For business combinations involving less than 100 percent ownership, the acquirer recognizes and measures all of the following at the acquisition date except:
A. identifiable assets acquired, at fair value.
B. liabilities assumed, at book value.
C. non-co

B. liabilities assumed, at book value.

In measuring non-controlling interest at the date of acquisition, which of the following would not be indicative of the value attributed to the non-controlling interest?
A. Fair value based on stock trades of the acquired company.
B. Subsidiary cash flows

C. Book value of subsidiary net assets.

When a parent uses the equity method throughout the year to account for its investment in an acquired subsidiary, which of the following statements is false before making adjustments on the consolidated worksheet?
A. Parent company net income equals contr

C. Parent company total assets equals consolidated total assets.

When a parent uses the initial value method throughout the year to account for its investment in an acquired subsidiary, which of the following statements is true before making adjustments on the consolidated worksheet?
A. Parent company net income equals

D. Parent company dividends equal consolidated dividends.

When a parent uses the partial equity method throughout the year to account for its investment in an acquired subsidiary, which of the following statements is false before making adjustments on the consolidated worksheet?
A. Parent company net income will

C. Parent company net income will be less than controlling interest in consolidated net income when fair value of net assets acquired exceeds book value of net assets acquired.

In a step acquisition, which of the following statements is false?
A. The acquisition method views a step acquisition essentially the same as a single step acquisition.
B. Income from subsidiary is computed by applying a partial year for a new purchase ac

C.
Income from subsidiary is computed for the entire year for a new purchase acquired during the year.

Which of the following statements is false regarding multiple acquisitions of a subsidiary's existing common stock?
A. The parent recognizes a larger percent of subsidiary income.
B. A step acquisition resulting in control may result in a parent recognizi

C. The book value of the subsidiary will increase.

When a subsidiary is acquired sometime after the first day of the fiscal year, which of the following statements is true?
A. Income from subsidiary is not recognized until there is an entire year of consolidated operations.
B. Income from subsidiary is re

B. Income from subsidiary is recognized from date of acquisition to year-end.

When consolidating a subsidiary that was acquired on a date other than the first day of the fiscal year, which of the following statements is true in the presentation of consolidated financial statements?
A. Preacquisition earnings are deducted from conso

E. Preacquisition earnings are ignored in the consolidated income statement.

When a parent uses the acquisition method for business combinations and sells shares of its subsidiary, which of the following statements is false?
A. If majority control is still maintained, consolidated financial statements are still required.
B. If maj

C. If majority control is not maintained but significant influence exists, the equity method is still used to account for the investment and consolidated financial statements are still required.

All of the following statements regarding the sale of subsidiary shares are true except which of the following?
A. The use of specific identification based on serial number is acceptable.
B. The use of the FIFO assumption is acceptable.
C. The use of the

D. The use of specific LIFO assumption is acceptable.

Which of the following statements is true regarding the sale of subsidiary shares when using the acquisition method for accounting for business combinations?
A. If control continues, the difference between selling price and acquisition value is recorded a

C. If control continues, the difference between selling price and carrying value is recorded as an adjustment to additional paid-in capital.

Jax Company uses the acquisition method for accounting for its investment in Saxton Company. Jax sells some of its shares of Saxton such that neither control nor significant influence exists. Which of the following statements is true?
A. The difference be

C. The difference between selling price and carrying value is recorded as a realized gain or loss.

In comparing U.S. GAAP and international financial reporting standards (IFRS) with regard to a basis for measurement of a non-controlling interest, which of the following is true?
A. U.S. GAAP requires acquisition-date fair value measurement and IFRS requ

D. U.S. GAAP requires acquisition-date fair value measurement, but IFRS allows an option for acquisition-date fair value measurement.