Exam 3: Business Combinations

Goodwill can best be described as:

Which of the following statement(s)pertaining to Business Combinations is FALSE?

Which of the following is closest to IAS 27 definition of control?

The following information pertains to Questions ABC123 Inc has decided to purchase 100% the voting shares of DEF456 for $400,000 in Cash on July1,2008.On the date,the balance sheets of each of these companies were as follows: On that date,the fair values of DEF456 Assets and Liabilities were as follows: In addition to the above,an independent appraiser deemed that DEF456 Inc.had trademarks with a fair market value of $100,000 which had not been accounted for.In turn,ABC123's fair market values were equal to their book values with the exception of the Company's Inventory and Plant and Equipment,which were said to have Fair Market Values of $30,000 and $480,000,respectively. -Prepare any disclosure required for ABC123 Inc.under IFRS.Assume DEF456 produces high-end loudspeakers for touring musicians.

The following data pertains to Questions IOU Inc.purchased all of the outstanding common shares of UNI Inc.for $800,000.On the date of acquisition,UNI's assets included $2,000,000 of Inventory and Land with a Book value of $120,000.UNI also had $1,400,000 in Liabilities on that date.UNI's book values were equal to their fair market values,with the exception of the company's Land,which was estimated to have a fair market value which was $50,000 higher than its book value. -Assuming that the acquisition was properly recorded at cost,which of the following journal entries is required to prepare Consolidated Financial Statements the day following the acquisition?

Under which of the following scenarios would the preparation of Consolidated Financial Statements NOT be justified?

The following information pertains to Questions Telecom Inc has decided to purchase the shares of Intron Inc.for $300,000 in Cash on July 1,2009.On the date,the balance sheets of each of these companies were as follows: On that date,the fair values of Intron's Assets and Liabilities were as follows: -Assume that two days after the acquisition,the Goodwill was put to an impairment test,after which it was decided that its true value should have been $70,000. Required: Prepare the necessary journal entry to write-down the goodwill as well as another Consolidated Balance Sheet to reflect the new Goodwill amount.

Appendix A of IFRS 3 provides an extensive list of what must be disclosed for each business combination.Which of the following items not in included in that list:

How is negative goodwill treated under the acquisition method?

The following data pertains to Questions IOU Inc.purchased all of the outstanding common shares of UNI Inc.for $800,000.On the date of acquisition,UNI's assets included $2,000,000 of Inventory and Land with a Book value of $120,000.UNI also had $1,400,000 in Liabilities on that date.UNI's book values were equal to their fair market values,with the exception of the company's Land,which was estimated to have a fair market value which was $50,000 higher than its book value. -Which of the following is the correct journal entry to record IOU's acquisition of UNI?

Which of the following would NOT be included in the Acquisition Cost?

Which of the following statements about the Pooling of Interests Method is incorrect?

The following data pertains to Questions IOU Inc.purchased all of the outstanding common shares of UNI Inc.for $800,000.On the date of acquisition,UNI's assets included $2,000,000 of Inventory and Land with a Book value of $120,000.UNI also had $1,400,000 in Liabilities on that date.UNI's book values were equal to their fair market values,with the exception of the company's Land,which was estimated to have a fair market value which was $50,000 higher than its book value. -How much goodwill would be created by IOU's acquisition of UNI?

Because the use of the Pooling of Interests Method is no longer allowed,it is irrelevant and its study is no longer warranted)Discuss the validity of this statement.

A Company owns 80% of the voting shares of B Company,which in turn owns 70% of the shares of C Company.There are no outstanding warrants or options which would enable holders of other instruments to acquire additional voting shares of any of these companies.In this scenario,

The following data pertains to questions Parent and Sub Inc had the following balance sheets on December 31,2008: On January 1,2009 Parent purchased all of Sub Inc's Common Shares for $40,000 in cash.On that date,Sub's Current Assets and Fixed Assets were worth $26,000 and $54,000,respectively.Assuming that Consolidated Financial Statements were prepared on that date,answer the following: -The Goodwill arising from this Business Combination would be:

The Pooling of Interests Method is no longer an acceptable method of accounting for Business Combinations.Discuss any limitations of the Pooling of Interests Method,and explain the reasoning behind the move to use the Purchase Method to account for Business Combinations.

Assume that two companies wish to engage in a Business Combination involving a share exchange.Once the share exchange is consummated,each shareholder group will have an equal number of voting shares.Which of the following statements best describes the course of action that must be taken under these circumstances?

The following data pertains to questions Parent and Sub Inc had the following balance sheets on December 31,2008: On January 1,2009 Parent purchased all of Sub Inc's Common Shares for $40,000 in cash.On that date,Sub's Current Assets and Fixed Assets were worth $26,000 and $54,000,respectively.Assuming that Consolidated Financial Statements were prepared on that date,answer the following: -The Shareholder's Equity section of the Consolidated Balance Sheet would show what amount?

How should the acquisition cost of a Business Combination be allocated prior to preparing Consolidated Financial Statements?