Question 1

Long-term obligations
Bond indenture are a frequent part of the issuance of bonds and other long-term debt.Discuss what bond indenture are,why the auditor is concerned about them and some of the audit procedures that would be applied because of them.What are some common types of provisions that are typically included in such agreements?

Accepted Answer

The answer of Long-term obligations
Bond indenture are a frequent part...

Question 2

Audit of long-term obligations
What considerations will the auditor make in auditing a client's long-term obligations?

Accepted Answer

The answer of Audit of long-term obligations
What considerations will the...

Question 3

What type of expert will usually be required by management and the auditors to evaluate the purchase price of a target entity?
A)Actuary
B)Valuation
C)Registrar
D)Underwriter

Accepted Answer

A valuation expert is usually required to evaluate the purchase price of a target entity. This expert will use various valuation methods to determine the fair value of the entity being acquired.

Question 4

The reporting unit in an acquisition may be which of the following?
A)the combined company.
B)a separate sub-unit of the company.
C)an operating unit of the company.
D)any of the above.

Accepted Answer

The reporting unit in an acquisition may be any of the above options. It depends on the specific circumstances of the acquisition and how the acquiring company plans to integrate the acquired company or business unit into its existing operations. The reporting unit could be the combined company as a whole, a separate sub-unit of the company, or an operating unit of the company.

Question 5

Goodwill
Discuss what a 'reporting unit' is in an acquisition and how it is related to goodwill and goodwill impairment.

Accepted Answer

The answer of Goodwill
Discuss what a 'reporting unit' is in...

Question 6

In mergers and acquisitions,the term used for the acquired segment to which the goodwill from the acquisition is assigned is called the
A)sub-unit.
B)merger-unit.
C)reporting-unit.
D)segment-unit.

Accepted Answer

The term used for the acquired segment to which the goodwill from the acquisition is assigned is called the reporting unit. This is the unit within the acquiring company's structure that is responsible for generating the financial results that are being acquired. The reporting unit is typically a segment of the acquired company that has its own management team and operates as a standalone business. The goodwill from the acquisition is then assigned to the reporting unit for accounting purposes. This allows the acquiring company to track the performance of the acquired segment separately and assess the overall impact of the acquisition on its financial results.

Question 7

Common Stock and Owners' Equity
State the transactions that affect stockholders' equity that should be addressed during an audit.

Accepted Answer

The answer of Common Stock and Owners' Equity
State the transactions...

Question 8

Goodwill impairment
Identify four principles covered in the accounting literature for accounting for goodwill impairment that were provided by the FASB.

Accepted Answer

The answer of Goodwill impairment
Identify four principles covered in the...

Question 9

In an acquisition,the definition of a reporting unit usually does not involve which of the following?
A)separate accounting.
B)synergies of the combination.
C)being easily separable from the company
D)being managed as a separate segment.

Accepted Answer

The definition of a reporting unit usually involves separate accounting, being managed as a separate segment, and being easily separable from the company. However, the concept of synergies of the combination is not typically used to define a reporting unit in an acquisition. Rather, it is used to assess the expected benefits from the combination of two or more reporting units.

Question 10

Common stock
During the period ended December 31,2011,Eggball Company issued one million shares of its common stock in an offering for $9 million.What are the major tests of details that will be performed related to the paid-in capital accounts of Eggball in the year-end audit?

Accepted Answer

The answer of Common stock
During the period ended December 31,2011,Eggball...

Question 11

Goodwill impairment
What is the two-step process necessary to evaluate the impairment of goodwill?

Accepted Answer

The answer of Goodwill impairment
What is the two-step process necessary...

Question 12

Related entity transactions
What are the auditor's primary concerns regarding related entity transactions and what procedures will an auditor perform to test for such transactions?

Accepted Answer

The answer of Related entity transactions
What are the auditor's primary...

Question 13

Mergers and Acquisitions
Identify the major valuation issues associated with mergers and acquisitions..

Accepted Answer

The answer of Mergers and Acquisitions
Identify the major valuation issues...

Quiz 14: Audit of Longer-Term Liabilities, equity, acquisitions, and Related-Entity Transactions, long-Term Liabilities, and Equity

Audit of long-term obligations What considerations will the auditor make in auditing a client's long-term obligations?

What type of expert will usually be required by management and the auditors to evaluate the purchase price of a target entity?

The reporting unit in an acquisition may be which of the following?

Goodwill Discuss what a 'reporting unit' is in an acquisition and how it is related to goodwill and goodwill impairment.

In mergers and acquisitions,the term used for the acquired segment to which the goodwill from the acquisition is assigned is called the

Common Stock and Owners' Equity State the transactions that affect stockholders' equity that should be addressed during an audit.

Goodwill impairment Identify four principles covered in the accounting literature for accounting for goodwill impairment that were provided by the FASB.

In an acquisition,the definition of a reporting unit usually does not involve which of the following?

Common stock During the period ended December 31,2011,Eggball Company issued one million shares of its common stock in an offering for $9 million.What are the major tests of details that will be performed related to the paid-in capital accounts of Eggball in the year-end audit?

Goodwill impairment What is the two-step process necessary to evaluate the impairment of goodwill?

Related entity transactions What are the auditor's primary concerns regarding related entity transactions and what procedures will an auditor perform to test for such transactions?

Mergers and Acquisitions Identify the major valuation issues associated with mergers and acquisitions..