Question 1

In pooling of interests accounting (no longer allowed), a taxable transaction usually resulted.

Accepted Answer

A) True 
 B)False

Question 2

In business combinations, buyers are usually motivated more by income tax considerations than are sellers.

Accepted Answer

A) True 
 B)False

Question 3

In pooling of interests accounting, a new basis of accounting is established for the target company's assets.

Accepted Answer

A) True 
 B)False

Question 4

_____ In a business combination in which the assets of the target company are acquired, which of the following cannot occur, arise, or result?

Accepted Answer

A)  The recognition of a bargain purchase element . 
B)  A statutory consolidation. 
C)  Goodwill. 
D)  A new basis of accounting. 
E)  None of the above. 
A)  The recognition of a bargain purchase element . 
B)  A statutory consolidation. 
C)  Goodwill. 
D)  A new basis of accounting. 
E)  None of the above.

Question 5

In purchase accounting, a statutory merger is possible.

Accepted Answer

A) True 
 B)False

Question 6

In a statutory merger, a new corporation is created-the legal existence of each combining company is terminated.

Accepted Answer

A) True 
 B)False

Question 7

_____ When a statutory merger has been effected,

Accepted Answer

A)  A new company is formed to carry on the businesses of two previously existing companies. 
B)  One of the combining companies ceases its legal existence. 
C)  A parent-subsidiary relationship is formed. 
D)  A pooling of interests has occurred. 
E)  None of the above. 
A)  A new company is formed to carry on the businesses of two previously existing companies. 
B)  One of the combining companies ceases its legal existence. 
C)  A parent-subsidiary relationship is formed. 
D)  A pooling of interests has occurred. 
E)  None of the above.

Question 8

In a statutory consolidation, a new corporation is created-no corporation's legal existence is terminated.

Accepted Answer

A) True 
 B)False

Question 9

Pye Company acquired 100% of the outstanding common stock of Slyce Company Pye gave $400,000 cash as consideration. Slyce's net assets have a book value of $300,000 and a current value of $375,000.
Required:
Record the entries that would be made on each company's books as a result of this transaction.

Accepted Answer

The answer of Pye Company acquired 100% of the outstanding...

Question 10

In purchase accounting, a new basis of accounting is established for the assets of the two combining companies.

Accepted Answer

A) True 
 B)False

Question 11

An offer made by an acquiring company directly to the stockholders of the target company is known as a(n) ________________________________________.

Accepted Answer

The answer of An offer made by an acquiring company...

Question 12

In purchase accounting, a statutory consolidation is possible.

Accepted Answer

A) True 
 B)False

Question 13

The two resulting organizational forms of an acquired business are __________________________________ and _____________________________________.

Accepted Answer

The answer of The two resulting organizational forms of an...

Question 14

In purchase accounting, the target company's common stock must be acquired.

Accepted Answer

A) True 
 B)False

Question 15

A type of business combination in which one of the combining companies ceases its legal existence is called a(n) _____________________________________.

Accepted Answer

The answer of A type of business combination in which...

Question 16

In purchase accounting, the primary consideration given must be common stock.

Accepted Answer

A) True 
 B)False

Question 17

The type of tax treatment that usually occurs in a purchase is __________________________________________ treatment.

Accepted Answer

The answer of The type of tax treatment that usually...

Question 18

Goodwill must be (1) capitalized and (2) amortized only if its value has been impaired.

Accepted Answer

A) True 
 B)False

Question 19

_____ Under purchase accounting, which of the following items is true?

Accepted Answer

A)  Goodwill always exist. 
B)  Goodwill is charged to earnings at the acquisition date. 
C)  Goodwill is charged to stockholders' equity at the acquisition date. 
D)  Goodwill is capitalized-never to be amortized. 
E)  None of the above. 
A)  Goodwill always exist. 
B)  Goodwill is charged to earnings at the acquisition date. 
C)  Goodwill is charged to stockholders' equity at the acquisition date. 
D)  Goodwill is capitalized-never to be amortized. 
E)  None of the above.

Question 20

In purchase accounting, a taxable transaction always results.

Accepted Answer

A) True 
 B)False

Exam 4: Introduction to Business Combinations

In pooling of interests accounting (no longer allowed), a taxable transaction usually resulted.

In business combinations, buyers are usually motivated more by income tax considerations than are sellers.

In pooling of interests accounting, a new basis of accounting is established for the target company's assets.

_____ In a business combination in which the assets of the target company are acquired, which of the following cannot occur, arise, or result?

In purchase accounting, a statutory merger is possible.

In a statutory merger, a new corporation is created-the legal existence of each combining company is terminated.

_____ When a statutory merger has been effected,

In a statutory consolidation, a new corporation is created-no corporation's legal existence is terminated.

In purchase accounting, a new basis of accounting is established for the assets of the two combining companies.

An offer made by an acquiring company directly to the stockholders of the target company is known as a(n) ________________________________________.

In purchase accounting, a statutory consolidation is possible.

The two resulting organizational forms of an acquired business are __________________________________ and _____________________________________.

In purchase accounting, the target company's common stock must be acquired.

A type of business combination in which one of the combining companies ceases its legal existence is called a(n) _____________________________________.

In purchase accounting, the primary consideration given must be common stock.

The type of tax treatment that usually occurs in a purchase is __________________________________________ treatment.

Goodwill must be (1) capitalized and (2) amortized only if its value has been impaired.

_____ Under purchase accounting, which of the following items is true?

In purchase accounting, a taxable transaction always results.

Wholly Owned Subsidiaries: at Date of Creation

Wholly Owned Subsidiaries: Postcreation Periods

Partially Owned Created Subsidiaries & Variable Interest Entities

The Purchase Method: at Date of Acquisition-100 Ownership

The Purchase Method: Postacquisition Periods and Partial Ownerships

New Basis of Accounting

Introduction to Intercompany Transactions

Intercompany Inventory Transfers

Intercompany Fixed Asset Transfers & Bond Holdings

Changes in a Parents Ownership Interest, Statement of Cash Flows, & Earnings Per Share

Reporting Segment and Related Information

International Accounting Standards & Translating Foreign Currency Transactions

Using Derivatives to Manage Foreign Currency Exposures

Translating Foreign Currency Statements: The Current Rate Method

Translating Foreign Currency Statements: The Temporal Method and the Functional Currency Concept

Interim Period Reporting

Securities and Exchange Commission Reporting

Bankruptcy Reorganizations and Liquidations

Partnerships: Formation and Operation

Partnerships: Changes in Ownership

Partnerships: Liquidations

Estates and Trusts

Governmental Accounting: Basic Principles and the General Fund

Governmental Accounting: The Special-Purpose Funds and Special General Ledger

Not-For-Profit Organizations: Introduction and Private Npos

Filters

The two resulting organizational forms of an acquired business are and ___.