上海对外经贸大学 高级财务会计学笔记-高级财务会计学（英）chapter 3.docVIP

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AdvancedAccounting,12e(Beamsetal.)

Chapter3AnIntroductiontoConsolidatedFinancialStatements

3.1MultipleChoiceQuestions

1)WhatmethodmustbeusedifFASBStatementNo.94prohibitsfullconsolidationofa70%ownedsubsidiary?

A)Thecostmethod

B)TheLiquidationvalue

C)Marketvalue

D)Equitymethod

Answer:D

Objective:LO2

Difficulty:Easy

2)Fromthestandpointofaccountingtheory,whichofthefollowingstatementsisthebestjustificationforthepreparationofconsolidatedfinancialstatements?

A)Insubstancethecompaniesareseparate,butinformthecompaniesareoneentity.

B)Insubstancethecompaniesareoneentity,butinformtheyareseparate.

C)Insubstanceandformthecompaniesareoneentity.

D)Insubstanceandformthecompaniesareseparateentities.

Answer:B

Objective:LO2

Difficulty:Easy

3)PaniniCorporationowns85%oftheoutstandingvotingstockofStrathmoreCompanyandMaloneCorporationownstheremaining15%ofStrathmoresvotingstock.OntheconsolidatedfinancialstatementsofPaniniCorporationandStrathmore,Maloneis

A)anaffiliate.

B)anoncontrollinginterest.

C)anequityinvestee.

D)arelatedparty.

Answer:B

Objective:LO2

Difficulty:Easy

4)Asubsidiarycanbeexcludedfromconsolidationif

A)controldoesnotrestwiththemajorityowner.

B)thesubsidiaryisinlegalreorganization.

C)thesubsidiaryisoperatingundersevereforeign-exchangerestrictions.

D)Alloftheabovearecorrect.

Answer:D

Objective:LO2

Difficulty:Easy

5)PreglerInc.has70%ownershipofSachCompany,butshouldexcludeSachfromitsconsolidatedfinancialstatementsif

A)Sachisinaregulatedindustry.

B)PreglerusestheequitymethodforSach.

C)Sachisinlegalreorganization.

D)Sachisinaforeigncountryandrecordsitsbooksinaforeigncurrency.

Answer:C

Objective:LO2

Difficulty:Moderate

6)Subsequenttoanacquisition,thepa