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12. Multinational Accounting: Issues in Financial Reporting and Translation of Foreign Entity Statements
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13. Segment and Interim Reporting
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14. SEC Reporting gf gf
15. Partnerships: Formation, Operation, and Changes in Membership
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16. Partnerships: Liquidation
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17. Governmental Entities: Introduction and General Fund Accounting
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18. Governmental Entities: Special Funds and Governmentwide Financial Statements
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19. Not-for-Profit Entities
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20. Corporations in Financial Difficulty
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Chapter 1 gf Intercorporate Acquisitions and Investments in Other Entities g f g f g f g f g f g f
1) Assuming no impairment in value prior to transfer, assets transferred by a parent company toa g f g f g f gf g f g f gf gf gf g f gf g f g f gf f
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nother entity it has created should be recorded by the newly created entity at the assets':
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A) cost to the parent company. gf gf gf g f
B) book value on the parent company's books at the date of transfer.
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C) fair value at the date of transfer. g f gf gf g f gf gf
D) fair value of consideration exchanged by the newly created entity.
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Answer: B Diffic g f gf
ulty: 1 Easy gf gf
Topic: Internal Expansion: Creating a Business Entity; Valuation of Business Entities Learning
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Objective: 01-
01 Understand and explain the reasons for and different methods of business expansion, the types
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of organizational structures, and the types of acquisitions.; 01-
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03 Make calculations and prepare journal entries for the creation of a business entity.
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Bloom's:
Remember AACSB: gf
gReflective Thinking AICPA:
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FN Decision Making gf gf
2) Given the increased development of complex business structures, which of the followingregul
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ators is responsible for the continued usefulness of accounting reports?
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A) Securities and Exchange Commission (SEC) g f g f g f g f
B) Public Company Accounting Oversight Board (PCAOB) g f g f g f g f g f
C) Financial Accounting Standards Board (FASB) g f g f g f g f
,D) All of the other answers are correct
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Answer: D Diffic g f gf
ulty: 1 Easy gf gf
Topic: An Introduction to Complex Business Structures gf g f g f g f g f
Learning Objective: 01- gf
01 Understand and explain the reasons for and different methods ofbusiness expansion, the types
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of organizational structures, and the types of acquisitions.
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Bloom's:
Remember AACSB: gf
gReflective Thinking AICPA:
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FN Reporting gf
3) A business combination in which the acquired company's assets and liabilities are combinedwith t
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hose of the acquiring company into a single entity is defined as:
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A) Stock acquisition gf
B) Leveraged buyout gf
C) Statutory Merger gf
D) Reverse statutory rollup g f gf
, Answer: C Diffic g f gf
ulty: 1 Easy gf gf
Topic: Organizational Structure and Financial Reporting g f g f g f g f
Learning Objective: 01- gf
04 Understand and explain the differences between different forms ofbusiness combinations.
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Bloom's:
Remember AACSB: gf
gReflective Thinking AICPA:
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FN Decision Making gf gf
4) In which of the following situations do accounting standards not require that the financials
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tatements ofthe parent and subsidiary be consolidated? gf gf gf gf gf gf gf
A) A corporation creates a new 100 percent owned subsidiary
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B) A corporation purchases 90 percent of the voting stock of another company
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C) A corporation has both control and majority ownership of an unincorporated company
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D) A corporation owns less-than a controlling interest in an unincorporated company
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Answer: D Diffic g f gf
ulty: 1 Easy gf gf
Topic: Organizational Structure and Financial Reporting g f g f g f g f
Learning Objective: 01- gf
01 Understand and explain the reasons for and different methods ofbusiness expansion, the types o
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f organizational structures, and the types of acquisitions.
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Bloom's:
Remember AACSB: gf
g Reflective Thinking AICPA:
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FN Decision Making gf gf
During its inception, Devon Company purchased land for $100,000 and a building for $180,000. Afte
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r exactly 3 years, it transferred these assets and cash of $50,000 to a newly created subsidiary,Regan Co
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mpany, in exchange for 15,000 shares of Regan's $10 par value stock. Devon uses straight-
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line depreciation. Useful life for the building is 30 years, with zero residual value. An appraisal reve
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aled that the building has a fair value of $200,000.
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5) Based on the information provided, at the time of the transfer, Regan Company should record:
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A) Building at $180,000 and no accumulated depreciation. g f g f g f g f g f g f
B) Building at $162,000 and no accumulated depreciation. gf g f g f g f g f g f
C) Building at $200,000 and accumulated depreciation of $24,000. g f g f g f g f g f g f gf
D) Building at $180,000 and accumulated depreciation of $18,000. g f g f g f g f g f g f g f
Answer: D Difficulty g fgf gf
: 2 Medium
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Topic:
Valuation of Business Entities; Accounting for Internal Expansion: Creating Business g f g f g f g f g f g f g f g f g f g
Entities
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Learning Objective: 01- gf
04 Understand and explain the differences between different forms of business combinations.; 01-
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03 Make calculations and prepare journal entries for the creation of a business entity.
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Bloom's:
Understand AACSB gf
: Analytical Thinking AICPA:
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