The Test Bank for Advanced Accounting, 10th Edition by Fischer is a great learning resource for students studying mergers, acquisitions, consolidated financial statements as well as equity investments. This resource provides a large number of questions, case studies, and fully explained answers that are similar to the practice of real life in accounting.
Key Topics Covered
This test bank is useful for advanced understanding of critical accounting concepts such as:
Equity Method and Cost Method: Describe the effects of using each method of accounting for investments on net income and retained earnings. Determine when under which situations the equity method is used, particularly where there is influence over another firm to a considerable degree.
Consolidated Financial Statements: Heighten the understanding of intercompany dealings and the effect of non-controlling interest. There are separate and distinct sections dealing with the consolidation of the subsidiary’s inventories, equipment, land, and other property.
Goodwill and Asset Valuation: The test bank covers both the calculation of goodwill and the requisite adjustments to book or fair values of things like plant property and equipment for mergers and acquisitions.
Advanced Problems and Case Studies: Work on case-based problems regarding dividends, retained earnings amortization, and more advanced issues. Understanding advanced topics like business combinations is made easier by these exercises.
Reasons as to why THIS Test Bank is Useful
This test bank was designed for students who would want to have a clear insight into accounting with the help of the following practices:
Reinforce Key Accounting Competencies: The use of these questions accentuates confidence building concerning topics revolving around foreign currency transactions and hedging.
Be Exam Ready and much More: Since the questions beat those in real examinations, using this resource alongside others provides one with targeted business practice that would assist them in various disciplines both in academics and professionally.
Understand the Various Consolidation Techniques: Knowing how to apply the various techniques of a consolidated balance sheet, subsidiary income, and parent company demonstrates grappling skill in a key poem that a tangle in accounts compels the holder to possess.
What Makes This Test Bank Stand Out?
This test bank contains courses that are relevant to the current times and are equally complemented with skill-based questions. In addition to that practicing on these resources will in a great way prepare an individual on how to approach complex accounting queries in specialist institutions.
Conclusion
Don’t forget to look into the Advanced Accounting 10th edition test bank by Fischer. This test bank, in as much as it helps in preparing for exams through a problem-solving approach particularly prepares one for working in advanced account settings such as consolidating investment and asset valuation. It is an exam bank such should not be looked over as it will improve one’s accounting and problem-solving capabilities enhancing career development.
Test Bank For Advanced Accounting 10th Edition By Fischer
Chapter 3—Consolidated Statements: After Acquisition
MULTIPLE CHOICE
Scenario 3-1
Pedro purchased 100% of the common stock of the Sanburn Company on January 1, 20X1, for $500,000. On that date, the stockholders’ equity of Sanborn Company was $380,000. On the purchase date, the inventory of Sanburn Company, which was sold during 20X1, was understated by $20,000. Any remaining excess of cost over book value is attributable to a patent with a 20-year life. The reported income and dividends paid by Sanburn Company were as follows:
20X1
20X2
Net income
$80,000
$90,000
Dividends paid
10,000
10,000
1. Refer to Scenario 3-1. Using the simple equity method, which of the following amounts is correct?
Investment IncomeInvestment Account Balance
20X1December 31, 20X1
a.
$80,000$570,000
b.
$70,000$570,000
c.
$70,000$550,000
d.
$80,000$550,000
ANS: A DIF: M OBJ: 3-1
2. Refer to Scenario 3-1. Using the sophisticated (full) equity method, which of the following amounts are correct?
Investment IncomeInvestment Account Balance
20X1December 31, 20X1
a.
$55,000 $555,000
b.
$55,000 $545,000
c.
$75,000 $565,000
d.
$80,000 $570,000
ANS: B DIFF: M OBJ: 3-1
3. Refer to Scenario 3-1. Using the cost method, which of the following amounts is correct?
Investment IncomeInvestment Account Balance
20X1December 31, 20X1
a.
$10,000 $500,000
b.
$10,000 $570,000
c.
$0 $570,000
d.
$80,000 $500,000
ANS: A DIF: M OBJ: 3-1
4. What is the effect if an unconsolidated subsidiary is accounted for by the equity method but consolidated statements are being prepared for the parent company and other subsidiaries?
a.
All of the unconsolidated subsidiary’s accounts will be included individually in the consolidated statements.
b.
The consolidated retained earnings will not reflect the earnings of the unconsolidated subsidiary.
c.
The consolidated retained earnings will be the same as if the subsidiary had been included in the consolidation.
d.
Dividend revenue from the unconsolidated subsidiary will be reflected in consolidated net income.
ANS:CDIF:MOBJ:3-1 | 3-2 | 3-4
Scenario 3-2
On January 1, 20X1, Promo, Inc. purchased 70% of Set Corporation for $469,000. On that date, the book value of the net assets of Set totaled $500,000. Based on the appraisal done at the time of the purchase, all assets and liabilities had book values equal to their fair values except as follows:
Book Value
Fair Value
Inventory
$100,000
$120,000
Land
75,000
85,000
Equipment (useful life 4 years)
125,000
165,000
The remaining excess of cost over book value was allocated to a patent with a 10-year useful life.
During 20X1 Promo reported a net income of $200,000 and Set had a net income of $100,000.
5. Refer to Scenario 3-2. What is consolidated net income if Promo recognizes income from Set using the sophisticated equity method?
a.
$42,000
b.
$70,000
c.
$200,000
d.
$270,000
ANS:DDIF:MOBJ:3-1 | 3-4 | 3-6
6. Refer to Scenario 3-2. What income from the subsidiary did Promo include in its net income if Promo used the simple equity method?
a.
$33,000
b.
$42,000
c.
$70,000
d.
$100,000
ANS: C DIF: D OBJ: 3-1 | 3-6
7. Refer to Scenario 3-2. What income from the subsidiary did Promo include in its net income if Promo used the sophisticated equity method?
a.
$33,000
b.
$49,000
c.
$70,000
d.
$100,000
ANS: B DIF: D OBJ: 3-1 | 3-6
8. On January 1, 20X1, Rabb Corp. purchased 80% of Sunny Corp.’s $10 par common stock for $975,000. On this date, the carrying amount of Sunny’s net assets was $1,000,000. The fair values of Sunny’s identifiable assets and liabilities were the same as their carrying amounts except for plant assets (net), which were $100,000 over the carrying amount.
In the January 1, 20X1, consolidated balance sheet, goodwill should be reported at ____.
a.
$0
b.
$75,750
c.
$95,000
d.
$118,750
ANS:DDIF:EOBJ:3-2 | 3-3 | 3-4
9. Which of the following statements applying to the use of the equity method versus the cost method is true?
a.
The equity method is required when one firm owns 20% or more of the common stock of another firm.
b.
If no dividends were paid by the subsidiary, the investment account would have the same balance under both methods.
c.
The method used has no significance to consolidated statements.
d.
An advantage of the equity method is that no amortization of excess adjustments needs to be made on the consolidated worksheet.
ANS: C DIF: E OBJ: 3-2 | 3-3
10. In consolidated financial statements, it is expected that:
a.
Dividends declared equals the sum of the total parent company’s declared dividends and the total subsidiary’s declared dividends.
b.
Retained Earnings equals the sum of the controlling interest’s separate retained earnings and the noncontrolling interest’s separate retained earnings.
c.
Common Stock equals the sum of the parent company’s outstanding shares and the subsidiary’s outstanding shares.
d.
Net Income equals the sum of the income distributed to the controlling interest and the income distributed to the noncontrolling interest.
ANS:DDIF:EOBJ:3-2 | 3-3 | 3-4
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