Question 1

If Osorio retains a separate corporate existence, what amount was recorded as the investment in Osorio?

Accepted Answer

A)  $930. 
B)  $820. 
C)  $800. 
D)  $835. 
E)  $815. 
A)  $930. 
B)  $820. 
C)  $800. 
D)  $835. 
E)  $815.

Question 2

How are direct combination costs accounted for in an acquisition transaction?

Accepted Answer

In an acquisition, d

Question 3

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 4

In a transaction accounted for using the acquisition method where consideration transferred is less than fair value of net assets acquired, which statement is true?

Accepted Answer

A)  Negative goodwill is recorded. 
B)  A deferred credit is recorded. 
C)  A gain on bargain purchase is recorded. 
D)  Long-term assets of the acquired company are reduced in proportion to their fair values. Any excess is recorded as a deferred credit. 
E)  Long-term assets and liabilities of the acquired company are reduced in proportion to their fair values. Any excess is recorded as gain. 
A)  Negative goodwill is recorded. 
B)  A deferred credit is recorded. 
C)  A gain on bargain purchase is recorded. 
D)  Long-term assets of the acquired company are reduced in proportion to their fair values. Any excess is recorded as a deferred credit. 
E)  Long-term assets and liabilities of the acquired company are reduced in proportion to their fair values. Any excess is recorded as gain.

Question 5

In a business combination where a subsidiary retains its incorporation and which is accounted for under the acquisition method, how should stock issuance costs and direct combination costs be treated?

Accepted Answer

A)  Stock issuance costs and direct combination costs are expensed as incurred. 
B)  Direct combination costs are ignored, and the stock issuance costs result in a reduction to additional paid-in capital. 
C)  Direct combination costs are expensed as incurred and stock issuance costs result in a reduction to additional paid-in capital. 
D)  Both are treated as part of the acquisition consideration transferred. 
E)  Both reduce additional paid-in capital. 
A)  Stock issuance costs and direct combination costs are expensed as incurred. 
B)  Direct combination costs are ignored, and the stock issuance costs result in a reduction to additional paid-in capital. 
C)  Direct combination costs are expensed as incurred and stock issuance costs result in a reduction to additional paid-in capital. 
D)  Both are treated as part of the acquisition consideration transferred. 
E)  Both reduce additional paid-in capital.

Question 6

What amount will be reported for consolidated additional paid-in capital?

Accepted Answer

A)  $365,000. 
B)  $350,000. 
C)  $360,000. 
D)  $375,000. 
E)  $345,000. 
A)  $365,000. 
B)  $350,000. 
C)  $360,000. 
D)  $375,000. 
E)  $345,000.

Question 7

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 8

Determine the balance for Goodwill that would be included in a December 1, 2017, consolidation.

Accepted Answer

Fair value of consideration transferred:

Question 9

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 10

A statutory merger is a(n)

Accepted Answer

A)  Business combination in which only one of the two companies continues to exist as a legal corporation. 
B)  Business combination in which both companies continue to exist. 
C)  Acquisition of a competitor. 
D)  Acquisition of a supplier or a customer. 
E)  Legal proposal to acquire outstanding shares of the target's stock. 
A)  Business combination in which only one of the two companies continues to exist as a legal corporation. 
B)  Business combination in which both companies continue to exist. 
C)  Acquisition of a competitor. 
D)  Acquisition of a supplier or a customer. 
E)  Legal proposal to acquire outstanding shares of the target's stock.

Question 11

According to GAAP, which of the following is true with respect to the pooling of interest method of accounting for business combinations?

Accepted Answer

A)  It was the only method used prior to 2002. 
B)  It must be used for all new acquisitions. 
C)  GAAP allowed its use prior to 2002. 
D)  It, or the acquisition method, may be used at the acquirer's discretion. 
E)  GAAP requires it to be used instead of the acquisition method for business combinations for which $50 billion or more in consideration is transferred. 
A)  It was the only method used prior to 2002. 
B)  It must be used for all new acquisitions. 
C)  GAAP allowed its use prior to 2002. 
D)  It, or the acquisition method, may be used at the acquirer's discretion. 
E)  GAAP requires it to be used instead of the acquisition method for business combinations for which $50 billion or more in consideration is transferred.

Question 12

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 13

Compute consolidated retained earnings as a result of this acquisition.

Accepted Answer

A)  $1,160. 
B)  $1,170. 
C)  $1,265. 
D)  $1,280. 
E)  $1,650. 
A)  $1,160. 
B)  $1,170. 
C)  $1,265. 
D)  $1,280. 
E)  $1,650.

Question 14

Which of the following examples accurately describes a difference in the types of business combinations?

Accepted Answer

A)  A statutory merger can only be effected through an asset acquisition while a statutory consolidation can only be effected through a capital stock acquisition. 
B)  A statutory merger can only be effected through a capital stock acquisition while a statutory consolidation can only be effected through an asset acquisition. 
C)  A statutory merger requires the dissolution of the acquired company while a statutory consolidation requires dissolution of the companies involved in the combination following the transfer of assets or stock to a newly formed entity. 
D)  A statutory consolidation requires dissolution of the acquired company while a statutory merger does not require dissolution. 
E)  Both a statutory merger and a statutory consolidation can only be effected through an asset acquisition but only a statutory consolidation requires dissolution of the acquired company. 
A)  A statutory merger can only be effected through an asset acquisition while a statutory consolidation can only be effected through a capital stock acquisition. 
B)  A statutory merger can only be effected through a capital stock acquisition while a statutory consolidation can only be effected through an asset acquisition. 
C)  A statutory merger requires the dissolution of the acquired company while a statutory consolidation requires dissolution of the companies involved in the combination following the transfer of assets or stock to a newly formed entity. 
D)  A statutory consolidation requires dissolution of the acquired company while a statutory merger does not require dissolution. 
E)  Both a statutory merger and a statutory consolidation can only be effected through an asset acquisition but only a statutory consolidation requires dissolution of the acquired company.

Question 15

Compute consolidated land at the date of the acquisition.

Accepted Answer

A)  $2,060. 
B)  $1,800. 
C)  $ 260. 
D)  $2,050. 
E)  $2,070. 
A)  $2,060. 
B)  $1,800. 
C)  $ 260. 
D)  $2,050. 
E)  $2,070.

Question 16

Compute the consolidated retained earnings at December 31, 2018.

Accepted Answer

A)  $2,800. 
B)  $2,825. 
C)  $2,850. 
D)  $3,425. 
E)  $3,450. 
A)  $2,800. 
B)  $2,825. 
C)  $2,850. 
D)  $3,425. 
E)  $3,450.

Question 17

Compute the consolidated receivables and inventory for 2018.

Accepted Answer

A)  $1,200. 
B)  $1,515. 
C)  $1,540. 
D)  $1,800. 
E)  $2,140. 
A)  $1,200. 
B)  $1,515. 
C)  $1,540. 
D)  $1,800. 
E)  $2,140.

Question 18

How are bargain purchases accounted for in an acquisition business transaction?

Accepted Answer

A bargain purchase results when the coll

Question 19

Compute consolidated inventory immediately following 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 20

On January 1, 2018, Chester Inc.acquired 100% of Festus Corp.'s outstanding common stock by exchanging 37,500 shares of Chester's $2 par value common voting stock.On January 1, 2018, Chester's voting common stock had a fair value of $40 per share.Festus' voting common shares were selling for $6.50 per share.Festus' balances on the acquisition date, just prior to acquisition are listed below.
   Required:
Compute the value of Goodwill on the date of acquisition, 1/1/18.

Accepted Answer

Fair value of consideration transferred:

Exam 2: Consolidation of Financial Information

If Osorio retains a separate corporate existence, what amount was recorded as the investment in Osorio?

How are direct combination costs accounted for in an acquisition transaction?

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 is less than fair value of net assets acquired, which statement is true?

In a business combination where a subsidiary retains its incorporation and which is accounted for under the acquisition method, how should stock issuance costs and direct combination costs be treated?

What amount will be reported for consolidated additional paid-in capital?

Compute the amount of consolidated land at date of acquisition.

Determine the balance for Goodwill that would be included in a December 1, 2017, consolidation.

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

A statutory merger is a(n)

According to GAAP, which of the following is true with respect to the pooling of interest method of accounting for business combinations?

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 consolidated retained earnings as a result of this acquisition.

Which of the following examples accurately describes a difference in the types of business combinations?

Compute consolidated land at the date of the acquisition.

Compute the consolidated retained earnings at December 31, 2018.

Compute the consolidated receivables and inventory for 2018.

How are bargain purchases accounted for in an acquisition business transaction?

Compute consolidated inventory immediately following the acquisition.

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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