Question 1

Which of the following statements is true regarding a statutory merger?

Accepted Answer

A)  The original companies dissolve while remaining as separate divisions of a newly created company. 
B)  Both companies remain in existence as legal corporations with one corporation now a subsidiary of the acquiring company. 
C)  The acquired company dissolves as a separate corporation and becomes a division of the acquiring company. 
D)  The acquiring company acquires the stock of the acquired company as an investment. 
E)  A statutory merger is no longer a legal option. 
A)  The original companies dissolve while remaining as separate divisions of a newly created company. 
B)  Both companies remain in existence as legal corporations with one corporation now a subsidiary of the acquiring company. 
C)  The acquired company dissolves as a separate corporation and becomes a division of the acquiring company. 
D)  The acquiring company acquires the stock of the acquired company as an investment. 
E)  A statutory merger is no longer a legal option.

Question 2

Compute consolidated cash at the completion of the acquisition.

Accepted Answer

A)  $1,350. 
B)  $1,085. 
C)  $1,110. 
D)  $ 870. 
E)  $ 845. 
A)  $1,350. 
B)  $1,085. 
C)  $1,110. 
D)  $ 870. 
E)  $ 845.

Question 3

What is the primary difference between: (i) accounting for a business combination when the subsidiary is dissolved; and (ii) accounting for a business combination when the subsidiary retains its incorporation?

Accepted Answer

A)  If the subsidiary is dissolved, it will not be operated as a separate division. 
B)  If the subsidiary is dissolved, assets and liabilities are consolidated at their book values. 
C)  If the subsidiary retains its incorporation, there will be no goodwill associated with the acquisition. 
D)  If the subsidiary retains its incorporation, assets and liabilities are consolidated at their book values. 
E)  If the subsidiary retains its incorporation, the consolidation is not formally recorded in the accounting records of the acquiring company. 
A)  If the subsidiary is dissolved, it will not be operated as a separate division. 
B)  If the subsidiary is dissolved, assets and liabilities are consolidated at their book values. 
C)  If the subsidiary retains its incorporation, there will be no goodwill associated with the acquisition. 
D)  If the subsidiary retains its incorporation, assets and liabilities are consolidated at their book values. 
E)  If the subsidiary retains its incorporation, the consolidation is not formally recorded in the accounting records of the acquiring company.

Question 4

Using the acquisition method for a business combination, goodwill is generally calculated as the:

Accepted Answer

A)  Cost of the investment less the subsidiary's book value at the beginning of the year. 
B)  Cost of the investment less the subsidiary's book value at the acquisition date. 
C)  Cost of the investment less the subsidiary's fair value at the beginning of the year. 
D)  Cost of the investment less the subsidiary's fair value at acquisition date. 
E)  Zero, it is no longer allowed under federal law. 
A)  Cost of the investment less the subsidiary's book value at the beginning of the year. 
B)  Cost of the investment less the subsidiary's book value at the acquisition date. 
C)  Cost of the investment less the subsidiary's fair value at the beginning of the year. 
D)  Cost of the investment less the subsidiary's fair value at acquisition date. 
E)  Zero, it is no longer allowed under federal law.

Question 5

Compute consolidated inventory at the date of the acquisition.

Accepted Answer

A)  $1,650. 
B)  $1,810. 
C)  $1,230. 
D)  $ 580. 
E)  $1,830. 
A)  $1,650. 
B)  $1,810. 
C)  $1,230. 
D)  $ 580. 
E)  $1,830.

Question 6

Compute consolidated expenses immediately following the acquisition.

Accepted Answer

A)  $2,760. 
B)  $2,770. 
C)  $2,785. 
D)  $3,380. 
E)  $3,390. 
A)  $2,760. 
B)  $2,770. 
C)  $2,785. 
D)  $3,380. 
E)  $3,390.

Question 7

Compute consolidated equipment (net) at the date of the acquisition.

Accepted Answer

A)  $ 400. 
B)  $ 660. 
C)  $1,060. 
D)  $1,040. 
E)  $1,050. 
A)  $ 400. 
B)  $ 660. 
C)  $1,060. 
D)  $1,040. 
E)  $1,050.

Question 8

Elon Corp.obtained all of the common stock of Finley Co., paying slightly less than the fair value of Finley's net assets acquired.How should the difference between the consideration transferred and the fair value of the net assets be treated if the transaction is accounted for as an acquisition?

Accepted Answer

The difference between the con

Question 9

Compute consolidated buildings (net) immediately following the acquisition.

Accepted Answer

A)  $2,450. 
B)  $2,340. 
C)  $1,800. 
D)  $ 650. 
E)  $1,690. 
A)  $2,450. 
B)  $2,340. 
C)  $1,800. 
D)  $ 650. 
E)  $1,690.

Question 10

What amount will be reported for consolidated common stock?

Accepted Answer

A)  $1,000,000. 
B)  $1,080,000. 
C)  $1,200,000. 
D)  $1,280,000. 
E)  $1,360,000. 
A)  $1,000,000. 
B)  $1,080,000. 
C)  $1,200,000. 
D)  $1,280,000. 
E)  $1,360,000.

Question 11

How are direct and indirect costs accounted for when applying the acquisition method for a business combination?

Accepted Answer

The answer of How are direct and indirect costs accounted...

Question 12

Which of the following statements is true?

Accepted Answer

A)  The pooling of interests for business combinations is an alternative to the acquisition method. 
B)  The purchase method for business combinations is an alternative to the acquisition method. 
C)  Neither the purchase method nor the pooling of interests method is allowed for new business combinations. 
D)  Any previous business combination originally accounted for under purchase or pooling of interests accounting method will now be accounted for under the acquisition method of accounting for business combinations. 
E)  Companies previously using the purchase or pooling of interests accounting method must report a change in accounting principle when consolidating those subsidiaries with new acquisition combinations. 
A)  The pooling of interests for business combinations is an alternative to the acquisition method. 
B)  The purchase method for business combinations is an alternative to the acquisition method. 
C)  Neither the purchase method nor the pooling of interests method is allowed for new business combinations. 
D)  Any previous business combination originally accounted for under purchase or pooling of interests accounting method will now be accounted for under the acquisition method of accounting for business combinations. 
E)  Companies previously using the purchase or pooling of interests accounting method must report a change in accounting principle when consolidating those subsidiaries with new acquisition combinations.

Question 13

Compute consolidated buildings (net) at the date of the acquisition.

Accepted Answer

A)  $2,450. 
B)  $2,340. 
C)  $1,800. 
D)  $ 650. 
E)  $1,690. 
A)  $2,450. 
B)  $2,340. 
C)  $1,800. 
D)  $ 650. 
E)  $1,690.

Question 14

At the date of acquisition, by how much does Riley's additional paid-in capital increase or decrease?

Accepted Answer

A)  $ 0. 
B)  $440,000 increase. 
C)  $450,000 increase. 
D)  $640,000 increase. 
E)  $650,000 decrease. 
A)  $ 0. 
B)  $440,000 increase. 
C)  $450,000 increase. 
D)  $640,000 increase. 
E)  $650,000 decrease.

Question 15

Compute the amount of consolidated common stock at date of acquisition.

Accepted Answer

A)  $370. 
B)  $570. 
C)  $610. 
D)  $330. 
E)  $530. 
A)  $370. 
B)  $570. 
C)  $610. 
D)  $330. 
E)  $530.

Question 16

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 17

What term is used to refer to a business combination in which only one of the original companies continues to exist?

Accepted Answer

The approp

Question 18

Assume that Bullen issued preferred stock with a par value of $240,000 and a fair value of $500,000 for all of the outstanding shares of Vicker in an acquisition business combination.What will be the balance in the consolidated Inventory and Land accounts?

Accepted Answer

A)  $440,000, $496,000. 
B)  $440,000, $520,000. 
C)  $425,000, $505,000. 
D)  $400,000, $500,000. 
E)  $427,000, $510,000. 
A)  $440,000, $496,000. 
B)  $440,000, $520,000. 
C)  $425,000, $505,000. 
D)  $400,000, $500,000. 
E)  $427,000, $510,000.

Question 19

How would you account for in-process research and development acquired in a business combination accounted for as an acquisition?

Accepted Answer

In-Process Research and Develo

Question 20

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.

Exam 2: Consolidation of Financial Information

Which of the following statements is true regarding a statutory merger?

Compute consolidated cash at the completion of the acquisition.

What is the primary difference between: (i) accounting for a business combination when the subsidiary is dissolved; and (ii) accounting for a business combination when the subsidiary retains its incorporation?

Using the acquisition method for a business combination, goodwill is generally calculated as the:

Compute consolidated inventory at the date of the acquisition.

Compute consolidated expenses immediately following the acquisition.

Compute consolidated equipment (net) at the date of the acquisition.

Elon Corp.obtained all of the common stock of Finley Co., paying slightly less than the fair value of Finley's net assets acquired.How should the difference between the consideration transferred and the fair value of the net assets be treated if the transaction is accounted for as an acquisition?

Compute consolidated buildings (net) immediately following the acquisition.

What amount will be reported for consolidated common stock?

How are direct and indirect costs accounted for when applying the acquisition method for a business combination?

Which of the following statements is true?

Compute consolidated buildings (net) at the date of the acquisition.

At the date of acquisition, by how much does Riley's additional paid-in capital increase or decrease?

Compute the amount of consolidated common stock at date of acquisition.

What amount will be reported for consolidated inventory?

What term is used to refer to a business combination in which only one of the original companies continues to exist?

Assume that Bullen issued preferred stock with a par value of $240,000 and a fair value of $500,000 for all of the outstanding shares of Vicker in an acquisition business combination.What will be the balance in the consolidated Inventory and Land accounts?

How would you account for in-process research and development acquired in a business combination accounted for as an acquisition?

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

The Equity Method of Accounting for Investments

A: the Equity Method of Accounting for Investments

A: 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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