Question 1

How are direct combination costs, contingent consideration, and a bargain purchase reflected in recording an acquisition transaction?

Accepted Answer

The acquisition method embraces a fair v

Question 2

In a transaction accounted for using the acquisition method where consideration transferred exceeds book value of the acquired company, which statement is true for the acquiring company with regard to its investment?

Accepted Answer

A)  Net assets of the acquired company are revalued to their fair values and any excess of consideration transferred over fair value of net assets acquired is allocated to goodwill. 
B)  Net assets of the acquired company are maintained at book value and any excess of consideration transferred over book value of net assets acquired is allocated to goodwill. 
C)  Acquired assets are revalued to their fair values. Acquired liabilities are maintained at book values. Any excess is allocated to goodwill. 
D)  Acquired long-term assets are revalued to their fair values. Any excess is allocated to goodwill. 
A)  Net assets of the acquired company are revalued to their fair values and any excess of consideration transferred over fair value of net assets acquired is allocated to goodwill. 
B)  Net assets of the acquired company are maintained at book value and any excess of consideration transferred over book value of net assets acquired is allocated to goodwill. 
C)  Acquired assets are revalued to their fair values. Acquired liabilities are maintained at book values. Any excess is allocated to goodwill. 
D)  Acquired long-term assets are revalued to their fair values. Any excess is allocated to goodwill.

Question 3

At the date of an acquisition which is not a bargain purchase, the acquisition method

Accepted Answer

A)  Consolidates the subsidiary's assets at fair value and the liabilities at book value. 
B)  Consolidates all subsidiary assets and liabilities at book value. 
C)  Consolidates all subsidiary assets and liabilities at fair value. 
D)  Consolidates current assets and liabilities at book value, and long-term assets and liabilities at fair value. 
E)  Consolidates the subsidiary's assets at book value and the liabilities at fair value. 
A)  Consolidates the subsidiary's assets at fair value and the liabilities at book value. 
B)  Consolidates all subsidiary assets and liabilities at book value. 
C)  Consolidates all subsidiary assets and liabilities at fair value. 
D)  Consolidates current assets and liabilities at book value, and long-term assets and liabilities at fair value. 
E)  Consolidates the subsidiary's assets at book value and the liabilities at fair value.

Question 4

In an acquisition where 100% control is acquired, how would the land accounts of the parent and the land accounts of the subsidiary be reported on consolidated financial statements?

Accepted Answer

The answer of In an acquisition where 100% control is...

Question 5

Compute the consolidated cash upon completion of the acquisition.

Accepted Answer

A)  $1,350. 
B)  $1,110. 
C)  $1,080. 
D)  $1,085. 
E)  $ 635. 
A)  $1,350. 
B)  $1,110. 
C)  $1,080. 
D)  $1,085. 
E)  $ 635.

Question 6

Compute the amount of consolidated additional paid-in capital at date of acquisition.

Accepted Answer

A)  $1,080. 
B)  $1,420. 
C)  $1,065. 
D)  $1,425. 
E)  $1,440. 
A)  $1,080. 
B)  $1,420. 
C)  $1,065. 
D)  $1,425. 
E)  $1,440.

Question 7

Prepare the journal entries to record: (1) the issuance of stock by Jode; and (2) the payment of the combination costs.

Accepted Answer

Entry One - To record the issu

Question 8

Direct combination costs and amounts incurred to register and issue stock in connection with a business combination.How should those costs be accounted for in a pre-2009 business combination?

Accepted Answer

The answer of Direct combination costs and amounts incurred to...

Question 9

What amount will be reported for consolidated inventory?

Accepted Answer

A)  $1,000,000. 
B)  $ 960,000. 
C)  $ 920,000. 
D)  $ 660,000. 
E)  $ 620,000. 
A)  $1,000,000. 
B)  $ 960,000. 
C)  $ 920,000. 
D)  $ 660,000. 
E)  $ 620,000.

Question 10

On December 31, 2017, assuming that Cames will retain its separate corporate existence, what value is assigned to Riley's investment account?

Accepted Answer

A)  $ 150,000. 
B)  $ 300,000. 
C)  $ 750,000. 
D)  $ 760,000. 
E)  $1,350,000. 
A)  $ 150,000. 
B)  $ 300,000. 
C)  $ 750,000. 
D)  $ 760,000. 
E)  $1,350,000.

Question 11

Describe the accounting for direct costs, indirect costs, and issuance costs under the acquisition method of accounting for a business combination.

Accepted Answer

Direct and indirect combinatio

Question 12

Which of the following is a not a reason for a business combination to take place?

Accepted Answer

A)  Cost savings through elimination of duplicate facilities. 
B)  Quick entry for new and existing products into domestic and foreign markets. 
C)  Diversification of business risk. 
D)  Vertical integration. 
E)  Increase in stock price of the acquired company. 
A)  Cost savings through elimination of duplicate facilities. 
B)  Quick entry for new and existing products into domestic and foreign markets. 
C)  Diversification of business risk. 
D)  Vertical integration. 
E)  Increase in stock price of the acquired company.

Question 13

Assuming that Corr retains a separate corporate existence after this acquisition, at what amount is the investment recorded on Goodwin's books?

Accepted Answer

A)  $1,540. 
B)  $1,800. 
C)  $1,860. 
D)  $1,825. 
E)  $1,625. 
A)  $1,540. 
B)  $1,800. 
C)  $1,860. 
D)  $1,825. 
E)  $1,625.

Question 14

Assume that Bellington paid cash of $2.8 million.No stock is issued.An additional $50,000 is paid in direct combination costs.
Required:
For Goodwill, determine what balance would be included in a December 1, 2017 consolidation.

Accepted Answer

Fair value of consideration transferred:

Question 15

The following are preliminary financial statements for Green Co.and Gold Co.for the year ending December 31, 2018 prior to Black's acquisition of Blue.
   On December 31, 2018 (subsequent to the preceding statements), Green exchanged 10,000 shares of its $10 par value common stock for all of the outstanding shares of Gold.Green's stock on that date has a fair value of $60 per share.Green was willing to issue 10,000 shares of stock because Gold's land was appraised at $204,000.Green also paid $14,000 to attorneys and accountants who assisted in creating this combination.
Required:
Assuming that these two companies retained their separate legal identities, prepare a consolidation worksheet as of December 31, 2018 after the acquisition transaction is completed.

Accepted Answer

(1) I; (2)

Question 16

Compute the amount of consolidated land at date of acquisition.

Accepted Answer

A)  $1,000. 
B)  $ 960. 
C)  $ 920. 
D)  $ 400. 
E)  $ 320. 
A)  $1,000. 
B)  $ 960. 
C)  $ 920. 
D)  $ 400. 
E)  $ 320.

Question 17

What is the difference in consolidated results between a business combination whereby the acquired company is dissolved, and a business combination whereby separate incorporation is maintained?

Accepted Answer

There is n

Question 18

Goodwill is often acquired as part of a business combination.Why, when separate incorporation is maintained, does Goodwill not appear on the Parent company's trial balance as a separate account?

Accepted Answer

While the Goodwill does not appear on th

Question 19

What is the primary difference between recording an acquisition when the subsidiary is dissolved and when separate incorporation is maintained?

Accepted Answer

When the subsidiary is dissolved, the ac

Question 20

How are stock issuance costs accounted for in an acquisition business combination?

Accepted Answer

Stock issuance costs reduce th

Exam 2: A: Consolidation of Financial Information

How are direct combination costs, contingent consideration, and a bargain purchase reflected in recording an acquisition transaction?

In a transaction accounted for using the acquisition method where consideration transferred exceeds book value of the acquired company, which statement is true for the acquiring company with regard to its investment?

At the date of an acquisition which is not a bargain purchase, the acquisition method

In an acquisition where 100% control is acquired, how would the land accounts of the parent and the land accounts of the subsidiary be reported on consolidated financial statements?

Compute the consolidated cash upon completion of the acquisition.

Compute the amount of consolidated additional paid-in capital at date of acquisition.

Prepare the journal entries to record: (1) the issuance of stock by Jode; and (2) the payment of the combination costs.

Direct combination costs and amounts incurred to register and issue stock in connection with a business combination.How should those costs be accounted for in a pre-2009 business combination?

What amount will be reported for consolidated inventory?

On December 31, 2017, assuming that Cames will retain its separate corporate existence, what value is assigned to Riley's investment account?

Describe the accounting for direct costs, indirect costs, and issuance costs under the acquisition method of accounting for a business combination.

Which of the following is a not a reason for a business combination to take place?

Assuming that Corr retains a separate corporate existence after this acquisition, at what amount is the investment recorded on Goodwin's books?

Assume that Bellington paid cash of $2.8 million.No stock is issued.An additional $50,000 is paid in direct combination costs. Required: For Goodwill, determine what balance would be included in a December 1, 2017 consolidation.

Compute the amount of consolidated land at date of acquisition.

What is the difference in consolidated results between a business combination whereby the acquired company is dissolved, and a business combination whereby separate incorporation is maintained?

Goodwill is often acquired as part of a business combination.Why, when separate incorporation is maintained, does Goodwill not appear on the Parent company's trial balance as a separate account?

What is the primary difference between recording an acquisition when the subsidiary is dissolved and when separate incorporation is maintained?

How are stock issuance costs accounted for in an acquisition business combination?

The Equity Method of Accounting for Investments

A: the Equity Method of Accounting for Investments

Consolidation of Financial Information

Consolidations - Subsequent to the Date of Acquisition

A: Consolidations - Subsequent to the Date of Acquisition

Consolidated Financial Statements and Outside Ownership

A: Consolidated Financial Statements and Outside Ownership

Consolidated Financial Statements Intra-Entity Asset Transactions

A: Consolidated Financial Statements Intra-Entity Asset Transactions

Variable Interest Entities, Intra-Entity Debt, Consolidated Cash Flows, and Other Issues

A: Variable Interest Entities, Intra-Entity Debt, Consolidated Cash Flows, and Other Issues

Consolidated Financial Statements - Ownership Patterns and Income Taxes

A: Consolidated Financial Statements - Ownership Patterns and Income Taxes

Segment and Interim Reporting

A: Segment and Interim Reporting

Foreign Currency Transactions and Hedging Foreign Exchange Risk

A: Foreign Currency Transactions and Hedging Foreign Exchange Risk

Translation of Foreign Currency Financial Statements

A: Translation of Foreign Currency Financial Statements

Worldwide Accounting Diversity and International Accounting Standards

A: Worldwide Accounting Diversity and International Accounting Standards

Financial Reporting and the Securities and Exchange Commission

A: Financial Reporting and the Securities and Exchange Commission

Accounting for Legal Reorganizations and Liquidations

A: Accounting for Legal Reorganizations and Liquidations

Partnerships: Formation and Operation

A: Partnerships: Formation and Operation

Partnerships: Termination and Liquidation

A: Partnerships: Termination and Liquidation

Accounting for State and Local Governments, Part I

A: Accounting for State and Local Governments, Part I

Accounting for State and Local Governments, Part II

A: Accounting for State and Local Governments, Part II

Accounting for Not-For-Profit Entities

A: Accounting for Not-For-Profit Entities

Accounting for Estates and Trusts

A: Accounting for Estates and Trusts

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