Exam 1 advanced accounting PDF

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36 MC – 3 pts each – 108 points Chapter 1 – 8 Quantitative – 18 total Chapter 2 – 8 Quantitative – 18 total Chapter 1 1. If I make an investment into another company’s stock, what are the 3 methods? Fair Value, Equity Method, Consolidation 2. Can you own more than 20% and not own 20%? Yes, if there is no significant influence 3. Can I own less than 20% and have significant influence? Yes 4. All investments in stock start with the same entry Investments Cash, CS and APIC, Loan, etc. Goes on at fair value or cost 5. Retroactively adjust gains and losses and restate financial statements under equity method 6. Start using fair value prospectively 7. What’s the balance in the investment account problems 8. What is the balance on the income statement problems 9. The two transactions that affect amortization and upstream and downstream sales 10. Use equity method for significant influence 11. Suppose the sub had discontinued operations, extraordinary operations, etc., the parent must separate the types of income just like the sub. 12. If there is a permanent decline (impairment loss) in fair value, we must record the decline. Chapter 2 1. Date of acquisitions for consolidation? 2. Debit all the assets and include goodwill as necessary, credit bargain purchase price as cash and liabilities 3. Mergers and consolidations types – 4 of all 4. Accounting records aren’t used if separate identity on consolidated balance sheet 5. Just the parent’s income statement on date of acquisition 6. Parent + sub +/- adjustment 7. Ignore common stock on acquisition date = 0 8. Liabilities are the same 9. Acquisition method uses the fair value of the acquisition method 10. Purchase method is old school 11. Direct and indirect costs are expenses except fees of issuance of stocks are debits to APIC and credits to cash 12. R and D is expensed always. R and D from the past can be capitalized on the parents book. 13. 3 constituent groups – users, producers, and auditors

14. Goodwill calculations are many 15. Two methods for handling acquisitions in the past which have been grand fathered– pooling and purchase methods 16....