest on consolidated income statementAs compared with past practice, SFAS 160 requirements for displaying noncontrolling interests in the consolidated income statement:Reduce consolidated net incomeReduce consolidated revenueIncrease consolidated net incomeIncrease consolidated revenue14. Topic: Display of noncontrolling interest on consolidated financial staementsNoncontrolling interest is reported on the consolidated financial statements as:An asset on the consolidated balance sheetA distribution of consolidated net income on the consolidated income statementAn expense on the consolidated income statementA liability on the consolidated balance sheet15. Topic: IFRS for noncontrolling interestU. S. GAAP and IFRS can differ on valuation of noncontrolling interests on the consolidated balance sheet. Assume a parent owns 90% of a subsidiary, acquired several years ago. Which statement is true?IFRS allows noncontrolling interests to be reported at the current market value of the shares held by the noncontrolling interests.IFRS requires noncontrolling interests to be reported at fair value at the date of acquisition, adjusted for the accumulated noncontrolling interests' share of the subsidiary's net income and dividends since acquisition.IFRS allows noncontrolling interests to be reported at 10% of the current fair value of the subsidiary's identifiable net assets.IFRS allows noncontrolling interests to be reported at 10% of the fair value of the subsidiary's identifiable net assets at the date of acquisition, adjusted for the accumulated noncontrolling interests' share of the subsidiary's net income and dividends since acquisition.16. Topic: IFRS for noncontrolling interestAssume a parent acquires 75% of the stock of a subsidiary, in an acquisition in which goodwill is reported. If goodwill is not impaired, on the consolidated income statement the noncontrolling interest in net income as measured by U. S. GAAP is:Always less than noncontrolling interest in net income as measured using IFRSAlways the same as noncontrolling interest in net income as measured using IFRSAlways greater than noncontrolling interest in net income as measured using IFRSGreater than the noncontrolling interest in net income as measured using IFRS, but only if the alternative valuation method allowed by IFRS is used17. Topic: Display of noncontrolling interest on consolidated financial statementsNoncontrolling interest is reported on the consolidated financial statements as:A revenue on the consolidated income statementAn equity on the consolidated balance sheetA reduction in retained earnings on the consolidated statement of retained earningsAn expense on the consolidated income statement18. Topic: Valuation of noncontrolling interestWhich statement is true concerning valuation of noncontrolling interests at the date of acquisition per U. S. GAAP?Per-share value of the noncontrolling interest is likely to be higher than the acquisition price per share.Market price per share is the best measure of noncontrolling interest value if the stock is not actively traded.The main difference in per-share value between the controlling and noncontrolling interest is a control premium for the acquirer's interest.The per-share fair value of the controlling and noncontrolling interest is likely to be the same, due to market pressures.19. Topic: Display of noncontrolling interest on consolidated income statementWhere is the noncontrolling interest in consolidated net income reported?As a contra equity account in the equity section of the consolidated balance sheet.As a component of accumulated other comprehensive income.On the consolidated income statement as a distribution of consolidated net income.On the consolidated income statement as an expense, deducted to get consolidated net income.20. Topic: Noncontrolling interest, bargain purchase, subsequent yearsAn acquired company's assets all have fair values greater than book values. When compared with an acquisition with goodwill, an acquisition reported as a bargain purchase generally results in:Lower revaluation of plant & equipmentLower revaluation of identifiable intangiblesLower consolidated dividendsLower noncontrolling interest in equity

 

Paper#51232 | Written in 18-Jul-2015

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