Baker--Advanced Financial Accounting 9e.docVIP

Chapter 01 Intercorporate Acquisitions and Investments in Other Entities ? Multiple Choice Questions? 1.?Assuming no impairment in value prior to transfer, assets transferred by a parent company to another entity it has created should be recorded by the newly created entity at the assets:?A.?cost to the parent company.B.?book value on the parent companys books at the date of transfer.C.?fair value at the date of transfer.D.?fair value of consideration exchanged by the newly created entity. ? 2.?Given the increased development of complex business structures, which of the following regulators is responsible for the continued usefulness of accounting reports??A.?Securities and Exchange Commission (SEC)B.?Public Company Accounting Oversight Board (PCAOB)C.?Financial Accounting Standards Board (FASB)D.?All of the above ? 3.?A business combination in which the acquired companys assets and liabilities are combined with those of the acquiring company into a single entity is defined as:?A.?Stock acquisitionB.?Leveraged buyoutC.?Statutory MergerD.?Reverse statutory rollup ? 4.?In which of the following situations do accounting standards not require that the financial statements of the parent and subsidiary be consolidated??A.?A corporation creates a new 100 percent owned subsidiaryB.?A corporation purchases 90 percent of the voting stock of another companyC.?A corporation has both control and majority ownership of an unincorporated companyD.?A corporation owns less-than a controlling interest in an unincorporated company ? ?In order to reduce the risk associated with a new line of business, Conservative Corporation established Spin Company as a wholly owned subsidiary. It transferred assets and accounts payable to Spin in exchange for its common stock. Spin recorded the following entry when the transaction occurred:?? ? 5.?Based on the preceding information, what number of shares of $7 par value stock did Spin issue to Conservative??A.?10,000B.?7,000C.