Acc 401 Week 03 Quiz

ACC 401 WEEK 03 QUIZ

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ACC 401 Week 3 Quiz,

ACC 401 Week 3 Quiz – Strayer

Chapter 3

Consolidated Financial Statements—Date of Acquisition

Multiple Choice

1. A majority-owned subsidiary that is in legal reorganization should normally be accounted for using

a. consolidated financial statements.

b. the equity method.

c. the market value method.

d. the cost method.

2. Under the acquisition method, indirect costs relating to acquisitions should be

a. included in the investment cost.

b. expensed as incurred.

c. deducted from other contributed capital.

d. none of these.

3. Eliminating entries are made to cancel the effects of intercompany transactions and are made on the

a. books of the parent company.

b. books of the subsidiary company.

c. workpaper only.

d. books of both the parent company and the subsidiary.

4. One reason a parent company may pay an amount less than the book value of the subsidiary’s stock acquired is

a. an undervaluation of the subsidiary’s assets.

b. the existence of unrecorded goodwill.

c. an overvaluation of the subsidiary’s liabilities.

d. none of these.

5. In a business combination accounted for as an acquisition, registration costs related to common stock issued by the parent company are

a. expensed as incurred.

b. deducted from other contributed capital.

c. included in the investment cost.

d. deducted from the investment cost.

6. On the consolidated balance sheet, consolidated stockholders’ equity is

a. equal to the sum of the parent and subsidiary stockholders’ equity.

b. greater than the parent’s stockholders’ equity.

c. less than the parent’s stockholders’ equity.

equal to the parent’s stockholders’ equity.

7. Majority-owned subsidiaries should be excluded from the consolidated statements when

a. control does not rest with the...