chap1 -...

Info icon This preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
http://websites.swlearning.com/cgi-wadsworth/course_products_wp.pl? fid=M20b&product_isbn_issn=9780324304015&discipline_number=400  ( ban 9) http://websites.swlearning.com/cgi-wadsworth/course_products_wp.pl? fid=M20bI&flag=instructor&product_isbn_issn=9780324378900&disciplinenumber=3000&templ ate=ASIA  ( ban 1) 1. The CEO of Megaplex Theater Company is contemplating selling the business. The  cumulative earnings for the past 4 years amounted to $1,600,000. The annual earnings,  based on an average rate of return on investment for this industry, would have been  $230,000. If excess earnings are to be capitalized at 10%, then the implied goodwill in  this transaction is __________. a. $680,000  b. $1,020,000  c. $1,700,000   d. $2,125,000  2. Couples Corporation purchases Players Corporation. The market value of the net  assets of Players is $225,000 and the market value of priority accounts is $180,000.  Which of the following purchase prices would require using allocation procedures? 3. A business combination occurred halfway through the fiscal year of the acquiring firm.  The stock exchanged for the interest of the combining firm far exceeded the book value  of the combining firm's assets. If the transaction is considered a purchase, fixed assets  would be raised to a higher market value and goodwill would be created. Net income  will be higher if the transaction is accounted for as a pooling as compared to a purchase  because 4. Comparative statements of an acquiring firm, which include income from periods prior  to a business combination, include the income of the acquired firm under the
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Purchase Method Pooling Method a. No  No  b. No  Yes  c. Yes  No  d. Yes  Yes 
Image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern