7. Which most accurately describes what happens to the consolidation worksheet entries, assuming there is no push down accounting a. worksheet entries are posted only to the ledgers of the parent as post closing entries b. worksheet entries are posted only to the ledgers of the subsidiary as post closing entries c. worksheet entries are posted to the ledgers of both the parent and the subsidiary as post closing entries d. worksheet entries are posted to the ledgers of whichever company came into existence first e. worksheet entries are not posted to either the ledgers of the parent or the subsidiary 8. What is true about the choice by the parent as to whether to use equity, partial equity or initial value methods for acquisitions taking place in 2009 or later. a. all methods result in the same Investment on the parent's books b. equity method results in the highest consolidated net income c. initial value method results in the lowest consolidated net income d. consolidated totals for all three methods will be identical e. partial equity method has the parent record excess amortization 9. What describes what an equity investor does if a loss by an investee brings the balance in the investment account below zero. a record the full loss and report a negative balance in the investment account; continue to apply equity accounting b. record the full loss and report a negative balance in the investment account; apply initial value method c. record the full loss and report a negative balance in the investment account: apply the partial equity method d. bring the investor investment account down to zero and suspend equity method until future income from investee offsets unrecorded losses. e. bring the investment account down to zero and continue equity method. 10. What is one cost that is accounted for the same under the purchase method and acquisition methods continue equity method 10. What is one cost that is accounted for the same under the purchase method and acquisition methods a. stock issuance costs b. direct acquisition costs c. bargain purchase d. contingent consideration costs e. in process research and development costs 11. Investor owns 40% of investee but no longer has significant influence. What method of accounting should the investor use. a. equity method if fair value is available b. partial equity method if fair value is not available c. fair value method if fair value is not available d. fair value method if fair value is available e. initial value method if fair value is available 12. Which statement is true regarding an investment accounted for under the equity method when the fair value option has been adopted by the investor. a. changes in fair value of investment are reported in Accumulated Other Comprehensive Income b. changes in the fair value of investment are reported in the Income Statement c. investor may change back to record equity method accounting whenever they want and record their share of investee income d. dividends paid by the investee to the investor under the fair value option are credited to the Investment account e. interest paid by investee to investor is reported by the investor as a credit to Accumulated Other Comprehensive Income. 13. On January 1, 2020 Herald acquires 100% of Tribune and will operate Tribune as a wholly owned subsidiary. Herald's purchase price is less than the fair value of the net assets of Tribune. Push down accounting is not applicable. How is this handled. a. Goodwill is recorded on Herald's books b. Goodwill is recorded on Tribune's books c. Goodwill is reflected in the consolidated financial statements d. Gain on bargain purchase is recorded on Herald's books e. Gain on bargain purchase is reflected in the consolidated financial statements 13. On January 1, 2020 Herald acquires 100% of Tribune and will operate Tribune as a wholly owned subsidiary. Herald's purchase price is less than the fair value of the net assets of Tribune. Push down accounting is not applicable. How is this handled. a. Goodwill is recorded on Herald's books b. Goodwill is recorded on Tribune's books c. Goodwill is reflected in the consolidated financial statements d. Gain on bargain purchase is recorded on Herald's books e. Gain on bargain purchase is reflected in the consolidated financial statements 14. Alpha acquired 100% of Baker on October 1, 2000 in a transaction structured and qualifying for pooling of interest accounting. What would be a likely result when consolidating these companies in 2020. a. the 2020 consolidated income statement would include 12 months results for both Alpha and Baker b. fair value adjustments and amortization are recorded as worksheet entries for Baker's fixed assets c. depending on price paid, either consolidated goodwill or consolidated gain on bargain purchase will result d. dividends paid by Baker to Alpha are recorded in consolidated income e. intercompany receivables and payables between Alpha and Beta do not need to be adjusted in the consolidated totals 13. On January 1, 2020 Herald acquires 100% of Tribune and will operate Tribune as a wholly owned subsidiary. Herald's purchase price is less than the fair value of the net assets of Tribune. Push down accounting is not applicable. How is this handled. a. Goodwill is recorded on Herald's books b. Goodwill is recorded on Tribune's books c. Goodwill is reflected in the consolidated financial statements d. Gain on bargain purchase is recorded on Herald's books e. Gain on bargain purchase is reflected in the consolidated financial statements 14. Alpha acquired 100% of Baker on October 1, 2000 in a transaction structured and qualifying for pooling of interest accounting. What would be a likely result when consolidating these companies in 2020. a. the 2020 consolidated income statement would include 12 months results for both Alpha and Baker b. fair value adjustments and amortization are recorded as worksheet entries for Baker's fixed assets c. depending on price paid, either consolidated goodwill or consolidated gain on bargain purchase will result d. dividends paid by Baker to Alpha are recorded in consolidated income e. intercompany receivables and payables between Alpha and Beta do not need to be adjusted in the consolidated totals 7. Which most accurately describes what happens to the consolidation worksheet entries, assuming there is no push down accounting a. worksheet entries are posted only to the ledgers of the parent as post closing entries b. worksheet entries are posted only to the ledgers of the subsidiary as post closing entries c. worksheet entries are posted to the ledgers of both the parent and the subsidiary as post closing entries d. worksheet entries are posted to the ledgers of whichever company came into existence first e. worksheet entries are not posted to either the ledgers of the parent or the subsidiary 8. What is true about the choice by the parent as to whether to use equity, partial equity or initial value methods for acquisitions taking place in 2009 or later. a. all methods result in the same Investment on the parent's books b. equity method results in the highest consolidated net income c. initial value method results in the lowest consolidated net income d. consolidated totals for all three methods will be identical e. partial equity method has the parent record excess amortization 9. What describes what an equity investor does if a loss by an investee brings the balance in the investment account below zero. a record the full loss and report a negative balance in the investment account; continue to apply equity accounting b. record the full loss and report a negative balance in the investment account; apply initial value method c. record the full loss and report a negative balance in the investment account: apply the partial equity method d. bring the investor investment account down to zero and suspend equity method until future income from investee offsets unrecorded losses. e. bring the investment account down to zero and continue equity method. 10. What is one cost that is accounted for the same under the purchase method and acquisition methods