Exam 3: Business Combinations

Company A makes a hostile take-over bid for control of Company B.In response,Company B makes a counter-offer to purchase shares from Company A's shareholders.Which of the following best describes Company B's response?

In a Business Combination involving two companies,when can a company ALWAYS be deemed to be the acquirer?

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. -Assume that both companies would be wound up and a new company called ABCDEF Inc.was created in its place.Prepare the Balance Sheet to reflect this occurrence as at July 1,2008.The new entity would have10,000 voting shares issued to the current shareholders for a total market value of $1,222,000.

Which of the following regarding the preparation of Consolidated Financial Statement(s)is/are correct?

The new IASB standard issued with respect to the treatment of negative goodwill requires that:

Company Y purchases a controlling interest in Company Z on January 1,2002.Which of the following would appear as the Shareholder Equity amount on Company Y's Consolidated Balance Sheet on the date of acquisition?

DEF Inc.is contemplating a business combination involving GHI Inc.DEF can either purchase the assets and liabilities of GHI Inc,or it can engage in a Pooling of Interests with GHI Inc.Assuming that the Fair Market Values of GHI's identifiable assets are equal to their book values,which method would show a higher net income for the consolidated entity (assume that the Pooling of Interests Method is allowable)?

Company A has made an offer to purchase all of the outstanding shares of Company B for $10 per share (the current market value of the shares).In response to Company A's offer,the shareholders of Company B were given rights to purchase additional shares at $8 per share.Which of the following tactics was employed by Company B to prevent Company A from acquiring control of Company B?

One company is considering entering into a business combination with another.The potential acquirer wishes to acquire the subsidiary's assets and liabilities but wishes to prepare Consolidated Financial Statements using the Fair Market Values of its own assets and liabilities as well of those of its potential subsidiary.Can this be accomplished?

In order for one company to establish control over another,

Which of the following methods of accounting for Business Combinations is/are consistent with the Historical Cost Principle?

Suppose that you worked for Sonic Inc.and you were only made aware of the Business Combination after it had taken place and been accounted for.You have been handed the balance sheets of both companies as well as the following draft Balance Sheet prepared on that date: Required: What can be concluded about the accounting of this Business Combination?

The following data pertains to questions Parent and Sub Inc had the following balance sheets on July 31,2006: Yours Inc's Book Values were equal to their Fair Values on the date of acquisition,with the exception of Yours' Plant and Equipment,which was worth $100,000. -What amount would appear in Yours' Investment Account after the Pooling of Interests in Question 29 has taken place?