At acquisition date, the net assets of the acquired subsidiary are included in the consolidated financial statements at their acquisition date fair value. However, most of the parent’s assets and liabilities are measured on an historical cost basis. Is this consistent? Explain.

At acquisition date, the net assets of the acquired subsidiary are included in the consolidated financial statements at their acquisition date fair value. However, most of the parent’s assets and liabilities are measured on an historical cost basis. Is this consistent? Explain.

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

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At acquisition date, the net assets of the acquired subsidiary are included in the consolidated financial statements at their acquisition date fair value. However, most of the parent's assets and liabilities are measured on a historical cost basis. Is this consistent?
At acquisition date, the net assets of the acquired subsidiary are included in the consolidated financial statements at their acquisition date fair value. However, most of the parent's assets and liabilities are measured on a historical cost basis. Is this consistent? Explain Briefly.
at acquisition date net assets of a subsidiary company are included in the consolidated financial statement at their acquisition date fair value.however most of the parents assests and liabilities are measured on historical cost.explain
At acquisition date the net assests of the acquired subsidairy are included in the consolidated financial statement at their acquisition date fair value. However most of the parent assets and liabilities are measured on an historical cost basis . Is this Consistent ? Explain.
If a revaluation of the subsidiary’s assets is performed on consolidation, the subsidiary’s assets are carried into the consolidated statement of financial position at: Select one: a. Net present value. b. Historical cost. c. Fair value. d. Current replacement cost.
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In a business combination - stock acquisition, difference between current fair values and book values of subsidiary’s identifiable assets and liabilities on acquisition date is:
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? Group of answer choices RE is equal to the sum of the RE of the acquirer and acquire. RE is equal to RE of the acquirer plus unadjusted net income of the acquire. RE is equal to RE of the acquirer plus adjusted income of subsidiary net of minority interest in subsidiary’s net income. RE is equal to RE of the acquirer only.
In the consolidated statement of comprehensive income to be prepared by the parent corporation, which of the following items will affect both consolidated net income attributable to parent and non-controlling interest in net income? Impairment loss on goodwill recognized when the noncontrolling interest is measured at proportionate share of fair value of net assets of subsidiary. Amortization of difference between fair value and book value of liability of subsidiary. Realization of unrealized gain or (loss) from sale of parent company to subsidiary company. Recognition of gain on bargain purchase arising from business combination.
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.