1. At the date of an acquisition which is not a bargain purchase, the
acquisition method
2. In an acquisition where control is achieved, how would the land accounts
of the parent and the land accounts of the subsidiary be combined?
3. Lisa Co. paid cash for all of the voting common stock of Victoria Corp.
Victoria will continue to exist as a separate corporation. Entries for the
consolidation of Lisa and Victoria would be recorded in
4. Using the acquisition method for a business combination, goodwill is generally
defined as:
5. Direct combination costs and stock issuance costs are often incurred in
the process of making a controlling investment in another company. How should
those costs be accounted for in a pre-2009 purchase transaction?
6. How are direct and indirect costs accounted for when applying the
acquisition method for a business combination?
7. What is the
primary
accounting difference between accounting for when
the subsidiary is dissolved and when the subsidiary retains its incorporation?
8. According to GAAP, the pooling of interest method for business
combinations
9. An example of a difference in types of business combination is:
10. Acquired in-process research and development is considered as
11. Which one of the following is a characteristic of a business combination
accounted for as an acquisition?
12. Which one of the following is a characteristic of a business combination
that is accounted for as an acquisition?
13. A
statutory merger
is a(n)
14. How are
stock issuance costs
and
direct combination costs
treated in a
business combination which is accounted for as an acquisition when the
subsidiary will retain its incorporation?
15. Bullen Inc. acquired 100% of the voting common stock of 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 $47 fair value to obtain all of Vicker’s outstanding stock. In this acquisition
transaction, how much goodwill should be recognized?
16. Bullen Inc. acquired 100% of the voting common stock of 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 stock of Vicker. What is the
consolidated balance for Land as a result of this acquisition transaction?
17. Bullen Inc. acquired 100% of the voting common stock of 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 acquisition transaction?
18. Bullen Inc. acquired 100% of the voting common stock of 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 an acquisition
business combination. What will be the balance in the consolidated Inventory
and Land accounts?
19. Bullen Inc. acquired 100% of the voting common stock of 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 paid a total of $480,000 in cash for all of the shares of
Vicker. In addition, Bullen paid $35,000 for secretarial and management time
allocated to the acquisition transaction. What will be the balance in consolidated
goodwill?
20. Bullen Inc. acquired 100% of the voting common stock of 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 paid a total of $480,000 in cash for all of the shares of
Vicker. In addition, Bullen paid $35,000 to a group of attorneys for their work in
arranging the combination to be accounted for as an acquisition. What will be the
balance in consolidated goodwill?
21. Prior to being united in a business combination, Botkins Inc. and
Volkerson Corp. had the following stockholders’ equity figures:
Botkins issued 56,000 new shares of its common stock valued at $3.25 per share
for all of the outstanding stock of Volkerson.
Assume that Botkins acquired Volkerson on January 1, 2010. At what amount did
Botkins record the investment in Volkerson?
22. Prior to being united in a business combination, Botkins Inc. and
Volkerson Corp. had the following stockholders’ equity figures:
Botkins issued 56,000 new shares of its common stock valued at $3.25 per share
for all of the outstanding stock of Volkerson.
Assume that Botkins acquired Volkerson on January 1, 2010. Immediately
afterwards, what is consolidated Common Stock?
23. 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, 2011, 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 as an acquisition. Immediately after the combination, what was
the total consolidated net assets?
24. Which of the following is a
not
a reason for a business combination to take
place?
25. Which of the following statements is true regarding a statutory merger?