Advanced Accounting
14th Edition
ISBN: 9781260247824
Author: Joe Ben Hoyle, Thomas F. Schaefer, Timothy S. Doupnik
Publisher: RENT MCG
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Chapter 7, Problem 1P
To determine
Identify the appropriate answer for the given statement from the given choices.
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Entity A and Entity B combined their businesses. The acquirer in the businesscombination is not clearly identifiable. Which of the following is not an indicator that Entity A is the acquirer?
A. Entity A is the initiator of the business combination.
B. Entity A’s former owners receive the largest portion of the voting rights in the combined entity.
C. Entity A’s former management team dominates the management of the combined entity.
D. Entity C, a new entity, is formed and Entity C transfers cash to Entity A and Entity B
Which of the following is not true with regard to a business combination accomplished in the form of a stock acquisition?
a. Two companies remain in existence after the combination
b. A parent-subsidiary relationship is said to exist
c. Consolidated financial statements are normally required
d. All of the above statements are true
When one company buys the assets and liabilities of another company, this is known as which of the following?Choose one answer.a. Limited liability company b. Merger c. Conventional corporation d. Acquisition
Chapter 7 Solutions
Advanced Accounting
Ch. 7 - Prob. 1QCh. 7 - Prob. 2QCh. 7 - Prob. 3QCh. 7 - How does the presence of an indirect ownership...Ch. 7 - Prob. 5QCh. 7 - In accounting for mutual ownerships, what is the...Ch. 7 - Prob. 7QCh. 7 - Prob. 8QCh. 7 - Prob. 9QCh. 7 - Prob. 10Q
Ch. 7 - Prob. 11QCh. 7 - Jones acquires Wilson, in part because the new...Ch. 7 - Prob. 13QCh. 7 - Prob. 1PCh. 7 - Prob. 2PCh. 7 - Prob. 3PCh. 7 - Which of the following is correct for two...Ch. 7 - Prob. 5PCh. 7 - Prob. 6PCh. 7 - Prob. 7PCh. 7 - Prob. 8PCh. 7 - Prob. 9PCh. 7 - Prob. 10PCh. 7 - Prob. 11PCh. 7 - Prob. 13PCh. 7 - Prob. 14PCh. 7 - Prob. 15PCh. 7 - Prob. 16PCh. 7 - Prob. 17PCh. 7 - Prob. 18PCh. 7 - Prob. 19PCh. 7 - Prob. 20PCh. 7 - Prob. 23PCh. 7 - Prob. 24PCh. 7 - Prob. 26P
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Similar questions
- Which one of the following statements is incorrect with regards to non-controlling interests? 1. Non-controlling interests can be calculated using the analysis of owners’ equity of the subsidiary. 2. The retained earnings total in the consolidated statement of changes in equity does not include the non-controlling interests amount. 3. Non-controlling interests reduces the profit of the owners of the parent in the consolidated statement of profit or loss and other comprehensive income. 4.Non-controlling interests are presented as an asset in the consolidated statement of financial position.arrow_forwardPlease answer the following questions relating to unrealized profit in a business combination. 1) Intra entity transfers between the components of business combinations are quite common. Why do these intra company transactions occur frequently? 2) How are unrealized inventory gross profit created, and what are the necessary consolidation entries created to account for these gains? 3) How do intra entity profit present in any year affect the noncontrolling Interest calculation?arrow_forwardNon-controlling interest in consolidated income is never affected by: a. Sale of Parent to unaffiliated company b. Non-controlling interest is affected by all sales c. Downstream sales d. Upstream Salesarrow_forward
- Consolidated Net Income is equal to: Multiple Choice the sum of the net incomes of both the parent and its subsidiaries less any inter-company dividends. the parent's net income excluding any income arising from its investment in the Subsidiary, plus the net income of the subsidiary less the amortization of the acquisition differential and the impairment of goodwill. the parent's net income excluding any income arising from its investment in the subsidiary. the sum of the net incomes of both the parent and its subsidiaries.arrow_forwardWhat does empirical evidence suggest about the distribution of gains from mergers? Shareholders of the acquired firm gain the most. Shareholders of the acquiring firm gain the most. Neither group of shareholders is likely to gain. Both groups of shareholders gain equally.arrow_forwardChoose the right answerarrow_forward
- Answer these questions about consolidation accounting:1. Define parent company. Define subsidiary company.2. How do consolidated financial statements differ from the financial statements of a singlecompany?3. Which company’s name appears on the consolidated financial statements? How much ofthe subsidiary’s shares must the parent own before using consolidated statements?arrow_forwardWhich of the following is true regarding consolidation of net income?A. Parent net income is decreased by the dividend income recognized due to declared bysubsidiary at full amount even if less than 100% ownership is acquired.B. Amortization of excess must be done to adjust net income of parent to arrive at parent netincome own operation.C. Adjusted net income of subsidiary is shared by Parent’s holding interest andnoncontrolling interest.D. Dividend declared by subsidiary is shared by Parent’s holding interest and noncontrollinginterest.arrow_forward1 Which of the following is a characteristic of a business combination that should be accounted for as an acquisition? Group of answer choices a. The combination must involve the exchange of equity securities only. b. The transaction may be considered to be uniting of the ownership interest of the companies involved. c. The transaction establishes an acquisition fair value basis for the company being acquired d. Two companies may be about the same size and it is difficult to determine the acquired company and acquiring company.arrow_forward
- A(n) ________________ occurs when the management of the target company purchases a controlling interest in that company and the company incurs a significant amount of debt as a result. a. greenmail b. statutory merger c. poison pill d. leveraged buyoutarrow_forwardI need the answer as soon as possiblearrow_forwardTRUE OR FALSE. 1. Under the shareholders' equity section of a consolidated statement of Financial Position, common shares consist of only the parent company's shares. 2. The date of acquisition is the date on which the buyer obtains control of the target business. This date is very important as the value of all of the amounts included in the business combination are measured at this date, and the buyer starts consolidation of the target for accounting. 3. In business combination, even if the acquirer does not acquire 100% of the target business, the acquired assets and assumed liabilities are recorded at 100% of their fair value 4. When obtaining control of the business, the acquirer must take an ownership stake of more than 50% in the business.arrow_forward
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