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Push-down accounting, equity method, partial equity method

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8. Push-down accounting is concerned with the
A) impact of the purchase on the subsidiary's financial statements.
B) recognition of goodwill by the parent.
C) correct consolidation of the financial statements.
D) impact of the purchase on the separate financial statements of the parent.
E) recognition of dividends received from the subsidiary.

9. Under the equity method,
A) The investment account remains at initial cost.
B) Dividends received are recorded as revenue.
C) Goodwill is amortized over 20 years.
D) Income reported by the subsidiary increases the investment account.
E) Dividends received increase the investment account.

10. Under the partial equity method,
A) The investment account remains at initial cost.
B) Dividends received are recorded as revenue.
C) Amortization of the excess of cost over book value of net assets is applied over their useful lives to reduce the investment account.
D) Amortization of the excess of cost over book value is ignored in regard to the investment account.
E) Dividends received increase the investment account.

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Answers to multiple choice questions on Push-down accounting, equity method, partial equity method.

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8. Push-down accounting is concerned with the
A) impact of the purchase on the subsidiary's financial statements.
B) recognition of goodwill by the parent.
C) correct consolidation of the financial statements.
D) impact of the purchase on the separate financial statements of the parent.
E) recognition of dividends received from the subsidiary.

Answer: A) impact of the purchase on the subsidiary's financial statements.

Push-down Accounting: On the date of acquisition the subsidiary revalues its assets and ...

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