Quiz Chapter 3 Advance Acc

A subsidiary can be excluded from consolidation if ....

• Control rests with the majority owner

• Formation of joint ventures

• The acquisition of an asset or group of assets constitutes a business

• Acquisition of a not-for-profit entity by a for-profit business

Subsequent to an acquisition, the parent company and consolidated financial statement amounts would not be the same for ....

• Investments in unconsolidated subsidiaries

• Investments in consolidated subsidiaries

• Capital stock

• Ending retained earnings

A newly acquired subsidiary had pre-existing goodwill on its books. The parent company's consolidated balance sheet will ....

• Not show any value for the subsidiary's pre-existing goodwill

• Treat the goodwill similarly to other intangible assets of the acquired company

• Not show any value for the pre-existing goodwill unless all other assets of the subsidiary are stated at their full fair value

• Always show the pre-existing goodwill of the subsidiary at its book value

The unamortized excess account is ....

• A contra-equity account

• Used in allocating the amounts paid for recorded balance sheet accounts that are above or below their fair values

• Used in allocating the amounts paid for each asset and liability that are above or below their book values, especially when numerous assets or liabilities are involved

• The excess purchase cost that is attributable to goodwill

In the preparation of consolidated financial statements, which of the following intercompany transactions must be eliminated as part of the preparation of the consolidation working papers?

• All revenues, expenses, gains, losses, receivables, and payables

• All revenues, expenses, gains, and losses but not receivables and payables

• Receivables and payables but not revenues, expenses, gains, and losses

• Only sales revenue and cost of goods sold