Accounting for Mergers and Acquisitions
Exam Materials
Course Introduction
Accounting for Mergers and Acquisitions explores the specialized accounting concepts and standards involved in business combinations. The course covers the entire merger and acquisition process, from initial valuation and due diligence to post-transaction integration, focusing on the application of relevant International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP). Students learn to prepare and analyze consolidated financial statements, account for goodwill and intangible assets, recognize non-controlling interests, and manage tax and regulatory implications. Real-world case studies and practical exercises highlight the challenges and best practices in accurately reporting and evaluating the financial impacts of mergers and acquisitions.
Recommended Textbook
Advanced Accounting 12th Edition by Paul M. Fischer
Available Study Resources on Quizplus 24 Chapters
1159 Verified Questions
1159 Flashcards
Source URL: https://quizplus.com/study-set/3584 Page 2
Chapter 1: Business Combinations: New Rules for a
Long-Standing Business Practice
Available Study Resources on Quizplus for this Chatper
48 Verified Questions
48 Flashcards
Source URL: https://quizplus.com/quiz/71172
Sample Questions
Q1) Orbit Inc.purchased Planet Co.on January 1, 2015.At that time an existing patent having a 5-year estimated life was assigned a provisional value of $10,000 and goodwill was assigned a value of $100,000.By the end of fiscal year 2015, better information was available that indicated the fair value of the patent was $20,000.How should intangible assets be reported at the beginning of fiscal year 2016??
A)?Goodwill $100,000 \(\quad \)Patent $10,000
B)?Goodwill $90,000 \(\quad \)\(\quad \)Patent $16,000
C)?Goodwill $84,000 \(\quad \)\(\quad \)Patent $16,000
D)?Goodwill $90,000 \(\quad \)\(\quad \)Patent $20,000
Answer: B
Q2) A large nation-wide bank's acquisition of a major investment advisory firm would be an example of a:
A)market extension merger.
B)conglomerate merger.
C)product extension merger.
D)horizontal merger.
Answer: C
To view all questions and flashcards with answers, click on the resource link above.
Page 3
Chapter 2: Consolidated Statements: Date of Acquisition
Available Study Resources on Quizplus for this Chatper
44 Verified Questions
44 Flashcards
Source URL: https://quizplus.com/quiz/71171
Sample Questions
Q1) A subsidiary was acquired for cash in a business combination on December 31, 2016.The purchase price exceeded the fair value of identifiable net assets.The acquired company owned equipment with a fair value in excess of the book value as of the date of the combination.A consolidated balance sheet prepared on December 31, 2016, would A)report the excess of the fair value over the book value of the equipment as part of goodwill.
B)report the excess of the fair value over the book value of the equipment as part of the plant and equipment account.
C)reduce retained earnings for the excess of the fair value of the equipment over its book value.
D)make no adjustment for the excess of the fair value of the equipment over book value.Instead, it is an adjustment to expense over the life of the equipment.
Answer: B
To view all questions and flashcards with answers, click on the resource link above.
4
Chapter 3: Consolidated Statements: Subsequent to Acquisition
Available Study Resources on Quizplus for this Chatper
37 Verified Questions
37 Flashcards
Source URL: https://quizplus.com/quiz/71170
Sample Questions
Q1) Company A purchased a 90% interest in Company B in 2016 with total subsidiary goodwill of $135,000.Assume the investment amount exceeded the fair value of the subsidiary with the subsidiary book value based on acquisition date, amortized balances on December 31, 2019 of $1,000,000.The estimated fair value of Company B of $1,035,000 and the estimated fair value of net identifiable assets of $1,000,000.Select the following which is applies to the above transaction: ?
Goodwill is not impaired and no loss is calculated.
Goodwill is impaired and a Goodwill impairment loss of $100,000 is calculated. All of the goodwill of $135,000 needs to be written off.
Goodwill is impaired and a Goodwill impairment loss of $35,000 is calculated.
Answer: \(\begin{array}{lc}
\text { Estimated fair value of Company B } & \$ 1,035,000 \\
\text { Less: Estimated fair value of net identifiable assets } & 1,000,000\\
&\$35,000\\
\text { Existing goodwill }&135,000\\
&\$100,000
\end{array}\)
To view all questions and flashcards with answers, click on the resource link above.
Page 5
Chapter 4: Intercompany Transactions: Merchandise, Plant
Assets, and Notes
Available Study Resources on Quizplus for this Chatper
43 Verified Questions
43 Flashcards
Source URL: https://quizplus.com/quiz/71169
Sample Questions
Q1) On January 1, 2016, Poe Corp.sold a machine for $900,000 to Saxe Corp., its wholly-owned subsidiary.Poe paid $1,100,000 for this machine.On the sale date, accumulated depreciation was $250,000.Poe estimated a $100,000 salvage value and depreciated the machine on the straight-line method over 20 years, a policy that Saxe continued.In Poe's December 31, 2016, consolidated balance sheet, this machine should be included in cost and accumulated depreciation as Cost Accumulated Depreciation
A)$1,100,000 $300,000
B)$1,100,000 $290,000
C)$ 900,000 $ 40,000
D)$ 850,000 $ 42,500
Q2) Which of the following should appear in consolidated financial statements?
A)All intercompany transactions properly recorded on each affiliate's books.
B)Transactions between the consolidated company and outside parties.
C)Transactions not accounted for by the simple equity method.
D)Lease transactions between a parent and subsidiary.
To view all questions and flashcards with answers, click on the resource link above. Page 6
Chapter 5: Intercompany Transactions: Bonds and Leases
Available Study Resources on Quizplus for this Chatper
54 Verified Questions
54 Flashcards
Source URL: https://quizplus.com/quiz/71168
Sample Questions
Q1) Company S is a 100%-owned subsidiary of Company P.On January 1, 2016, Company S has $100,000 of 8% face rate bonds outstanding.The bonds had 5 years to maturity on January 1, 2016, and had an unamortized discount of $5,000.On that date, Company P purchased the bonds for $99,000.The net adjustment needed to consolidate retained earnings on December 31, 2016 is ____.
A)$(4,000)
B)$(3,200)
C)$(800)
D)$0
Q2) Phil Company leased a machine to its 100%-owned subsidiary, Scout Company.The direct financing lease required annual lease payments in advance of $2,319 for 5 years.The present value of the minimum lease payments at 8% interest is $10,000.The adjustment needed to arrive at consolidated net income for the first year after the lease is ____.
A)$0
B)$800
C)$2,319
D)$10,000
To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 6: Cash Flow, Eps, and Taxation
Available Study Resources on Quizplus for this Chatper
48 Verified Questions
48 Flashcards
Source URL: https://quizplus.com/quiz/71167
Sample Questions
Q1) The cash purchase of a controlling interest in a firm requires disclosure on the consolidated statement of cash flows as a(n)
A)financing activity only.
B)financing activity and in the schedule of noncash financing and investing activity.
C)investing activity only.
D)investing activity and in the schedule of noncash financing and investing activity.
Q2) For ownership interest of at least 20% but less than 80%, the parent may exclude how much of the dividends received from its reported income when filing separately?
A)100%
B)80%
C)70%
D)20%
Q3) Consolidated firms that meet the tax law requirements to be an affiliated group
A)must file a consolidated return.
B)must receive permission of the Internal Revenue Service to file separately.
C)may elect to file as a single entity or as a consolidated group.
D)cannot change the method of filing in the future.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 7: Special Issues in Accounting for an Investment
in a Subsidiary
Available Study Resources on Quizplus for this Chatper
42 Verified Questions
42 Flashcards
Source URL: https://quizplus.com/quiz/71166
Sample Questions
Q1) Pine Company purchased a 60% interest in the Scent Company on January 1, 2016 for $360,000.On that date, the stockholders' equity of Scent Company was $450,000.Any excess cost on 1/1/16 was attributable to goodwill.Pine purchased another 20% interest on January 1, 2019 for $200,000.On January 1, 2019, Scent Company's stockholders' equity was $700,000, the entire increase due to retained earnings.The goodwill balance on the December 31, 2019, balance sheet is ____.
A)$100,000
B)$60,000
C)$0
D)$150,000
Q2) If the sale of an investment in a subsidiary is deemed to be a disposal of a component of the entity, the appropriate accounting treatments for the results its operations for the period and the gain or loss on the sale are: Results of Operations for the Period Gain or Loss on the Sale
A)Normal recurring operations Extraordinary item
B)Discontinued operations Discontinued operations
C)Normal recurring operations Normal recurring operations
D)Normal recurring operations Discontinued operations
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 8: Subsidiary Equity Transactions, Indirect
Subsidiary Ownership, and Subsidiary Ownership of Parent Shares
Available Study Resources on Quizplus for this Chatper
41 Verified Questions
41 Flashcards
Source URL: https://quizplus.com/quiz/71165
Sample Questions
Q1) When a subsidiary owns shares of the parent, the subsidiary's investment account
A)should be accounted for using the equity method.
B)is not eliminated so the subsidiary's investment in the parent is displayed on the balance sheet.
C)is maintained at its original cost since the shares have no claim on income.
D)may be accounted for using the cost, equity or sophisticated equity method.
Q2) When a subsidiary issues a stock dividend, an amount equal to the fair value of the shares should be removed from retained earnings and transferred to paid-in-capital in excess of par, if the distribution:
A)is less than 20% of the previously outstanding shares.
B)exceeds 20% of the previously outstanding shares.
C)is more than 50% of the previously outstanding shares.
D)does not exceed 20% to 25% of the previously outstanding shares.
Q3) Which of the following situations is viewed as the parent having treasury stock?
A)A owns 80% of B, and B owns 70% of C.
B)A owns 80% of B and 20% of C; B owns 70% of C.
C)A owns 80% of B, and B owns 20% of A.
D)None of the above.
Page 10
To view all questions and flashcards with answers, click on the resource link above.
Chapter 9: The International Accounting Environment
Available Study Resources on Quizplus for this Chatper
17 Verified Questions
17 Flashcards
Source URL: https://quizplus.com/quiz/71164
Sample Questions
Q1) A U.S.company purchases medical lab equipment from a Japanese company.The Japanese company requires payment in Japanese yen.In this transaction, the dollar would be referred to as the ___________ currency.
A)measurement
B)denominated
C)purchasing
D)selling
Q2) Explain the factors which have led to the differences in accounting standards among nations.
Q3) RWB Corporation, a U.S.based company, sold inventory to a German company on June 5 for 12,000 euros, when $1 was equal to 1.20 euros.The company received 12,000 euros in payment on August 4 when $1 was equal to 1.25 euros.RWB's measurement currency is the U.S.dollar.RWB Corporation:
A)should record the sale for $9,600.
B)is exposed to an economic loss on the transaction.
C)has an economic gain on the transaction.
D)should record the sale for 12,000 euros.
Q4) Describe the complexities stemming from U.S.-based companies operating in an international environment.
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: Foreign Currency Transactions
Available Study Resources on Quizplus for this Chatper
75 Verified Questions
75 Flashcards
Source URL: https://quizplus.com/quiz/71163
Sample Questions
Q1) On 6/1/17, an American firm purchased a inventory costing 100,000 Canadian Dollars from a Canadian firm to be paid for on 8/1/17.Also on 6/1/17, the American firm entered into a forward contract to purchase 100,000 Canadian dollars for delivery on 8/1/17.The exchange rates were as follows: ?
\[\begin{array} { l r r r } & \text { Spot } & \text { Forward } \\ \hline 6 / 1 / 17 & 1 \mathrm { CD } = \$ 0.73 & 1 \mathrm { CD } = \$ 0.74 \\
6 / 30 / 17 & 1 \mathrm { CD } = \$ 0.70 & 1 \mathrm { CD } = \$ 0.75 \\
8 / 1 / 17 & 1 \mathrm { CD } = \$ 0.68 & 1 \mathrm { CD } = \$ 0.68
\end{array}\] The American firm's fiscal year end is 6/30/17.The changes in the value of the forward contract should be discounted at 8%.What is the value of the Forward Contract on 6/30/17?
A)$75,000
B)$1,000
C)$993
D)$74,000
Q2) For a hedge on an exposed position, describe the process of valuing the forward contract as of the fiscal period end date.
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Translation of Foreign Financial Statements
Available Study Resources on Quizplus for this Chatper
79 Verified Questions
79 Flashcards
Source URL: https://quizplus.com/quiz/71162
Sample Questions
Q1) Foreign firms operating in highly inflationary economies received special treatment under generally accepted accounting principles (GAAP) relative to translating their financial statements.
? Required:
?
a.How does the FASB define a highly inflationary economy? ? ?
b.Why is the method typically used for translating foreign entities not permitted for these firms? ? ?
c.What method is used for re-measuring or translating the statements of these firms? ?
Q2) Discuss the factors that may be considered in determining if a Mexican subsidiary of a U.S.firm has the peso or the dollar as its functional currency.The subsidiary only manufactures component parts that are shipped to the U.S.firm's final production plant in Detroit.
To view all questions and flashcards with answers, click on the resource link above.
13
Chapter 12: Interim Reporting and Disclosures About
Segments of an Enterprise
Available Study Resources on Quizplus for this Chatper
63 Verified Questions
63 Flashcards
Source URL: https://quizplus.com/quiz/71161
Sample Questions
Q1) In determining whether a segment should be reported, a profit and loss test can be used.The test selects segments for reporting by:
A)only including profitable segments.
B)comparing the absolute value of a segment's profit or loss to 10% of all segments cumulative profit or cumulative loss, whichever is higher.
C)comparing the absolute value of a segment's profit or loss to 10% of all segments combined profits and losses.
D)comparing the profit or loss of a segment to 10% of all segment external revenue.
Q2) Explain the difference in the independent and integral viewpoints of accounting for interim periods.Which method best describes the accepted accounting practice for interim financial reporting?
Q3) Discuss the criteria emphasized in the "management approach" that is used to define operating segments.
Q4) The management of Trident, Inc.is trying to determine if three of the company's non-reportable segments should be combined into one single segment for reporting purposes.In what five ways must these segments be similar in order to be reported as one?
To view all questions and flashcards with answers, click on the resource link above. Page 14
Chapter 13: Partnerships: Characteristics, Formation, and
Accounting for Activities
Available Study Resources on Quizplus for this Chatper
36 Verified Questions
36 Flashcards
Source URL: https://quizplus.com/quiz/71160
Sample Questions
Q1) D & E.share profits and loss in an agreed ratio of 5/7.With a net income of $85,000 E's share of net income would be:
A)$42,500
B)$49,583
C)$60,714
D)$45,000
Q2) Partners H & I share profit and loss in an agreed ratio of 90/10.In the case of a net loss of $10,000, Partner I's capital account would be:
A)Credited for $1,000
B)Debited for $9,000
C)Debited for $1,000
D)Would not be affected
Q3) RUPA ' deals with such topics as:
A)the rights of partners
B)Capital distribution,
C)partnership lending
D)Partnership drawing
To view all questions and flashcards with answers, click on the resource link above.
Page 15
Chapter 14: Partnerships: Ownership Changes and Liquidations
Available Study Resources on Quizplus for this Chatper
47 Verified Questions
47 Flashcards
Source URL: https://quizplus.com/quiz/71173
Sample Questions
Q1) This type of liquidation requires that all assets be realized before a distribution is made to partners, thus avoiding the possibility of a premature distribution.
A)Installment
B)Lump Sum
C)Distributive
D)Dissolutive
Q2) A partner's maximum loss absorbable is calculated by:
A)Dividing the partners' capital balance by percent in interest
B)Multiplying distributable assets by partners profit sharing
C)Multiplying partners' capital by profit/loss ratio
D)Dividing partners' capital balance by profit/loss agreed ratio
Q3) When the new partner invests some intangible asset, such as business acumen or an established clientele, it is possible to have a bonus credited to the new partner.This bonus may be viewed as:
A)Cost incurred to acquire Goodwill of new partner
B)Revenue recognition
C)Personal Drawing in excess of Goodwill
D)Additional investment by all partners.
To view all questions and flashcards with answers, click on the resource link above. Page 16
Chapter 15: Government and Not for Profit Accounting
Available Study Resources on Quizplus for this Chatper
44 Verified Questions
44 Flashcards
Source URL: https://quizplus.com/quiz/71159
Sample Questions
Q1) Assuming normal balances in the following accounts prepare closing entries for the fiscal year ending March 31. ? ?
\[\begin{array} { | l | l | }
\hline \text { Account } & \text { Normal Balance } \\
\hline & \\
\hline \text { Appropriations } & \$ 500,000 \\
\hline \text { Budgetary Fund Balance Unassigned } & \$ 35,000 \\
\hline \text { Estimated Other Financing Uses } & \$ 10,000 \\
\hline \text { Estimated Other Financing Source } & \$ 325,000 \\
\hline \text { Estimated Revenue } & \$ 150,000 \\
\hline & \\
\hline
\end{array}\]
Q2) Nongovernmental entities are likely to follow AICPA bulletins and:
A)GASB
B)FASB
C)DSAB
D)FBCPA
To view all questions and flashcards with answers, click on the resource link above.
Page 17
Chapter 16: Governmental Accounting: Other
Governmental Funds, Proprietary Funds, and Fiduciary Funds
Available Study Resources on Quizplus for this Chatper
60 Verified Questions
60 Flashcards
Source URL: https://quizplus.com/quiz/71158
Sample Questions
Q1) When a city plans to build a fire station by issuing long-term debt, it could obtain money to start construction before the bonds are sold by
A)selling old fire trucks.
B)borrowing from the pension trust fund.
C)issuing Bond Anticipation Notes.
D)issuing Tax Anticipation Notes.
Q2) Which of the following is not a classification of net assets of proprietary funds?
A)Unrestricted
B)Restricted
C)Assigned
D)Invested in capital assets, net of related debt
Q3) Proceeds from the sale of general obligation bonds would be considered an other financing source.
A)True
B)False
Q4) The City of Newport operates its own solid waste landfill and charges fees to users who dump solid waste in the landfill.When should estimated costs for closure and post-closure care be accounted for?
To view all questions and flashcards with answers, click on the resource link above. Page 18
Chapter 17: Financial Reporting Issues
Available Study Resources on Quizplus for this Chatper
37 Verified Questions
37 Flashcards
Source URL: https://quizplus.com/quiz/71157
Sample Questions
Q1) When operations of component units of government are blended with the primary government unit, they are reported by
A)a separate column on the General Purpose Financial Statements of the primary governmental unit
B)a disclosure in a footnote to the primary government unit General Purpose Financial Statements
C)Not reported or disclosed separately from the primary governmental unit
D)a separate set of general purpose financial statements
Q2) Which of the following is not a classification of the net asset accounts of a proprietary fund?
A)Invested in capital assets, net of related debt
B)Restricted both externally and internally
C)Encumbrances
D)Unrestricted
Q3) The statement of net assets also includes general long-term liabilities accounted for at face value.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
19
Chapter 18: Accounting for Private Not-For-Profit Organizations
Available Study Resources on Quizplus for this Chatper
61 Verified Questions
61 Flashcards
Source URL: https://quizplus.com/quiz/71156
Sample Questions
Q1) Recently revised accounting standards for mergers and acquisitions of not-for-profit organizations:
A)require the recognition of goodwill for all acquisitions.
B)allows for a different methods of accounting for mergers than for acquisitions.
C)stipulate a new not-for-profit entity is created whenever there is a combination of two organizations.
D)allow the purchase method of accounting in certain situations.
Q2) A temporary restriction expires when:
A)the stipulated time has elapsed.
B)the stipulated purpose has been fulfilled.
C)the useful life of donated assets has ended.
D)All of the above.
Q3) Investment revenue includes interest and dividends, and realized and unrealized gains and losses on investments.
A)True
B)False
Q4) A not-for-profit organization does not issue an income statement.
A)True
B)False
20
To view all questions and flashcards with answers, click on the resource link above.
Chapter 19: Accounting for Not-For-Profit Colleges and Universities and Health Care Organizations
Available Study Resources on Quizplus for this Chatper
83 Verified Questions
83 Flashcards
Source URL: https://quizplus.com/quiz/71155
Sample Questions
Q1) A contribution is a(n)
A)conditional transfer of cash.
B)unconditional transfer of cash.
C)donation of services which would not be purchased otherwise.
D)donation of unskilled services which you might purchase.
Q2) With the adoption of GASB statement #35 in 1999, public colleges and universities are required to report their activities in a manner more like a(n):
A)general fund
B)special revenue fund
C)enterprise fund
D)fiduciary fund
Q3) In the Statement of Cash Flow for a public college or university, endowment contributions are included in cash flows provided by (used for) ____________ activities.
A)operating
B)financing
C)noncapital financing
D)investing
Q4) Are not-for-profit universities required to use fund accounting?
21
To view all questions and flashcards with answers, click on the resource link above.
Chapter 20: Estates and Trusts: Their Nature and the
Accountants Role
Available Study Resources on Quizplus for this Chatper
56 Verified Questions
56 Flashcards
Source URL: https://quizplus.com/quiz/71154
Sample Questions
Q1) Adequate estate planning is critical for an individual or family with a sizable net worth.List the goals of estate planning for large, more complex estates.
Q2) The party to which legal title and management responsibilities are initially given in a trust agreement is referred to as the trustee.
A)True
B)False
Q3) What are some of the tax planning strategies which may be employed to reduce the tax on the decedent's gross estate?
Q4) All of the following would be charged to principal in an estate except:
A)Property taxes incurred after death to protect income flow.
B)Final income taxes of decedent.
C)Medical expenses.
D)Funeral expenses.
Q5) A trust created through a will is called a testamentary trust.
A)True
B)False
Q6) Define what makes up the corpus or principal of an estate and list several examples.Also, list the potential claims or deductions from the principal.
Page 22
To view all questions and flashcards with answers, click on the resource link above.
Chapter 21: Debt Restructuring, Corporate Reorganizations, and Liquidations
Available Study Resources on Quizplus for this Chatper
49 Verified Questions
49 Flashcards
Source URL: https://quizplus.com/quiz/71153
Sample Questions
Q1) A plan of reorganization may include all except which of the following?
A)arrangements involving elimination of some debt
B)identification of various classes of claims
C)identification of a trustee in liquidations
D)differentiation of impaired versus non-impaired interests
Q2) Which of the following is an illustration of an action that can be taken to help a troubled firm without using the court system?
A)asset transfers to settle debt
B)equity interest granted in exchange for debt
C)modifications of interest rates more favorable to the firm
D)All or a combination can be used.
Q3) The dividend to general unsecured creditors is not a return of equity to shareholders, but the ratio of the net proceeds available to unsecured creditors without priority divided by the total claims of unsecured creditors without priority.
A)True
B)False
Q4) Differentiate by function the Accounting Statement of Affairs and the Statement of Realization and Liquidation.
Q5) Describe the duties of the trustee in a Chapter 7 liquidation.
To view all questions and flashcards with answers, click on the resource link above. Page 23
Chapter 22: Derivatives and Related Accounting Issues
Available Study Resources on Quizplus for this Chatper
60 Verified Questions
60 Flashcards
Source URL: https://quizplus.com/quiz/71152
Sample Questions
Q1) The FASB requires entities that hold or issue derivative instruments that are designated and qualify as hedging instruments to disclose information that allows users to understand how and why the reporting entity uses derivative instruments.
A)True
B)False
Q2) A swap
A)is not traded on an organized exchange and is customized to meet the needs of the parties.
B)is not traded on an organized exchange and is subject to formal regulations which results in standardized contrasts
C)is traded on an organized exchange and is subject to formal regulations which results in standardized contrasts.
D)is traded on an organized exchange and is customized to meet the needs of the parties.
Q3) A hedge of a forecasted transaction is a cash flow hedge.
A)True B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 24
Chapter 23: Equity Method for Unconsolidated Investments
Available Study Resources on Quizplus for this Chatper
25 Verified Questions
25 Flashcards
Source URL: https://quizplus.com/quiz/71151
Sample Questions
Q1) The percentage of ownership in an investment is not a required disclosure for equity method investors.
A)True
B)False
Q2) Company P Company uses the equity method to account for its January 1, 20X1, purchase of 30% of Company S's common stock.On January 1, 20X1, the market values of Company S's FIFO inventory and land exceed their book values.How do these excesses of market values over book values affect Company P's reported equity in Company S's 20X1 earnings?
Inventory Excess Land Excess
A)Decrease Decrease
B)Decrease No effect
C)Increase Increase
D)Increase No effect
Q3) If the market value of an equity method investment falls below its book value, it is written down if the decline is considered permanent with no subsequent increase in value other than regular equity method adjustments.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Chapter 24: Variable Interest Entities
Available Study Resources on Quizplus for this Chatper
10 Verified Questions
10 Flashcards
Source URL: https://quizplus.com/quiz/71150
Sample Questions
Q1) In a VIE, the majority of losses or income ow to the primary bene ciaries, not the residual interest shareholders shareholder.The distribution of income is not based on common stock ownership.Instead, it is based on contractual agreements that could include interest on loans, management fees or a de ned percentage of revenue or income.
A)True
B)False
Q2) Consolidation procedures are applied to controlling ownership interests in Variable Interest Entities.
A)True
B)False
Q3) The primary beneficiary does not consolidate its interest in a VIE into their consolidated financial statements.
A)True
B)False
Q4) The primary bene ciary will likely record its share of VIE interest revenue on its books. A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.