Question 1

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.

Question 2

Assuming that Corr retains a separate corporate existence after this acquisition, at what amount is the investment recorded on Goodwin's books?

Accepted Answer

A)  $1,540. 
B)  $1,800. 
C)  $1,860. 
D)  $1,825. 
E)  $1,625.

Question 3

Acquired in-process research and development is considered as

Accepted Answer

A)  A definite-lived asset subject to amortization. 
B)  A definite-lived asset subject to testing for impairment. 
C)  An indefinite-lived asset subject to amortization. 
D)  An indefinite-lived asset subject to testing for impairment. 
E)  A research and development expense at the date of acquisition.

Question 4

What amount will be reported for consolidated buildings (net)?

Accepted Answer

A)  $1,420,000. 
B)  $1,260,000. 
C)  $1,140,000. 
D)  $1,480,000. 
E)  $1,200,000.

Question 5

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 shares of Vicker.What will be the consolidated Additional Paid-In Capital and Retained Earnings (January 1, 2018 balances) as a result of this acquisition transaction?

Accepted Answer

A)  $60,000 and $490,000. 
B)  $60,000 and $250,000. 
C)  $380,000 and $250,000. 
D)  $524,000 and $250,000. 
E)  $524,000 and $420,000.

Question 6

What amount will be reported for consolidated receivables?

Accepted Answer

A)  $660,000. 
B)  $640,000. 
C)  $500,000. 
D)  $460,000. 
E)  $480,000.

Question 7

Which of the following is a not a reason for a business combination to take place?

Accepted Answer

A)  Cost savings through elimination of duplicate facilities. 
B)  Quick entry for new and existing products into domestic and foreign markets. 
C)  Diversification of business risk. 
D)  Vertical integration. 
E)  Increase in stock price of the acquired company.

Question 8

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

Accepted Answer

A)  Net assets of the acquired company are reported at their fair values. 
B)  Net assets of the acquired company are reported at their book values. 
C)  Any goodwill associated with the acquisition is reported as a development cost. 
D)  The acquisition can only be effected by a mutual exchange of voting common stock. 
E)  Indirect costs of the combination reduce additional paid-in capital.

Question 9

Compute the consolidated cash upon completion of the acquisition.

Accepted Answer

A)  $1,350. 
B)  $1,110. 
C)  $1,080. 
D)  $1,085. 
E)  $ 635.

Question 10

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.

Question 11

Compute the amount of consolidated cash after recording the acquisition transaction.

Accepted Answer

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

Question 12

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

Accepted Answer

The answer of For acquisition accounting, why are assets and...

Question 13

Compute consolidated revenues immediately following the acquisition.

Accepted Answer

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

Question 14

Compute the consolidated additional paid-in capital at December 31, 2018.

Accepted Answer

A)  $ 810. 
B)  $1,350. 
C)  $1,675. 
D)  $1,910. 
E)  $1,875.

Question 15

What is the amount of goodwill arising from this acquisition?

Accepted Answer

A)  $230. 
B)  $120. 
C)  $520. 
D)  None. There is a gain on bargain purchase of $230. 
E)  None. There is a gain on bargain purchase of $265.

Question 16

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.

Question 17

Compute consolidated land immediately following the acquisition.

Accepted Answer

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

Question 18

Fine Co.issued its common stock in exchange for the common stock of Dandy Corp.in an acquisition.At the date of the combination, Fine had land with a book value of $480,000 and a fair value of $620,000.Dandy had land with a book value of $170,000 and a fair value of $190,000.
Required:
What was the consolidated balance for Land in a consolidated balance sheet prepared at the date of the acquisition combination?

Accepted Answer

The answer of Fine Co.issued its common stock in exchange...

Question 19

Assume that Botkins acquired Volkerson on January 1, 2017 and that Volkerson maintains a separate corporate existence.At what amount did Botkins record the investment in Volkerson?

Accepted Answer

A)  $ 56,000. 
B)  $182,000. 
C)  $209,000. 
D)  $261,000. 
E)  $312,000.

Question 20

Chapel Hill Company had common stock of $350,000 and retained earnings of $490,000.Blue Town Inc.had common stock of $700,000 and retained earnings of $980,000.On January 1, 2018, Blue Town issued 34,000 shares of common stock with a $12 par value and a $35 fair value for all of Chapel Hill Company's outstanding common stock.This combination was accounted for using the acquisition method.Immediately after the combination, what was the amount of total consolidated net assets?

Accepted Answer

A)  $2,520,000. 
B)  $1,190,000. 
C)  $1,680,000. 
D)  $2,870,000. 
E)  $2,030,000.

Exam 2: Consolidation of Financial Information