Question 1

In a pooling of interests,

Accepted Answer

A) revenues and expenses are consolidated for the entire fiscal year,even if the combination occurred late in the year. 
B) goodwill may be recognized. 
C) consolidation is accomplished using the fair values of both companies. 
D) the transactions may involve the exchange of preferred stock or debt securities as well as common stock. 
E) the transaction is properly regarded as an acquisition of one company by another. 
A) revenues and expenses are consolidated for the entire fiscal year,even if the combination occurred late in the year. 
B) goodwill may be recognized. 
C) consolidation is accomplished using the fair values of both companies. 
D) the transactions may involve the exchange of preferred stock or debt securities as well as common stock. 
E) the transaction is properly regarded as an acquisition of one company by another. A

Question 2

REFERENCE: Ref.02_01
Bullen Inc.assumed 100% control over Vicker Inc.on January 1,20X1.The book value and fair value of Vicker's accounts on that date (prior to creating the combination)follow,along with the book value of Bullen's accounts:
  
-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 a business combination (which is not a pooling of interests).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) $402,000,$520,000. 
E) $427,000,$510,000. 
A) $440,000,$496,000. 
B) $440,000,$520,000. 
C) $425,000,$505,000. 
D) $402,000,$520,000. 
E) $427,000,$510,000. B

Question 3

REFERENCE: Ref.02_04
On January 1,20X1,the Moody company entered into a transaction for 100% of the outstanding common stock of Osorio Company.To acquire these shares,Moody issued $400 in long-term liabilities and 40 shares of common stock having a par value of $1 per share but a fair value of $10 per share.Moody paid $20 to lawyers,accountants,and brokers for assistance in bringing about this purchase.Another $15 was paid in connection with stock issuance costs.Prior to these transactions,the balance sheets for the two companies were as follows:   Note: Parentheses indicate a credit balance.
In Moody's appraisal of Osorio,three assets were deemed to be undervalued on the subsidiary's books: Inventory by $10,Land by $40,and Buildings by $60.
-Compute the amount of consolidated cash after recording the transaction.

Accepted Answer

A) $220. 
B) $185. 
C) $200. 
D) $205. 
E) $215. 
A) $220. 
B) $185. 
C) $200. 
D) $205. 
E) $215. B

Question 4

REFERENCE: Ref.02_06
The financial balances for the Atwood Company and the Franz Company as of December 31,20X1,are presented below.Also included are the fair values for Franz Company's net assets.
   Note: Parenthesis indicate a credit balance
Assume a business combination took place at December 31,20X1.Atwood issued 50 shares of its common stock with a fair value of $35 per share for all of the outstanding common shares of Franz.Stock issuance costs of $15 (in thousands)and direct costs of $10 (in thousands)were paid.
-Compute consolidated inventory at the date of the business combination.

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 5

REFERENCE: Ref.02_01
Bullen Inc.assumed 100% control over Vicker Inc.on January 1,20X1.The book value and fair value of Vicker's accounts on that date (prior to creating the combination)follow,along with the book value of Bullen's accounts:
  
-Assume that Bullen issued 12,000 shares of common stock with a $5 par value and a $42 fair value for all of the outstanding shares of Vicker.What will be the consolidated Additional Paid-In Capital and Retained Earnings (January 1,20X1 balances)as a result of this transaction (which is not a pooling of interests)?

Accepted Answer

A) $20,000 and $160,000. 
B) $20,000 and $260,000. 
C) $380,000 and $160,000. 
D) $464,000 and $160,000. 
E) $380,000 and $260,000. 
A) $20,000 and $160,000. 
B) $20,000 and $260,000. 
C) $380,000 and $160,000. 
D) $464,000 and $160,000. 
E) $380,000 and $260,000.

Question 6

REFERENCE: Ref.02_05
Carnes has the following account balances as of May 1,2000 before a pooling of interests transaction takes place.   The fair value of Carnes' Land and Buildings are $650,000 and $550,000,respectively.On May 1,2000,Riley Company issues 30,000 shares of its $10 par value ($25 fair value)common stock in exchange for all of the shares of Carnes' common stock.
-Assume Riley issues 70,000 shares instead of 30,000 at date of acquisition.Riley currently has $40,000 of additional paid-in capital on its books.By how much will Riley's retained earnings increase or decrease as a result of the combination?

Accepted Answer

A) $40,000 increase. 
B) $200,000 increase. 
C) $140,000 increase. 
D) $160,000 increase. 
E) $40,000 decrease. 
A) $40,000 increase. 
B) $200,000 increase. 
C) $140,000 increase. 
D) $160,000 increase. 
E) $40,000 decrease.

Question 7

REFERENCE: Ref.02_04
On January 1,20X1,the Moody company entered into a transaction for 100% of the outstanding common stock of Osorio Company.To acquire these shares,Moody issued $400 in long-term liabilities and 40 shares of common stock having a par value of $1 per share but a fair value of $10 per share.Moody paid $20 to lawyers,accountants,and brokers for assistance in bringing about this purchase.Another $15 was paid in connection with stock issuance costs.Prior to these transactions,the balance sheets for the two companies were as follows:   Note: Parentheses indicate a credit balance.
In Moody's appraisal of Osorio,three assets were deemed to be undervalued on the subsidiary's books: Inventory by $10,Land by $40,and Buildings by $60.
-Compute the amount of consolidated inventories at date of combination.

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

REFERENCE: Ref.02_04
On January 1,20X1,the Moody company entered into a transaction for 100% of the outstanding common stock of Osorio Company.To acquire these shares,Moody issued $400 in long-term liabilities and 40 shares of common stock having a par value of $1 per share but a fair value of $10 per share.Moody paid $20 to lawyers,accountants,and brokers for assistance in bringing about this purchase.Another $15 was paid in connection with stock issuance costs.Prior to these transactions,the balance sheets for the two companies were as follows:   Note: Parentheses indicate a credit balance.
In Moody's appraisal of Osorio,three assets were deemed to be undervalued on the subsidiary's books: Inventory by $10,Land by $40,and Buildings by $60.
-Compute the amount of consolidated equipment at date of combination.

Accepted Answer

A) $580. 
B) $480. 
C) $559. 
D) $570. 
E) $560. 
A) $580. 
B) $480. 
C) $559. 
D) $570. 
E) $560.

Question 9

REFERENCE: Ref.02_07
Presented below are the financial balances for the Atwood Company and the Franz Company as of December 31,2009,immediately before Atwood acquired Franz.Also included are the fair values for Franz Company's net assets at that date.
   Note: Parenthesis indicate a credit balance
Assume a business combination took place at December 31,2009.Atwood issued 50 shares of its common stock with a fair value of $35 per share for all of the outstanding common shares of Franz.Stock issuance costs of $15 (in thousands)and direct costs of $10 (in thousands)were paid.Atwood is applying the acquisition method in accounting for Franz.To settle a difference of opinion regarding Franz's fair value,Atwood promises to pay an additional $5.2 (in thousands)to the former owners if Franz's earnings exceed a certain sum during the next year.Given the probability of the required contingency payment and utilizing a 4% discount rate,the expected present value of the contingency is $5 (in thousands).
-Compute consolidated revenues at date of acquisition.

Accepted Answer

A) $3,540. 
B) $2,880. 
C) $1,170. 
D) $1,650. 
E) $4,050. 
A) $3,540. 
B) $2,880. 
C) $1,170. 
D) $1,650. 
E) $4,050.

Question 10

REFERENCE: Ref.02_03
The financial statements for Goodwin,Inc. ,and Corr Company for the year ended December 31,20X1,prior to Goodwin's business combination transaction regarding Corr,follow (in thousands):   On December 31,20X1,Goodwin issued $600 in debt and 30 shares of its $10 par value common stock to the owners of Corr to purchase all of the outstanding shares of that company.Goodwin shares had a fair value of $40 per share.
Goodwin paid $25 to a broker for arranging the transaction.Goodwin paid $35 in stock issuance costs.Corr's equipment was actually worth $1,400 but its buildings were only valued at $560.
-Assumiing the combination is accounted for as a purchase,compute the consolidated retained earnings at December 31,20X1.

Accepted Answer

A) $2,850. 
B) $3,450. 
C) $2,400. 
D) $2,800. 
E) $2,810. 
A) $2,850. 
B) $3,450. 
C) $2,400. 
D) $2,800. 
E) $2,810.

Question 11

REFERENCE: Ref.02_06
The financial balances for the Atwood Company and the Franz Company as of December 31,20X1,are presented below.Also included are the fair values for Franz Company's net assets.
   Note: Parenthesis indicate a credit balance
Assume a business combination took place at December 31,20X1.Atwood issued 50 shares of its common stock with a fair value of $35 per share for all of the outstanding common shares of Franz.Stock issuance costs of $15 (in thousands)and direct costs of $10 (in thousands)were paid.
-Assuming the combination is accounted for as a purchase,compute consolidated retained earnings at the date of the combination.

Accepted Answer

A) $1,170. 
B) $1,650. 
C) $1,290. 
D) $1,810. 
E) $3,870. 
A) $1,170. 
B) $1,650. 
C) $1,290. 
D) $1,810. 
E) $3,870.

Question 12

How are bargain purchases different between SFAS 141 and SFAS 141(R)Business Combinations?

Accepted Answer

Under SFAS 141 (the purchase method),a b

Question 13

REFERENCE: Ref.02_03
The financial statements for Goodwin,Inc. ,and Corr Company for the year ended December 31,20X1,prior to Goodwin's business combination transaction regarding Corr,follow (in thousands):   On December 31,20X1,Goodwin issued $600 in debt and 30 shares of its $10 par value common stock to the owners of Corr to purchase all of the outstanding shares of that company.Goodwin shares had a fair value of $40 per share.
Goodwin paid $25 to a broker for arranging the transaction.Goodwin paid $35 in stock issuance costs.Corr's equipment was actually worth $1,400 but its buildings were only valued at $560.
-Compute the consolidated buildings (net)account at December 31,20X1.

Accepted Answer

A) $2,700. 
B) $3,370. 
C) $3,300. 
D) $3,260. 
E) $3,340. 
A) $2,700. 
B) $3,370. 
C) $3,300. 
D) $3,260. 
E) $3,340.

Question 14

Dutch Co.has loaned $90,000 to its subsidiary,Hans Corp. ,which retains separate incorporation.How would this loan be treated on a consolidated balance sheet?

Accepted Answer

The loan represents an interco

Question 15

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 continues 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 continues 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 16

REFERENCE: Ref.02_08
Flynn acquires 100 percent of the outstanding voting shares of Macek Company on January 1,20X1.To obtain these shares,Flynn pays $400 (in thousands)and issues 10,000 shares of $20 par value common stock on this date.Flynn's stock had a fair value of $36 per share on that date.Flynn also pays $15 (in thousands)to a local investment firm for arranging the transaction.An additional $10 (in thousands)was paid by Flynn in stock issuance costs.
The book values for both Flynn and Macek as of January 1,20X1 follow.The fair value of each of Flynn and Macek accounts is also included.In addition,Macek holds a fully amortized trademark that still retains a $40 (in thousands)value.The figures below are in thousands.Any related question also is in thousands.
SHAPE \* MERGEFORMAT
  
-Assuming the combination is accounted for as an acquisition,what amount will be reported for consolidated retained earnings?

Accepted Answer

A) $1,065. 
B) $1,080. 
C) $1,525. 
D) $1,535. 
E) $1,560. 
A) $1,065. 
B) $1,080. 
C) $1,525. 
D) $1,535. 
E) $1,560.

Question 17

REFERENCE: Ref.02_07
Presented below are the financial balances for the Atwood Company and the Franz Company as of December 31,2009,immediately before Atwood acquired Franz.Also included are the fair values for Franz Company's net assets at that date.
   Note: Parenthesis indicate a credit balance
Assume a business combination took place at December 31,2009.Atwood issued 50 shares of its common stock with a fair value of $35 per share for all of the outstanding common shares of Franz.Stock issuance costs of $15 (in thousands)and direct costs of $10 (in thousands)were paid.Atwood is applying the acquisition method in accounting for Franz.To settle a difference of opinion regarding Franz's fair value,Atwood promises to pay an additional $5.2 (in thousands)to the former owners if Franz's earnings exceed a certain sum during the next year.Given the probability of the required contingency payment and utilizing a 4% discount rate,the expected present value of the contingency is $5 (in thousands).
-Compute consolidated equipment at date of 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 18

REFERENCE: Ref.02_06
The financial balances for the Atwood Company and the Franz Company as of December 31,20X1,are presented below.Also included are the fair values for Franz Company's net assets.
   Note: Parenthesis indicate a credit balance
Assume a business combination took place at December 31,20X1.Atwood issued 50 shares of its common stock with a fair value of $35 per share for all of the outstanding common shares of Franz.Stock issuance costs of $15 (in thousands)and direct costs of $10 (in thousands)were paid.
-Assuming the combination is accounted for as an acquisition,compute consolidated retained earnings at the date of the combination.

Accepted Answer

A) $1,160. 
B) $1,170. 
C) $1,280. 
D) $1,290. 
E) $1,640. 
A) $1,160. 
B) $1,170. 
C) $1,280. 
D) $1,290. 
E) $1,640.

Question 19

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 20

Determine consolidated Paid-in Capital at December 31,2009.

Accepted Answer

SHAPE \* M

In a pooling of interests,

How are bargain purchases different between SFAS 141 and SFAS 141(R)Business Combinations?

Dutch Co.has loaned $90,000 to its subsidiary,Hans Corp. ,which retains separate incorporation.How would this loan be treated on a consolidated balance sheet?

A statutory merger is a(n)

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?

Determine consolidated Paid-in Capital at December 31,2009.

The Equity Method of Accounting for Investments

Consolidations - Subsequent to the Date of Acquisition

Consolidated Financial Statements and Outside Ownership

Consolidated Financial Statements - Intercompany Asset Transactions

Variable Interest Entities, intercompany Debt, consolidated Statement of Cash Flows, and Other Issues

Consolidated Financial Statements - Ownership Patterns and Income Taxes

Segment and Interim Reporting

Foreign Currency Transactions and Hedging Foreign Exchange Risk

Translation of Foreign Currency Financial Statements

Worldwide Accounting Diversity and International Accounting Standards

Financial Reporting and the Securities and Exchange Commission

Accounting for Legal Reorganizations and Liquidations

Partnerships: Formation and Operation

Partnerships: Termination and Liquidation

Accounting for State and Local Governments, Part I

Accounting for State and Local Governments,part II

Accounting for Not-For-Profit Organizations

Accounting for Estates and Trusts

Filters

Exam 2: Consolidation of Financial Information

In a pooling of interests,

How are bargain purchases different between SFAS 141 and SFAS 141(R)Business Combinations?

Dutch Co.has loaned $90,000 to its subsidiary,Hans Corp. ,which retains separate incorporation.How would this loan be treated on a consolidated balance sheet?

A statutory merger is a(n)

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?

Determine consolidated Paid-in Capital at December 31,2009.

The Equity Method of Accounting for Investments

Consolidations - Subsequent to the Date of Acquisition

Consolidated Financial Statements and Outside Ownership

Consolidated Financial Statements - Intercompany Asset Transactions

Variable Interest Entities, intercompany Debt, consolidated Statement of Cash Flows, and Other Issues

Consolidated Financial Statements - Ownership Patterns and Income Taxes

Segment and Interim Reporting

Foreign Currency Transactions and Hedging Foreign Exchange Risk

Translation of Foreign Currency Financial Statements

Worldwide Accounting Diversity and International Accounting Standards

Financial Reporting and the Securities and Exchange Commission

Accounting for Legal Reorganizations and Liquidations

Partnerships: Formation and Operation

Partnerships: Termination and Liquidation

Accounting for State and Local Governments, Part I

Accounting for State and Local Governments,part II

Accounting for Not-For-Profit Organizations

Accounting for Estates and Trusts

Filters