: 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

: 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

Auditing: A Risk Based-Approach to Conducting a Quality Audit

10th Edition

ISBN:9781305080577

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter16: Advanced Topics Concerning Complex Auditing Judgments

Section: Chapter Questions

Problem 21MCQ

See similar textbooks

Related questions

Q: Respond to the following statements and questions in the discussion forum. Try to do this without…

A: “Since you have posted a question with multiple sub-parts, we will solve first three subparts for…

Q: Full Belly Farm grows organic vegetables and sells them to distributors and local restaurants after…

A: Contribution margin=Selling price-Variable cost

Q: Identify and provide examples of controls related to the use of files and data.

A: INTRODUCTION Data control is the administration of information policy for the data of an…

Q: Conrad, Inc. recently lost a portion of its records in an office fire. The following information was…

A: The direct materials used is calculated as difference between amount of direct materials available…

Q: (Related to Checkpoint 4.3) (Analyzing Profitability) In 2016, the Allen Corporation had sales of…

A: Lets understand the basics. Net operating income is a income generated from the selling the goods or…

Q: What is the NET EFFECT of the errors in PERFECT’s 2020 net income?

A: The solution has been provided for the question which has been sought to be answered which is the…

Q: In grouping expenses for planning and control purposes, what is the difference between grouping by…

A: For planning and control purposes it is important to categorize cost into cost centers.

Q: On December 31, according to the accounting records, the inventory balance is $650,000. The…

A: Solution Inventory refers to all the items ,goods ,merchandise and material held by a business for…

Q: Use Given-Required-Solution in answering problems. Provide cash flow diagram as necessary. Answers…

A: Depreciation :— It is the decrease in the value of assets due to continuos use of asset.…

Q: Multiple Versus Single Overhead Rates, Activity Drivers Deoro Company has identified the following…

A: Traditionally the overhead cost is allocated on the bases of plantwide overhead rates. These rates…

Q: Company A has current sales of $10,717,172 and a 43% contribution margin. Its fixed costs are…

A: Degree of operating leverage The degree of operating leverage is nothing but an indicator or a…

Q: Credit memos are manually appli balances Select one: a. on the Receive payment form b. on the Credit…

A: credit memos are manually applied to customer balances on the credit memo form option number (b)…

Q: If Samantha Jones had the following itemized deductions, should she use Schedule A or the standard…

A: Estimate the itemized deduction on Schedule A: Total itemized deduction = Donation to church &…

Q: Calculate the per-unit contribution margin of a product that has a sale price of $794 if the…

A: Contribution margin is the excess of sales value over the variable costs associated with making a…

Q: Required information Use the following information for the Exercises below. (Algo) [The following…

A: According to the given question, we need to determine the required figures mentioned in the…

Q: Recomendations for fraud detection are included in SAS 99 (AU 316, and now PCAOB AS 2401). Which of…

A: Fraud detection refers to the procedure where it protects the customer as well as the information of…

Q: WoolCorp is currently using the single plantwide factory overhead rate method, which uses a…

A: Over rates :— The overhead rate is a cost which is allocated to the production of a product or…

Q: Proof of Cash Problems 1. Lazer Company had the following bank reconciliation on June 30: Balance…

A: Disclaimer : Hello. Since your question has multiple sub-parts, we will solve the first three…

Q: What is Wright's Change in Working Capital -125 What is Wright's Cash Flow from Operations…

A: The cash flow statement assesses a corporation's ability to handle its cash balance, or how…

Q: Blupa Ltd acquired a 25% interest in Trinity Ltd for $145,000 on 1 July 2020. At that date,…

A: Journal - A journal is a thorough account that documents all of a company's financial activities. It…

Q: Which of the following QBO features can be used to save a transaction that will be re-used in the…

A: Introduction:- QBO means Quick book online. It is an accounting software. It is very easy to use…

Q: Build up a unit rate per m³ of excavation work by using an excavator. Data Capital Cost Interest…

A: Calculation of Unit Rate per m3 of excavation work by using an excavation RM Interest Cost (4% of…

Q: interest compounded annually

A: In the first question, we are given with: present value, P= 5,400 future value, F= 7,200 n= 5 years…

Q: Identify factors in an ethical decision. Jim Sandrolini is an accountant for a local manufacturing…

A: Accounting: Business ethics are business policies and practices which are made to conduct a…

Q: Instructions Journalize the transactions. Do not provide explanations. Record journal entries. E2.9…

A: Solution A journal is a company's official book in which all business transaction are recorded in…

Q: Check All That Apply Invoice Receive Payment Pay Bills

A: Invoice and Receive payment refers to the "Customers and Sales" transaction.

Q: According to the Montana Wrongful Discharge from Employment Act, what are the three elements of a…

Q: How do you Calculate "Change in Retained Earnings"?

A: Retained earnings are the earnings which has been with the company from the net income which has…

Q: quacy ources of revenue sh sufficient to eet the

A: Taxation system is the backbone of the economy of every nation. The…

Q: A newly formed company provides the following list of transactions. Transaction 1 2 3 4 5 6…

A: Transaction Assets = Liabilities + Stockholders' Equity 1 $45,000 $45,000 2 $9,000…

Q: 1. Provide the names of 2 asset accounts and indicate the increase side, debit or credit. 2. Provide…

A: Since you have posted multiple questions, we will do the first one for you. Please post the other…

Q: mes) Simtech, Inc. started business on January 1, 2020. During the year, they purchased $180,000 of…

A: The valuation of inventory is the one of the most important part of the cost accounting. There…

Q: Question # 5: You are a financial manager in Gama Corporation. You have the task of getting the…

A: Comment - Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the…

Q: A farmer decided to begin breeding and raising mink. He housed the mink in cages in a shed on his…

A: INTRODUCTION Explosives: An explosive is any chemical substance, combination, object, etc. that has…

Q: What's the relationship between various financial markets

A: Introduction: Any location or system that allows both buyers and sellers to trade investment…

Q: You are the management accountant of T Ltd. The following computer printout shows details relating…

A: Answer - “Since you have posted a question with multiple sub-parts, we will solve first three…

Q: Analyze statements al

A: The accounting recording process is Analyzing the transactions in terms of variables, i.e assets,…

Q: Budget Actual

A: Budgeted average contribution margin = (budgeted contribution margin of X * budgeted sales of X) + (…

Q: Business Combination Versus Asset Acquisition Haley Corporation pays $3,900,000 in cash to acquire…

A: There are two method to record the journal entry. Business Combination Asset Acquisition In case…

Q: Ebony and Ivory companies operate in the same industry and are similar in size, in terms of…

A: The cash flow statmenet is the statmenet that shows the flow of the cash in the company. The cash…

Q: Global Entity is a retailer situated in Windhoek that sells various products. For the month of March…

A: Lets understand the basics. As per balance sheet and acccounting equation, total assets are always…

Q: 1. Using the information in appendix 1 only, comment on the financial performance of the business…

A: Analysis of Financial Information - The goal of sharing financial information is to help people…

Q: What is the amount of total manufacturing cost?

A: Business wants to determine the cost of the goods which has been manufacturing costs by the company…

Q: Sandhill Department Store uses a perpetual inventory system. Data for product E2-D2 includes the…

A: Lets understand the basics. In perptual method weighted average basis, average is calculated for the…

Q: Suppose Barry had doubled its sales as well as its inventories, accounts receivable, income and…

A: Ratio analysis is an arithmetic technique for analyzing a corporation's financial statements,…

Q: ! Required information Use the following information for the Exercises below. (Algo) [The following…

A: Under marginal Costing Income is Computed by Deducting Fixed cost from Contribution Margin.…

Q: Required information [The following information applies to the questions displayed below.] Altira…

A: When the average costing approach is utilized within a perpetual inventory system, every time an…

Q: Assume that the risk-free rate is 2.5% and the required return on the market is 8%. What is the…

A: According to capital assets pricing model, The expected return on equity stock is calculated as…

Q: What is 20% markup price of a product having variable cost 20, fixed cost 300000 expected unit cost…

A: Mark up refers to amount that will be added to cost of product, to calculate the price of the…

Q: V Company's net income computed by the Full Costing Method was Php6,400.00 and its net income…

A: Fixed overhead :— It is the cost that is not changed with change in units. Variable Costing…

Concept explainers

Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.

Question

In 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.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

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

A company acquires a subsidiary and will prepare consolidated financial statements for external reporting purposes. For internal reporting purposes, the company has decided to apply the initial value method. Why might the company have made this decision? It is a relatively easy method to apply. Operating results appearing on the parent’s financial records reflect consolidated totals. GAAP now requires the use of this particular method for internal reporting purposes. Consolidation is not required when the parent uses the initial value method.
S1: Under the acquisition method, if the fair values of identifiable net assets exceed the value implied by the purchase price of the acquired company, the excess should be accounted for goodwill. S2: With an acquisition, direct and indirect expenses are considered a par of the total cost of the acquired company. Both statements are Only S1 is Only S2 is Both statements are 2. Following the completion of a business combination in the form of a statutory consolidation, what is the balance in the new corporation’s Retained earningsaccount? The acquirer retained earnings accountbalance Thesum of the acquirer and acquiree retained earnings account The acquiree retained earnings accountbalance Zero 3. S1: The acquisition-related costs in a business combination to be expensed immediately include cost of issuing debt securities. S2: In a business combination any “gain on bargain purchase” shall be recognized in other comprehensive income. Only S2 is Both statements are Both statements…
Under 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 year
Choose the correct. When does gain recognition accompany a business combination?a. When a bargain purchase occurs.b. In a combination created in the middle of a fiscal year.c. In an acquisition when the value of all assets and liabilities cannot be determined.d. When the amount of a bargain purchase exceeds the value of the applicable noncurrent assets (other than certain exceptions) held by the acquired company.
Choose the correct. A company acquires a subsidiary and will prepare consolidated financial statements for external reporting purposes. For internal reporting purposes, the company has decided to apply the initial value method. Why might the company have made this decision?a. It is a relatively easy method to apply.b. Operating results appearing on the parent’s financial records reflect consolidated totals.c. GAAP now requires the use of this particular method for internal reporting purposes.d. Consolidation is not required when the parent uses the initial value method.
Under PFRS 3, when is a gain recognized in consolidating financial information? a. In a combination created in the middle of the fiscal year b. In an acquisition when the value of all assets and liabilities cannot be determined. c. When any bargain purchased is created d. When the amount of a bargain purchase exceeds the value of the applicable liability held by the acquired company.
Prepare the set of consolidated financial statement of financial position on the date of acquisition by showing the consolidation procedures.
When an entity sells a non-current asset at a profit to another entity within the same group, which of the following adjustments is necessary on consolidation? Select one: a. Dr Asset, DR Gain on sale b. Dr Gain on sale, CR Asset c. Dr Gain on sale, CR Cash d. Dr Asset, CR Cash
Which 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…
1. At the date of an acquisition which resulted to either goodwill or gain on bargain purchase, the acquisition method: A. Consolidates the subsidiary's assets and liabilities at book value. B. Consolidates the subisdiary's assets at fair value and libailities at book value. C. Consolidates the subsidiary's assets at book value and liabilities at fair value. D. Consolidates the subsidiary's assets and liabilities at fair value. 2. The consideration transferred in a business combination will most likely include which of the following? A. The transaction price in an arrangement that is primarily for the benefit of the acquirer or the combined entity. B. A contingent liability with an acquisition-date fair value but imposes an improbable outflow that the acquirer assumes in a business combination. C. The "off-market" value of a reacquired right. D. The acquisition-date fair value of a contingent consideration that is dependent upon the occurrence of a possible, but not probable,…
A business combination resulting to a goodwill is accounted using acquisition method. In the consolidated balance sheet at the date of acquisition, which of the following statement about retained earnings (RE) is TRUE? A. RE is equal to RE of the acquirer plus unadjusted net income of the acquiree. B. RE is equal to RE of the acquirer only. C. RE is equal to the sum of the RE of the acquirer and acquiree. D. RE is equal to RE of the acquirer plus adjusted income of subsidiary net of minority interest in subsidiary’s net income.
Statement 1: The preparation of consolidated financial statements after acquisition is materially different concept from preparing them in the acquisition date in the sense that reciprocal accounts are eliminated and remaining balances are combined. Statement 2: All revenues and expenses of individual consolidating companies arising from transactions and actions with affiliated companies are included in the consolidated financial statements. a. Only Statement 1 is correct b. Both statements are correct c. Only Statement 2 is correct d. Both statements are incorrect