AACSB: Analytic
AICPA BB: Critical Thinking
AICPA FN: Measurement
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 02-04 Describe the valuation principles of the acquisition method.
Learning Objective: 02-05 Determine the total fair value of the consideration transferred for an acquisition and allocate
that fair value to specific subsidiary assets acquired (including goodwill); and liabilities assumed; or a gain on bargain
purchase.
Learning Objective: 02-06 Prepare the journal entry to consolidate the accounts of a subsidiary if dissolution takes place.
Learning Objective: 02-07 Prepare a worksheet to consolidate the accounts of two companies that form a business
combination if dissolution does not take place.
81.
Flynn acquires 100 percent of the outstanding voting shares of Macek Company on
January 1, 2013. To obtain these shares, Flynn pays $400 cash (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 acquisition. 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, 2013 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.
What amount will be reported for goodwill as a result of this acquisition?
A.
$30,000.
B.
$55,000.
C.
$65,000.
D.
$175,000.
E.
$200,000.
$400,000 + ($36 × 10,000shares) = $760,000 Consideration
Net Assets at FV = $665,000 + $40,000 Trademark = $705,000
$760,000 – $705,000 = $55,000 Goodwill
AACSB: Analytic
AICPA BB: Critical Thinking
AICPA FN: Measurement
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 02-04 Describe the valuation principles of the acquisition method.
Learning Objective: 02-05 Determine the total fair value of the consideration transferred for an acquisition and allocate
that fair value to specific subsidiary assets acquired (including goodwill); and liabilities assumed; or a gain on bargain
purchase.
Learning Objective: 02-06 Prepare the journal entry to consolidate the accounts of a subsidiary if dissolution takes place.
Learning Objective: 02-07 Prepare a worksheet to consolidate the accounts of two companies that form a business
combination if dissolution does not take place.
82.
Flynn acquires 100 percent of the outstanding voting shares of Macek Company on
January 1, 2013. To obtain these shares, Flynn pays $400 cash (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 acquisition. 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, 2013 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.
What amount will be reported for consolidated receivables?
A.
$660,000.
B.
$640,000.
C.
$500,000.
D.
$460,000.
E.
$480,000.
$480,000 + $160,000 = $640,000
AACSB: Analytic
AICPA BB: Critical Thinking
AICPA FN: Measurement
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 02-05 Determine the total fair value of the consideration transferred for an acquisition and allocate
that fair value to specific subsidiary assets acquired (including goodwill); and liabilities assumed; or a gain on bargain
purchase.
Learning Objective: 02-06 Prepare the journal entry to consolidate the accounts of a subsidiary if dissolution takes place.
Learning Objective: 02-07 Prepare a worksheet to consolidate the accounts of two companies that form a business
combination if dissolution does not take place.
83.
Flynn acquires 100 percent of the outstanding voting shares of Macek Company on
January 1, 2013. To obtain these shares, Flynn pays $400 cash (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 acquisition. 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, 2013 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.
What amount will be reported for consolidated inventory?
A.
$1,000,000.
B.
$960,000.
C.
$920,000.
D.
$660,000.
E.
$620,000.
$660,000 + $300,000 = $960,000
AACSB: Analytic
AICPA BB: Critical Thinking
AICPA FN: Measurement
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 02-05 Determine the total fair value of the consideration transferred for an acquisition and allocate
that fair value to specific subsidiary assets acquired (including goodwill); and liabilities assumed; or a gain on bargain
purchase.
Learning Objective: 02-06 Prepare the journal entry to consolidate the accounts of a subsidiary if dissolution takes place.
Learning Objective: 02-07 Prepare a worksheet to consolidate the accounts of two companies that form a business
combination if dissolution does not take place.
84.
Flynn acquires 100 percent of the outstanding voting shares of Macek Company on
January 1, 2013. To obtain these shares, Flynn pays $400 cash (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 acquisition. 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, 2013 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.
What amount will be reported for consolidated buildings (net)?
A.
$1,420,000.
B.
$1,260,000.
C.
$1,140,000.
D.
$1,480,000.
E.
$1,200,000.
$1,200,000 + $280,000 = $1,480,000
AACSB: Analytic
AICPA BB: Critical Thinking
AICPA FN: Measurement
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 02-05 Determine the total fair value of the consideration transferred for an acquisition and allocate
that fair value to specific subsidiary assets acquired (including goodwill); and liabilities assumed; or a gain on bargain
purchase.
Learning Objective: 02-06 Prepare the journal entry to consolidate the accounts of a subsidiary if dissolution takes place.
Learning Objective: 02-07 Prepare a worksheet to consolidate the accounts of two companies that form a business
combination if dissolution does not take place.
85.
Flynn acquires 100 percent of the outstanding voting shares of Macek Company on
January 1, 2013. To obtain these shares, Flynn pays $400 cash (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 acquisition. 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, 2013 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.
What amount will be reported for consolidated equipment (net)?
A.
$385,000.
B.
$335,000.
C.
$435,000.
D.
$460,000.
E.
$360,000.
$360,000 + $75,000 = $435,000
AACSB: Analytic
AICPA BB: Critical Thinking
AICPA FN: Measurement
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 02-05 Determine the total fair value of the consideration transferred for an acquisition and allocate
that fair value to specific subsidiary assets acquired (including goodwill); and liabilities assumed; or a gain on bargain
purchase.
Learning Objective: 02-06 Prepare the journal entry to consolidate the accounts of a subsidiary if dissolution takes place.
Learning Objective: 02-07 Prepare a worksheet to consolidate the accounts of two companies that form a business
combination if dissolution does not take place.
86.
Flynn acquires 100 percent of the outstanding voting shares of Macek Company on
January 1, 2013. To obtain these shares, Flynn pays $400 cash (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 acquisition. 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, 2013 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.
What amount will be reported for consolidated long-term liabilities?
A.
$1,520,000.
B.
$1,480,000.
C.
$1,440,000.
D.
$1,180,000.
E.
$1,100,000.
$1,140,000 + $300,000 = $1,440,000
AACSB: Analytic
AICPA BB: Critical Thinking
AICPA FN: Measurement
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 02-05 Determine the total fair value of the consideration transferred for an acquisition and allocate
that fair value to specific subsidiary assets acquired (including goodwill); and liabilities assumed; or a gain on bargain
purchase.
Learning Objective: 02-06 Prepare the journal entry to consolidate the accounts of a subsidiary if dissolution takes place.
Learning Objective: 02-07 Prepare a worksheet to consolidate the accounts of two companies that form a business
combination if dissolution does not take place.
87.
Flynn acquires 100 percent of the outstanding voting shares of Macek Company on
January 1, 2013. To obtain these shares, Flynn pays $400 cash (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 acquisition. 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, 2013 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.
What amount will be reported for consolidated common stock?
A.
$1,000,000.
B.
$1,080,000.
C.
$1,200,000.
D.
$1,280,000.
E.
$1,360,000.
$1,000,000 + ($20 × 10,000 shares) = $1,200,000
AACSB: Analytic
AICPA BB: Critical Thinking
AICPA FN: Measurement
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 02-04 Describe the valuation principles of the acquisition method.
Learning Objective: 02-05 Determine the total fair value of the consideration transferred for an acquisition and allocate
that fair value to specific subsidiary assets acquired (including goodwill); and liabilities assumed; or a gain on bargain
purchase.
Learning Objective: 02-06 Prepare the journal entry to consolidate the accounts of a subsidiary if dissolution takes place.
Learning Objective: 02-07 Prepare a worksheet to consolidate the accounts of two companies that form a business
combination if dissolution does not take place.
88.
Flynn acquires 100 percent of the outstanding voting shares of Macek Company on
January 1, 2013. To obtain these shares, Flynn pays $400 cash (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 acquisition. 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, 2013 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.
Assuming the combination is accounted for as a purchase, what amount will be reported
for consolidated retained earnings?
A.
$1,830,000.
B.
$1,350,000.
C.
$1,080,000.
D.
$1,560,000.
E.
$1,535,000.
$1,080,000 R/E of the Parent Only
AACSB: Analytic
AICPA BB: Critical Thinking
AICPA FN: Measurement
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 02-09 Appendix: Identify the general characteristics of the legacy purchase and pooling of interest
methods of accounting for past business combinations. Understand the effects that persist today in financial statements
from the use of these legacy methods.
89.
Flynn acquires 100 percent of the outstanding voting shares of Macek Company on
January 1, 2013. To obtain these shares, Flynn pays $400 cash (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 acquisition. 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, 2013 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.
What amount will be reported for consolidated retained earnings?
A.
$1,065,000.
B.
$1,080,000.
C.
$1,525,000.
D.
$1,535,000.
E.
$1,560,000.
$1,080,000 – $15,000 = $1,065,000
AACSB: Analytic
AICPA BB: Critical Thinking
AICPA FN: Measurement
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 02-04 Describe the valuation principles of the acquisition method.
Learning Objective: 02-05 Determine the total fair value of the consideration transferred for an acquisition and allocate
that fair value to specific subsidiary assets acquired (including goodwill); and liabilities assumed; or a gain on bargain
purchase.
Learning Objective: 02-06 Prepare the journal entry to consolidate the accounts of a subsidiary if dissolution takes place.
Learning Objective: 02-07 Prepare a worksheet to consolidate the accounts of two companies that form a business
combination if dissolution does not take place.
90.
Flynn acquires 100 percent of the outstanding voting shares of Macek Company on
January 1, 2013. To obtain these shares, Flynn pays $400 cash (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 acquisition. 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, 2013 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.
What amount will be reported for consolidated additional paid-in capital?
A.
$365,000.
B.
$350,000.
C.
$360,000.
D.
$375,000.
E.
$345,000.
$200,000 + ($16 × 10,000 shares) – $10,000 = $350,000