Exam 4: Introduction to Business Combinations

To avoid changing the basis of accounting for the target company's assets, the acquiring company should acquire assets instead of common stock.

_____ Goodwill, if present, can be reported as a result of using

In business combinations, the terminology in the U.S. Internal Revenue Code focuses on things from the perspective of the _________________________________.

When assets are acquired, the target company never makes any entries on its books as a result of the combination.

Whether to use purchase accounting or pooling of interests accounting is left to the judgment of management.

_____ Goodwill must be accounted for in which of the following manners?

In pooling of interests accounting, the consideration given must be common stock.

Goodwill must be capitalized--never to be amortized.

In business combinations, the terminology in FAS 141 focuses on things from the perspective of the ________________________________________.

_____ A taxable business combination has ramifications for the

To avoid having to deal with the target company's labor union after the combination, the acquiring company should acquire common stock instead of assets.

The process of trying to acquire the business of a target company is commonly called a(n) ________________________________________.

In purchase accounting, an account called Investment in Subsidiary is never used.

In pooling of interests accounting (no longer allowed), a nontaxable transaction always resulted.

A type of business combination no longer allowed in which common stock had to be the primary consideration given is a(n) _____________________________________.

_____ In purchase accounting, a new basis of accounting is established for the

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

_____A reason for acquiring assets versus acquiring common stock is that

_____ In all cases in which all of the target company's outstanding common stock is acquired,

In the acquisition of 100% of the target company's assets, purchase accounting is optional.