Ch1 - Ch1 Student: _ 1. Dickens Corporation issued...

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Ch1 Student: ___________________________________________________________________________ 1. Dickens Corporation issued nonvoting preferred stock with a fair market value of $1,200,000 in exchange for all the assets and liabilities of D&E Corporation. D&E's net assets on the date of acquisition had a book value of $800,000 and a fair value of $1,050,000. Also, Dickens issued common stock with a fair market value of $50,000 to legal counsel for arranging the transaction. As a result of this business combination Dickens' net assets increased by: A. $ 800,000. B. $1,050,000. C. $1,200,000. D. $1,250,000. 2. Which of the following situations best describes a business combination to be accounted for as a statutory merger? A. All the outstanding stock of a company is acquired. B. Cash or other consideration is exchanged for total net assets of another company. C. Two companies combine to form a new third company, and the original two companies are dissolved. D. One company transfers assets to another company it has created. 3. Assuming no impairment in value prior to transfer, assets transferred by a parent company to another entity it has created should be recorded by the newly created entity at the assets': A. cost to the parent company. B. book value on the parent company's books at the date of transfer. C. fair value at the date of transfer. D. fair value of consideration exchanged by the newly created entity. 4. Goodwill recognized in a business combination should be: I. amortized over its useful life. II. tested for impairment at least annually. III. identified with the reporting unit benefited by the goodwill. A. I and II B. I and III C. II and III D. I, II, and III 5. A company is acquired part way through its fiscal year in a business combination accounted for as a purchase. Which of the following best describes the proper amount of net income and retained earnings to be reported in the combined company's financial statements for that year? A. Net income since acquisition; retained earnings from the beginning of the year B. Net income and retained earnings from the beginning of the year C. Net income and retained earnings since acquisition D. Net income from the beginning of the year; retained earnings since acquisition
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6. There may be an impairment of goodwill if: I. The fair value of a reporting unit exceeds its carrying value. II. Implied goodwill exceeds the carrying value of goodwill. A. I B. II C. Both I and II D. Neither I nor II 7. A statutory consolidation is a type of business combination in which: A. one of the combining companies survives and the other loses its separate identity. B. each of the combining companies is dissolved and the net assets of both companies are transferred to a newly created corporation. C. one company acquires the voting shares of the other company and the two companies continue to operate
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This note was uploaded on 05/26/2011 for the course ACCT 410 taught by Professor Khalib during the Spring '11 term at Strayer.

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Ch1 - Ch1 Student: _ 1. Dickens Corporation issued...

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