Question 1

For acquisition accounting, why are assets and liabilities of the subsidiary consolidated at fair value?

Accepted Answer

The acquisition transaction is assumed t

Question 2

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 3

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

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 consolidation 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 consolidation is no longer a legal option.

Question 4

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 5

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 6

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 7

Compute the amount of consolidated inventories at date of acquisition.

Accepted Answer

A)  $1,080. 
B)  $1,350. 
C)  $1,360. 
D)  $1,370. 
E)  $ 290. 
A)  $1,080. 
B)  $1,350. 
C)  $1,360. 
D)  $1,370. 
E)  $ 290.

Question 8

Which of the following statements is true regarding the acquisition method of accounting for a business combination?

Accepted Answer

A)  The combination must involve the exchange of equity securities only. 
B)  The transaction establishes an acquisition fair value basis for the company being acquired. 
C)  The two companies may be about the same size, and it is difficult to determine the acquired company and the acquiring company. 
D)  The transaction may be considered to be the uniting of the ownership interests of the companies involved. 
E)  The acquired subsidiary must be smaller in size than the acquiring parent. 
A)  The combination must involve the exchange of equity securities only. 
B)  The transaction establishes an acquisition fair value basis for the company being acquired. 
C)  The two companies may be about the same size, and it is difficult to determine the acquired company and the acquiring company. 
D)  The transaction may be considered to be the uniting of the ownership interests of the companies involved. 
E)  The acquired subsidiary must be smaller in size than the acquiring parent.

Question 9

Compute the consolidated equipment (net) account at December 31, 2018.

Accepted Answer

A)  $2,100. 
B)  $3,500. 
C)  $3,300. 
D)  $3,000. 
E)  $3,200. 
A)  $2,100. 
B)  $3,500. 
C)  $3,300. 
D)  $3,000. 
E)  $3,200.

Question 10

Compute consolidated goodwill at the date of the acquisition.

Accepted Answer

A)  $360. 
B)  $450. 
C)  $460. 
D)  $440. 
E)  $475. 
A)  $360. 
B)  $450. 
C)  $460. 
D)  $440. 
E)  $475.

Question 11

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

Accepted Answer

A)  $1,700. 
B)  $1,760. 
C)  $1,640. 
D)  $1,320. 
E)  $ 500. 
A)  $1,700. 
B)  $1,760. 
C)  $1,640. 
D)  $1,320. 
E)  $ 500.

Question 12

Assume that Bullen issued 12,000 shares of common stock, with a $5 par value and a $47 fair value, to obtain all of Vicker's outstanding stock.In this acquisition transaction, how much goodwill should be recognized?

Accepted Answer

A)  $144,000. 
B)  $104,000. 
C)  $ 64,000. 
D)  $ 60,000. 
E)  $ 0. 
A)  $144,000. 
B)  $104,000. 
C)  $ 64,000. 
D)  $ 60,000. 
E)  $ 0.

Question 13

Assume that Bullen issued 12,000 shares of common stock with a $5 par value and a $47 fair value for all of the outstanding stock of Vicker.What is the consolidated balance for Land as a result of this acquisition transaction?

Accepted Answer

A)  $460,000. 
B)  $510,000. 
C)  $500,000. 
D)  $520,000. 
E)  $490,000. 
A)  $460,000. 
B)  $510,000. 
C)  $500,000. 
D)  $520,000. 
E)  $490,000.

Question 14

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 15

What amount will be reported for consolidated cash after the acquisition is completed?

Accepted Answer

A)  $475,000. 
B)  $500,000. 
C)  $555,000. 
D)  $580,000. 
E)  $875,000. 
A)  $475,000. 
B)  $500,000. 
C)  $555,000. 
D)  $580,000. 
E)  $875,000.

Question 16

Compute the consolidated cash account at December 31, 2018.

Accepted Answer

A)  $460. 
B)  $425. 
C)  $400. 
D)  $435. 
E)  $240. 
A)  $460. 
B)  $425. 
C)  $400. 
D)  $435. 
E)  $240.

Exam 2: A: Consolidation of Financial Information

For acquisition accounting, why are assets and liabilities of the subsidiary consolidated at fair value?

Which of the following statements is true?

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

Compute consolidated expenses immediately following the acquisition.

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

Compute consolidated inventory at the date of the acquisition.

Compute the amount of consolidated inventories at date of acquisition.

Which of the following statements is true regarding the acquisition method of accounting for a business combination?

Compute the consolidated equipment (net) account at December 31, 2018.

Compute consolidated goodwill at the date of the acquisition.

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

Assume that Bullen issued 12,000 shares of common stock, with a $5 par value and a $47 fair value, to obtain all of Vicker's outstanding stock.In this acquisition transaction, how much goodwill should be recognized?

Assume that Bullen issued 12,000 shares of common stock with a $5 par value and a $47 fair value for all of the outstanding stock of Vicker.What is the consolidated balance for Land as a result of this acquisition transaction?

What amount will be reported for consolidated common stock?

What amount will be reported for consolidated cash after the acquisition is completed?

Compute the consolidated cash account at December 31, 2018.

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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