Which statement is FALSE?
a) Goodwill recorded as the result of an acquisition is defined as the purchase price less the book value of net assets |
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b) Under SFAS 141, accounting for acquisitions can no longer result in an increase in the consolidated entity's stockholders' equity. |
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c) One of the problems with purchase accounting is that there is often very little basis for comparability of financial statements before acquisition and after acquisition. |
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d) One of the problems with consolidated financial statements is that all intercompany transactions are not reported. |
Which statement is FALSE?
a) Translation is the process under which local currency results are translated into the functional currency. |
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b) When using the current rate method to record foreign subsidiary results, gains and losses arising from the translation process are reported separately as a component of stockholders' equity and excluded from reported net income. |
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c) If the functional currency of a foreign-based subsidiary of an American company is the local currency, the current rate method of translation should be used for consolidation purposes. |
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d) Reported sales in US dollars of revenues from a foreign subsidiary will be the same regardless of the functional currency. |
a) Goodwill recorded as a result of an acquisition is defined as the purchase price less the book value of the net assets | |
FALSE | |
When the Purchasing company pays an amount higher than the net value of the assets of the Selling Company, it means the Purchasing Company isacquiring it for a premium due to the godwill.Therefore such difference is treated as Good will. | |
b) Translation is the process under which local currency results are translated into the functional currency. | |
FALSE | |
Translation is the process used for expressing the financial results of a separate entity so that it may be included in the parent entity’s consolidated financial statements when the separate entity’s functional currency is different from the parent’s. |
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