Chapter 6 - Test Bank

Chapter 6 - Test Bank - Chapter 06 - Variable Interest...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Chapter 06 - Variable Interest Entities, Intra-Entity Debt, Consolidated Cash Flo Chapter 06 Variable Interest Entities, Intra-Entity Debt, Consolidated Cash Flo Multiple Choice Questions 1. On January 1, 2011, Riley Corp. acquired some of the outstanding bonds of one of its subsidiaries. The bonds had a carrying value of $421,620, and Riley paid $401,937 for them. How should you account for the difference between the carrying value and the purchase price in the consolidated financial statements for 2011? A. The difference is added to the carrying value of the debt. B. The difference is deducted from the carrying value of the debt. C. The difference is treated as a loss from the extinguishment of the debt. D. The difference is treated as a gain from the extinguishment of the debt. E. The difference does not influence the consolidated financial statements. 2. Regency Corp. recently acquired $500,000 of the bonds of Safire Co., one of its subsidiaries, paying more than the carrying value of the bonds. According to the most practical view of this intra-entity transaction, to whom would the loss be attributed? A. To Safire because the bonds were issued by Safire. B. The loss should be allocated between Safire and Regency based on the purchase price and the original face value of the debt. C. The loss should be amortized over the life of the bonds and need not be attributed to either party. D. The loss should be deferred until it can be determined to whom the attribution can be made. E. To Regency because Regency is the controlling party in the business combination. 3. Which one of the following characteristics of preferred stock would make the stock a dilutive security for earnings per share? A. The preferred stock is callable. B. The preferred stock is convertible. C. The preferred stock is cumulative. D. The preferred stock is noncumulative. E. The preferred stock is participating. 6-1 Chapter 06 - Variable Interest Entities, Intra-Entity Debt, Consolidated Cash Flo 4. Where do dividends paid to the noncontrolling interest of a subsidiary appear on a consolidated statement of cash flows? A. Cash flows from operating activities. B. Cash flows from investing activities. C. Cash flows from financing activities. D. Supplemental schedule of noncash investing and financing activities. E. They do not appear in the consolidated statement of cash flows. 5. Where do dividends paid by a subsidiary to the parent company appear in a consolidated statement of cash flows? A. Cash flows from operating activities. B. Cash flows from investing activities. C. Cash flows from financing activities. D. Supplemental schedule of noncash investing and financing activities. E. They do not appear in the consolidated statement of cash flows....
View Full Document

Page1 / 107

Chapter 6 - Test Bank - Chapter 06 - Variable Interest...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online