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									1.In an acquisition where control is achieved, how would the land accounts of the parent a
accounts of the subsidiary be combined?




                                               (Points : 1)
      Entry   A
      Entry   B
      Entry   C
      Entry   D
      Entry   E

2.   Using the acquisition method for   a business combination, goodwill is generally defined a
      Cost of the investment less the   subsidiary's book value at the beginning of the year
      Cost of the investment less the   subsidiary's book value at the acquisition date
      Cost of the investment less the   subsidiary's fair value at the beginning of the year
      Cost of the investment less the subsidiary's fair value at acquisition date
      is no longer allowed under federal law

3.How are direct and indirect costs accounted for when applying the acquisition method fo
combination?




                                                                              (Points : 1)
      Entry   A
      Entry   B
      Entry   C
      Entry   D
      Entry   E

4.   According to GAAP, the pooling of interest method for business combinations (Points : 1)
      Is preferred to the purchase method
      Is allowed for all new acquisitions
     Is no longer allowed for business combinations after June 30, 2001
     Is no longer allowed for business combinations after December 31, 2010
     Is only allowed for large corporate mergers like Exxon and Mobil

5.When the acquisition price of an acquired firm is less than the fair value of the identifiab
assets, all of the following are recorded at fair value except (Points : 1)
   Assumed liabilities
   Current assets
   Long-lived assets
   Each of the above is recorded at fair value
   None of the above are recorded at fair value

6.When does gain recognition accompany a business combination? (Points : 1)
   When a bargain purchase occurs
   In an acquisition when the value of all assets and liabilities cannot be
determined
   When the amount of a bargain purchase exceeds the value of the
applicable noncurrent assets (other than certain exceptions) held by the
acquired company
   In a combination created in the middle of a fiscal year
   All business combinations result in a gain because the resulting
company is in a better financial position
7.   Acquired in-process research and development is considered as (Points : 1)
      a definite-lived asset subject to amortization
      a definite-lived asset subject to testing for impairment
      an indefinite-lived asset subject to amortization
      an indefinite-lived asset subject to testing for impairment
      a research and development expense at the date of acquisition

8.A statutory merger is a(n) (Points : 1)
   business combination in which
only one of the two companies
continues to exist as a legal
corporation
   business combination in which
both companies continues to exist
   acquisition of a competitor
   acquisition of a supplier or a
customer
   legal proposal to acquire
outstanding shares of the target's
stock

9.   Prior to being united in a business combination, Botkins Inc. and Volkerson Corp. had th
stockholders' equity figures:




Botkins issued 56,000 new shares of its common stock valued at $3.25 per share for all of
outstanding stock of Volkerson.

Assume that Botkins acquired Volkerson on January 1, 2010. How much did Botkins pay fo
investment in Volkerson? (Points : 2)
   $56,000
   $182,000
   $209,000
   $261,000
   $312,000

10.   Prior to being united in a business combination, Botkins Inc. and Volkerson Corp. had t
stockholders' equity figures:




Botkins issued 56,000 new shares of its common stock valued at $3.25 per share for all of
outstanding stock of Volkerson.

Assume that Botkins acquired Volkerson on January 1, 2010. Immediately afterwards, wh
consolidated Common Stock? (Points : 2)
   $456,000
   $402,000
   $274,000
   $276,000
   $330,000

  Which of the following statements is true regarding the acquisition method of accountin
11.
business combination? (Points : 1)
      Net assets of the acquired company are reported at their fair values
      Net assets of the acquired company are reported at their book values
      Any goodwill associated with the acquisition is reported as a development cost
      The acquisition can only be effected by a mutual exchange of voting common stock
      Indirect costs of the combination reduce additional paid-in capital

12.The financial statements for Goodwin, Inc., and Corr Company for the year ended Dece
20X1, prior to Goodwin's acquisition business combination transaction regarding Corr, follo
thousands):
On December 31, 20X1, Goodwin paid $600 cash and issued 30 shares of its $10 par valu
stock to the owners of Corr to acquire all of the outstanding shares of Corr. Goodwin share
value of $40 per share.
Corr's equipment was actually worth $1,400 but its buildings were only valued at $560.

Compute the goodwill arising from this acquisition at December 31, 20X1 (Points : 2)
  $0
  $100
  $125
  $160
  $45

13.According to the acquisition method of accounting for business combinations, costs paid
attorneys and accountants for services in arranging a merger should be (Points : 1)
    Written off over a five-year maximum useful life
    Recorded as an expense in the period the merger takes place
    Included in recognized goodwill
    Capitalized as part of the overall fair value acquired in the merger
    Costs paid are included in the purchase prices and not accounted for separately

14. Which      of the following is the best theoretical justification for consolidated financial state
(Points : 1)
      In form the companies are one entity; in substance they are separate
      In form and substance the companies are one entity
      In form the companies are separate; in substance they are one entity
       In form and substance the companies are separate
       In accounting consolidations help ensure job security
	
  

								
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