Reference no: EM132689842

Question 1: If an entity acquires another entity and has no AAP associated with the purchase, it can be assumed that:

A. The carrying value of the acquired entity is greater than total assets

B. The book value of the acquired entity is equal to the purchase price.

C. The book value of the acquired entity is equal to the purchase price plus goodwill.

D. None of the above

Question 2: An entry to defer gross profit on an inter-company safe will always include:

A. a reduction in cost of goods sold for the amount of gross profit

B. A decrease in sales for the amount of gross profit

C.an increase in inventory for the amount of gross profit

D.All of the above are always required

E. None of the above are always required

Question 3: If Sub sells to parent goods/services on which there is a gross profit, the elimination entries in the year of the sale will likely include an entry:

A. to adjust NCI for the amount of the gross profit.

B.to reverse the amount of gross profit at the end of the period

C.To adjust net income for the amount of the gross profit

D.None of the above

E.All of the above