CH. 3 Questions

stockholders' equity accounts

The label "S" in Consolidation Worksheet Entry S refers to the subsidiary's _______________________________________.

consolidation process

If a subsidiary company has a debt payable to Its parent company, the intra-entity payable and receivable (on a parent's books) is removed as part of the ___________________________________.

zero balance

In conjunction with combining a subsidiary's assets and liabilities with those of the parent company, the investment in subsidiary account is brought to a ______________________ as part of the consolidation process.

fair value

To measure an impairment loss for an indefinite-level intangible asset, the asset's carrying amount is compared to Its _____________________.

credit to depreciation expense

When a subsidiary's tangible asset has an excess acquisition-date book over fair value, Consolidation Entry E will show a ______________________________________________.

impairment

When an acquired subsidiary's intangible asset has an indefinite useful life, the intangible asset is not amortized but instead is assessed for _______________________ on a periodic basis.

Accrual Basis

Which of the following best descries the income recognition basis reflected by the equity method?

Consolidation Entry D

In ________________________________, the credit to the Dividends Declared account reduces the subsidiary's dividends balance.

Consolidation Entry E

Increases expenses when excess fair over book value acquisition-date allocations are made to depreciable subsidiary assets and provides current period amortization expense for the acquisition-date fair-value adjustments.

True

T/F? Entry I removes the Equity in Subsidiary Earnings which is then replaced by the inclusion of the subsidiary's individual revenue and expense accounts on the consolidated income statement.

Consolidation Entry C

The ________________________________ is needed to adjust the parent's beginning retained earnings to a full-accrual basis and simulates the equity method in adjusting the parent's beginning retained earnings.

goodwill over Its implied value

The amount of a reporting unit's goodwill impairment loss is computed as the excess of a reporting unit's carrying amount of ___________________________________________.

Consolidation Entry E

_______________________________ recognizes amortization expenses related to the subsidiary's acquisition-date differences between fair and book values.

zero balance

Consolidation entries S and A are part of a sequence of worksheet adjustments that bring the Investment in Subsidiary account to a _____________________________.

indefinite life

Goodwill recognized in a business combination is considered to have an __________________________ and thus s not amortized.

True

T/F? Conducting goodwill impairment tests at the reporting unit level (rather than the combined entity level) helps capture goodwill impairment losses that may otherwise be offset by an increase in goodwill in another reporting unit.

declares a dividend

Under the initial value method of accounting for an investment in a subsidiary company, the parent recognizes income when the subsidiary _______________________________.

cash basis

Under the initial value method, the parent recognizes income when Its subsidiary declares a dividend. Because of the brief time span between dividend declarations and cash payments, the initial value is said to reflect the _____________________ for income recognition.

reduction to consolidated depreciation expense

When a depreciable asset acquired in a business combination has an acquisition-date book value in excess of Its fair value, the excess will be allocated over time as a _______________________________________________________________________.

Consolidation Entry I

When the patron applies the initial value method for Its investment accounting, ____________________________ is needed to remove the balance in the parent's Dividend Income and the subsidiary's Dividends Declared.