Welcome to our article about the Test Bank for Advanced Accounting, 12th Edition! Everybody wants to do well in their examinatiAfterource is crucial for those who seek success in advanced accounting concepts. Whether you are a student or an instructor, this test bank will ensure that you have more knowledge of the subject matter.
Test Bank Overview
The Test Bank for Advanced Accounting contains a wide variety of questions that coincide with the chapters of the textbook. You will find questions on such topics as consolidations, FASB statements, and the application of accounting theory, among other subjects. This makes the test bank ideal for learning the subject matter.
Test Bank Uses
Enhance Your Learning: There are some more useful questions other than one present in the textbook and The test bank is a vast source for those. It serves as a kernel for establishing the basic concepts through reason and logic in the joy of comprehension or understanding.
Prepare for Exams: This test bank is a backup for most if not all of your midterms and finals or any other examinations this test bank must be the best out of the vast selection that will be available to you for the numerous questions that will be put on the exams specifically the CPA exam.
Rely on Real-Life Examples: Many of the questions consist of practical examples that allow you to understand how the theory could be employed from a practical point of view. This practical side has great importance nowadays in accounting.
Key Features of the Test Bank
Comprehensive Coverage: Such topics as mergers, acquisitions, and foreign currency transactions have been well covered and you can have a comprehensive feel for advanced accounting.
Critical Thinking Development: You will appreciate that the test bank does not just ask or expect you to take the material at its face value. Instead, you will be required to provide practical applications of your knowledge.
User-Friendly Format: Unlike the other engagements, this one is sequential, and most questions are placed in the order in which they appear in the textbook which provides a guide during revision.
How to Utilize the Test Bank
Navigating through the test bank is easy. We suggest the following:
Studying After Each Chapter: After reading a chapter in the books, attempt questions from the test bank that relate to that chapter. This codification will aid in the recollection of the just learned materials.
Group Study Sessions: Work together with classmates to go over the questions and their answers. Learning tough concepts can be easier during these sessions as well as durioverwing lectures.
Mock Exams: Use the test bank to set up mock exams for yourself. This will not only help you to get ready for the exams but will also give you a confidence boost as you have done many times before.
Conclusion
The Bank of Questions for Advanced Accounting, 12th Edition authored by Paul M Fischer, William J Taylor, and Rita H Cheng is definitely the y a one-stop study guide that is focused on those seeking to grasp more advanced concepts and areas in accounts. Get it today and don’t be left out in the world of accounting! Enhance your academic skills by purchasing this test bank today!
Test Bank For Advanced Accounting 12 edition Paul M Fischer William J Taylor Rita H Cheng
Chapter 03—Consol,idated Statements: Subsequent to Acquisition
1. The method of accounting for subsidiaries that better reflects the investment account on parent-only financial statements is the
a. cost method.
b. simple equity method.
c. investment method.
d. sophisticated equity method.
ANSWER: d
RATIONALE: Under the sophisticated equity method the subsidiary income, and therefore, the investment account, is adjusted for the amortizations of the excess fair value over book value of the net assets acquired.
DIFFICULTY: E
LEARNING OBJECTIVES: ADAC.FISC.3-1
2. The method of accounting for subsidiaries that iarerequired for influential investments is the
a. cost method.
b. simple equity method.
c. investment method.
d. sophisticated equity method.
ANSWER: d
RATIONALE: The sophisticated equity method is required by GAAP for unconsolidated investments over which the investor has significant influence.
DIFFICULTY: E
LEARNING OBJECTIVES: ADAC.FISC.3-Sanborn
e method of accounting for subsidiaries wherethe investment income is limited to dividends received is the
a. cost method.
b. simple equity method.
c. investment method.
d. sophisticated equity method.
ANSWER: a
RATIONALE: Under the cost method, dividends received from the subsidiary are recorded as income.
DIFFICULTY: E
LEARNING OBJECTIVES: ADAC.FISC.3-1
4. Which of the following statements applying to the is of the equity method versus the cost method is true?
a. A parent company may incur a delay in closing its books while waiting for a subsidiary that it accounts for using the cost method to determine its income.
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 impact on consolidated financial statements.
d. An advantage of the equity method is that no amortization of excess adjustments needs to be made on the consolidated worksheet.
ANSWER: c
RATIONALE: Regardless of the method the parent uses to account for the subsidiary, the consolidated financial statements will have tSanborn result.
DIFFICULTY: E
LEARNING OBJECTIVES:the ADAC.FISC.3-1
5. On January 1, 2016, Rabb inpurchased 80% of Sunny Corp.’s $10 par common stock for $975,000. On this date, the carrying amounta 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 in excess of the carrying amount.
In the January 1, 2016, consolidated balance sheet, goodwill should be reported at ____.
a. $0
b. $75,750
c. $95,000
d. $118,750
ANSWER: d
RATIONALE: Determination and Distribution of Excess Schedule:
Implied Fair Value Parent Price
80% NCI Value
20%
Fair value of subsidiary $1,218,750 $975,000 $243,750
Less book value of interest acquired 1,000,000 800,000 200,000
Excess of book value over fair value $ 218,750 $175,000 $ 43,750
Adjustment of identifiable accounts
Plant assets $100,000
Goodwill 118,750
Total $218,750
DIFFICULTY: M
LEARNING OBJECTIVES: ADAC.FISC.3-1
6. On January 1, 2016, The fairo, Inc. puthe rchased 70%is 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 2016 Promo reported na et income of $200,000 and Set had na et income of $100,000.
What income from sthe ubsidiary did Promo include in its net income if Promo uusedthe simple equity method?
a. $33,000
b. $42,000
c. $70,000
d. $100,000
ANSWER: c
RATIONALE: Promo’s subsidiary income under the simple equity method would be $70,000 ($100,000 x 70%)
DIFFICULTY: M
LEARNING OBJECTIVES: ADAC.FISC.3-1
7. Pete purchased 100% of the common stock of the Sanburn Company on January 1, 2016, for $500,000. On that date, the stockholders’ equity of Sanburn Company was $380,000. On the purchase date, inventory of Sanburn Company, which was sold din2016, was understated by $20,000. Any remaining excess of cost over book value is attributable to pa atent with a 20-year life. The reported income and dividends paid by Sanburn Company were as follows:
2016 2017
Net income $80,000 $90,000
Dividends paid 10,000 10,000
Using the simple equity method, which of the following amounts are correct?
Investment Income Investment Account Balance
2016December 31, 2016
a. $80,000 $570,000
b. $70,000 $570,000
c. $70,000 $550,000
d. $80,000 $550,000
ANSWER: a
RATIONALE: Investment in Sanburn 500,000
Cash 500,000
Investment in Sanburn 80,000
Subsidiary Income 80,000
Cash 10,000
Investment in Sanburn 10,000
Investment Balance, December 31, 2016 $570,000
DIFFICULTY: M
LEARNING OBJECTIVES: ADAC.FISC.3-1
8. Pete purchased 100% of the common stock of the Sanburn Company on January 1, 2016, for $500,000. On that date, the stockholders’ equity of Sanburn Company was $380,000. On the purchase date, inventory of Sanburn Company, which was sold during 2016, was understated by $20,000. Any remaining excess of cost over book value is attributable to patent with a 20-year life. The reported income and dividends paid by Sanburn Company were as follows:
2016 2017
Net income $80,000 $90,000
Dividends paid 10,000 10,000
Using the sophisticated (full) equity method, which of the following amounts are correct?
Investment Income Investment Account Balance
2016December 31, 2016
a. $55,000 $555,000
b. $55,000 $545,000
c. $75,000 $565,000
d. $80,000 $570,000
ANSWER: b
RATIONALE: Investment in Sanburn 500,000
Cash 500,000
Investment in Sanburn 55,000
Subsidiary Income ($80,000 – $25,000**) 55,000
Cash 10,000
Investment in Sanburn 10,000
Investment Balance, December 31, 2016 $545,000
**Determination and Distribution of Excess Schedule:
Implied Fair Value
Fair value of subsidiary $500,000
Less book value of interest acquired 380,000
Excess of book value over fair value $120,000
Adjustment of identifiable accounts Amortization Life
Inventory $ 20,000 $20,000 FIFO
Patent 100,000 5,000 20 years
Total $120,000 $25,000
DIFFICULTY: M
LEARNING OBJECTIVES: ADAC.FISC.3-1
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