Chapter 4 Exam 2 assesses knowledge on business combinations, focusing on aspects like noncontrolling interests, fair value measurements, and goodwill recognition. It is designed for learners seeking to understand complex financial consolidation scenarios.
A) $ 52,500.
B) $ 70,000.
C) $ 75,000.
D) $ 92,500.
E) $100,000.
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A) Valuation models based on subsidiary discounted cash flows.
B) Valuation models based on subsidiary residual income projections.
C) Comparison with comparable investments.
D) The application of a safe harbor discount rate.
E) Fair value based on market trades.
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A) $150,000.
B) $250,000.
C) $ 0.
D) $120,000.
E) $170,000.
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A) $132,000.
B) $150,000.
C) $168,000.
D) $160,000.
E) $0.
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A) $153,750.
B) $161,250.
C) $205,000.
D) $210,000.
E) $215,000.
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A) $250,000.
B) $150,000.
C) $600,000.
D) $360,000.
E) $460,000.
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A) $375,000
B) $125,000
C) $300,000
D) $500,000
E) $0.
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A) $686,000.
B) $560,000.
C) $644,000.
D) $635,600.
E) $691,600.
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A) $127,000.
B) $129,800.
C) $143,800.
D) $148,000.
E) $135,400.
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A) Parent company net income equals controlling interest in consolidated net income.
B) Parent company retained earnings equals consolidated retained earnings.
C) Parent company total assets equals consolidated total assets.
D) Parent company dividends equals consolidated dividends.
E) Goodwill is not recorded on the parent’s books.
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A) Parent company net income equals consolidated net income.
B) Parent company retained earnings equals consolidated retained earnings.
C) Parent company total assets equals consolidated total assets.
D) Parent company dividends equal consolidated dividends.
E) Goodwill is recorded on the parent’s books.
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A) The acquisition method views a step acquisition essentially the same as a single step acquisition.
B) Income from subsidiary is computed by applying a partial year for a new purchase acquired during the year.
C) Income from subsidiary is computed for the entire year for a new purchase acquired during the year.
D) Obtaining control through a step acquisition is a significant measurement event.
E) Pre-acquisition earnings are not included in the consolidated income statement.
A) The parent recognizes a larger percent of subsidiary income.
B) A step acquisition resulting in control may result in a parent recognizing a gain on revaluation.
C) The book value of the subsidiary will increase.
D) The parent's percent ownership in subsidiary will increase.
E) Noncontrolling interest in subsidiary's net income will decrease.
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Income from subsidiary is not recognized until there is an entire year of consolidated operations.
B) Income from subsidiary is recognized from date of acquisition to year-end.
C) Excess cost over acquisition value is recognized at the beginning of the fiscal year.
D) No goodwill can be recognized.
E) Income from subsidiary is recognized for the entire year.
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A) Pre-acquisition earnings are deducted from consolidated revenues and expenses.
B) Pre-acquisition earnings are added to consolidated revenues and expenses.
C) Pre-acquisition earnings are deducted from the beginning consolidated stockholders' equity.
D) Pre-acquisition earnings are added to the beginning consolidated stockholders' equity.
E) Pre-acquisition earnings are ignored in the consolidated income statement.
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A) The use of specific identification based on serial number is acceptable.
B) The use of the FIFO assumption is acceptable.
C) The use of the averaging assumption is acceptable.
D) The use of specific LIFO assumption is acceptable.
E) The parent company must determine whether consolidation is still appropriate for the remaining shares owned.
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A) $380,000.
B) $375,200.
C) $375,800.
D) $376,000.
E) $400,000.
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A) $23,400.
B) $24,000.
C) $24,900.
D) $26,000.
E) $20,000.
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A) $580,000.
B) $574,400.
C) $548,000.
D) $542,400.
E) $541,000.
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A) $500,000.
B) $574,400.
C) $625,000.
D) $542,400.
E) $532,000.
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A) $625,000.
B) $574,400.
C) $548,000.
D) $542,400.
E) $532,000.
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A) $150,000
B) $200,000.
C) $ 50,000.
D) $ 0.
E) $135,000.
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A) U.S. GAAP requires acquisition-date fair value measurement and IFRS requires the acquiree’s identifiable net asset fair value measurement.
B) U.S. GAAP and IFRS both require acquisition-date fair value measurement.
C) U.S. GAAP and IFRS both require the acquiree’s identifiable net asset fair value measurement
D) U.S. GAAP requires acquisition-date fair value measurement, but IFRS allows an option for acquisition-date fair value measurement
E) U.S. GAAP and IFRS both apportion goodwill to the parent only.
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A) $170,000
B) $169,000
C) $186,500
D) $192,000
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A) deducted from beginning consolidated retained earnings.
B) deducted from ending consolidated retained earnings.
C) allocated between the noncontrolling interest share and the parent's share.
D) only an entry in the parent company's general ledger.
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A) Cash paid to employees
B) Noncontrolling interest dividends paid
C) Noncontrolling interest share
D) Proceeds from the sale of land
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A) Post-closing trial balances
B) Adjusted trial balances
C) Unadjusted trial balances
D) The adjusted trial balance for the parent and the unadjusted trial balance for all controlled Subsidiaries
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$ 0
$30,000
$45,000
$105,000.
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$50,000
$100,000
$137,500
$150,000
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Change in accounting estimate.
Correction of an error.
Change of accounting principle.
Change in reporting entity.
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