6. Which term refers to the practice of revaluing an acquired subsidiary\'s asse

Question

6. Which term refers to the practice of revaluing an acquired subsidiary's assets and liabilities to their fair values directly on that subsidiary's books at the date of acquisition? (Points : 1)        Fair value accounting
       Push-down accounting
       Fully adjusted method
       Reciprocal ownership


Question 7.7. On December 31, 20X8, X Company acquired controlling ownership of Y Company. A consolidated balance sheet was prepared immediately. Partial balance sheet data for the two companies and the consolidated entity at that date follow:

During 20X8, X Company provided consulting services to Y Company and has not yet been paid for them. There were no other receivables or payables between the companies at December 31, 20X8.  Based on the information given, what is the amount of unpaid consulting services at December 31, 20X8, on work done by X Company for Y Company? (Points : 1)        $0
       $10,000
       $5,000
       $15,000 Question 8.8. Which of the following stockholders equity accounts are eliminated during the consolidation process? (Points : 1)        Common Stock of the subsidiary
       Preferred Stock of the subsidiary
       Additional Paid-in Capital of the subsidiary
       All of the above




Question 9.9. On December 31, 20X8, Mercury Corporation acquired 100 percent ownership of Saturn Corporation. On that date, Saturn reported assets and liabilities with book values of $300,000 and $100,000, respectively, common stock outstanding of $50,000, and retained earnings of $150,000. The book values and fair values of Saturn's assets and liabilities were identical except for land which had increased in value by $10,000 and inventories which had decreased by $5,000. What amount of differential will appear in the eliminating entries required to prepare a consolidated balance sheet immediately after the business combination, if the acquisition price was $240,000? (Points : 1)        $0
       $40,000
       $25,000
       $5,000 Question 10.10. Which of the following is true? When companies employ push-down accounting: (Points : 1)        the subsidiary revalues assets and liabilities to their fair values as of the acquisition date.
       a special account called Revaluation Capital will appear in the consolidated balance sheet.
       all consolidation elimination entries are made on the books of the subsidiary rather than in consolidated worksheets.
       the subsidiary is not substantially wholly owned by the parent.

Explanation / Answer

6. Push-down accounting refers to the practice of revaluing an acquired subsidiary's assets and liabilities to their fair values directly on that subsidiary's books at the date of acquisition

7.c) $5,000  unpaid consulting services at December 31, 20X8, on work done by X Company for Y Company

8. D) All of the above ( Common Stock of the subsidiary, Preferred Stock of the subsidiary, Additional Paid-in Capital of the subsidiary ) following stockholders equity accounts are eliminated during the consolidation process

10. A) The subsidiary revalue’s assets and liabilities to their fair values as of the acquisition date

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