Advanced Accounting
14th Edition
ISBN: 9781260247824
Author: Joe Ben Hoyle, Thomas F. Schaefer, Timothy S. Doupnik
Publisher: RENT MCG
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 3, Problem 4Q
To determine
Explain the necessity of removing this amortization.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
True or False
Pls indicate if the statements are true or false.
1. The worksheet eliminations prepared subsequent to acquisition remove the allocated excess/purchase differential amortizations from the consolidated financial statements.
2. Allocated excess/purchase differential amortizations result in the Investment Income account disclosing the income that would have been allocated to the parent had the subsidiary’s financial records disclosed the market value of its assets and liabilities.
3.
In reference to the downstream or upstream sale of depreciable assets, which of the following statements is correct?
A. Gains and losses appear in the parent-company accounts in the year of sale and must be eliminated by the parent company determining its investment income under equity method of accounting.
B. The initial effect of unrealized gains and losses from downstream sales of depreciable asset is different from the sale of non-depreciable assets.
C. Gains, but not losses, appear in the parent-company accounts in the year of sale and must be eliminated by the parent company in determining its investment income under the equity method of accounting.
D. Upstream sales from the subsidiary to the parent company always result in unrealized gains or losses.
Which of the following is NOT included in the cost of an acquired company? (applying section 19 of IFRS for SMEs)
a. Contingent consideration determinable at the consummation date of the combination
b. Finder’s fee for arranging the combination
c. Cost of registering and issuing equity securities
d. None of the above
Chapter 3 Solutions
Advanced Accounting
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- When the parent's Investment in S account is eliminated in the consolidation process, what replaces this item on the consolidated financial statements? A) The acquisition-date fair values of S's net assets, adjusted for any post-acquisition amortization of Differential. B) The acquisition-date book values of S's net assets, adjusted for any post-acquisition amortization of Differential. C) The book value of S's net assets and S's beginning retained earnings only. D) Only the new goodwill generated from the transaction.arrow_forwardWhich of the following statements is true regarding the acquisition method of accounting for a business combination? a. Assets of the acquired company are recorded at book values. b. Assets of the acquired company are recorded at fair value, but only if the acquisition cost equals or exceeds fair value of the subsidiary's net assets. c. Assets of the acquired company are recorded at fair values regardless of the acquisition cost. d. Consulting costs related to the combination reduce additional paid-in capital.arrow_forwardIn an asset acquisition: a. A consolidation must be prepared whenever financial statements are issued. b. The acquiring company deals only with existing shareholders, not the company itself. c. The assets and liabilities are recorded by the acquiring company at their book values. d. Statements for the single combined entity are produced automatically and no consolidation process is needed.arrow_forward
- During the current year, an entity acquires another entity in a transaction properly accounted for as a business acquisition. At the time of the acquisition, some of the information for valuing assets was incomplete. How should the acquirer account for the incomplete information in preparing its financial statements immediately after the acquisition? a. Record the uncertain items at a provisional amount measured at the date of acquisition. b. Record a contra account to the investment account for the amount involved c. Do not record the uncertain items until complete information is available d. Record the uncertain items at the carrying amount of the acquirearrow_forwardHow shall an acquirer in a business combination account for the changes in fair value contingent consideration classified as equity instrument if the changes result from events after the acquisition date? a. The changes in fair value of contingent consideration classified as equity shall be recognized as gain or loss in profit or loss because they are not measurement period adjustments. b. Contingent consideration classified as equity shall not be re-measured and its subsequent settlement shall be accounted for within equity. c. The changes in fair value of contingent consideration classified as equity shell be retrospectively restated to beginning retained earnings because they are prior period error. d. The change in fair value of contingent consideration classified as equity shall be retroactively adjusted to goodwill/gain on bargain purchase because they are measurement period adjustments.arrow_forwardWhich of the following is incorrect regarding measurement period? a. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the acquirer shall report in its financial statements provisional amounts for the items for which the accounting is incomplete. b. During the measurement period, the acquirer shall also recognise additional assets or liabilities if new information is obtained about facts and circumstances that existed as of the acquisition date and, if known, would have resulted in the recognition of those assets and liabilities as of that date. c. The measurement period ends as soon as the acquirer receives the information it was seeking about facts and circumstances that existed as of the acquisition date or learns that more information is not obtainable. d. During the measurement period, the acquirer shall prospectively adjust the provisional amounts recognised at the acquisition date…arrow_forward
- Which of the following is not considered in the determination of Total Assets after business combination? Group of answer choices a.Book value of the acquirer’s total assets. b.Fair value of the acquiree’s total assets. c.Expenses that are actually paid in relation to business combination d.Contingent considerationarrow_forwardUnder PFRS 3, when is a gain recognized in consolidating financial information? Group of answer choices a.When the amount of a bargain purchase exceeds the value of the applicable liability held by the acquired company. b.In an acquisition when the value of all assets and liabilities cannot be determined. c.When any bargain purchased is created d.In a combination created in the middle of the fiscal yeararrow_forwardPrepare consolidation worksheet entries for December 31, 2021 -Prepare entry S to eliminate stockholders' equity accounts of subsidiary for 2021. Prepare entry A to recognize allocations attributed to specific accounts at acquisition date for 2021. Prepare entry I to eliminate the income accrual for 2021 less the amortization recorded by the parent using the equity method. Prepare entry D to eliminate intra-entity dividend transfers. Prepare entry E to recognize current year amortization expense.arrow_forward
- Can another company that is not acquiring a company recognize unrecorded assets related to their company?arrow_forwardThe consolidated balance of fixed assets will be affected by working paper entriesinvolving all of the following,except: a.Excess of fixed asset FV over BV of the parent at the date of acquisitionb.Amortization of the excess of fixed asset FV over BV of the subsidiary at the date ofacquisitionc.Unrealized gain or loss on intercompany sale of fixed assetd.Realized gain or loss on intercompany sale of fixed assetarrow_forwardWhat is the correct method for treating a vesting differential linked to the acquisition of shares? privileged rights of the subsidiary by the parent company? Select an answer: a. It must be allocated to identifiable net assets or goodwill. b. It must be distributed in proportion to the identifiable assets and liabilities of the subsidiary. c. It must be charged to consolidated retained earnings or credited to contributed surplus. d. It must be taken care of in the current year.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Auditing: A Risk Based-Approach to Conducting a Q...AccountingISBN:9781305080577Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:South-Western College Pub
Auditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage Learning
Auditing: A Risk Based-Approach to Conducting a Q...
Accounting
ISBN:9781305080577
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:South-Western College Pub
Auditing: A Risk Based-Approach (MindTap Course L...
Accounting
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Cengage Learning