Chapter 2-solution class

Chapter 2-solution class - Chapter 2 Consolidation of...

Info iconThis preview shows pages 1–8. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 2 Consolidation of Financial Information 1. South Port, Inc. and Wet Dock Corporation were joined into a new company called Sowet, Inc. Both companies transferred their assets and liabilities to the new company and then both companies were dissolved. Which of the following terms best describes this event? A. Statutory Consolidation B. Statutory Merger C. Acquisition of Majority Interest D. Business Combination . 1. A Study Guide – Chapter 2 19
Background image of page 1

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

View Full DocumentRight Arrow Icon
2. How would each of the following types of costs be accounted for under the Purchase method? Direct Combination Fees Stock Issuance Costs A. Increase Acquisition Cost Expense as incurred B. Increase Paid-In Capital Increase Acquisition Cost C. Expense as Incurred Decrease Paid-In Capital D. Increase Acquisition Cost Decrease Paid-In Capital E. Decrease Acquisition Cost Decrease Paid-In Capital 2. D 20 Advanced Accounting – 10/e
Background image of page 2
3. Using the Acquisition Method, how would each of the following types of costs be accounted for? Direct Combination Fees Stock Issuance Costs A. Increase Acquisition Cost Expense as incurred B. Increase Paid-In Capital Increase Acquisition Cost C. Expense as Incurred Decrease Paid-In Capital D. Increase Acquisition Cost Decrease Paid-In Capital E. Decrease Acquisition Cost Decrease Paid-In Capital 3. C Study Guide – Chapter 2 21
Background image of page 3

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

View Full DocumentRight Arrow Icon
4. In accounting for a business combination, a bargain purchase exists when A. Consideration transferred > book value of net assets acquired. B. Fair value of net assets acquired > consideration transferred. C. Fair value of net assets acquired < book value. D. Fair value of net assets acquired > book value. E. Fair value of net assets acquired < consideration transferred. 22 Advanced Accounting – 10/e
Background image of page 4
4. B 5. On the consolidated financial statements of a business combination accounted for as an acquisition, which one of the following is the appropriate basis for valuing fixed assets of a wholly-owned subsidiary on the date of acquisition? A. Fair value. B. Book value as shown on the books of the subsidiary. C. Book value plus any excess of purchase price over book value of the acquired assets and liabilities. D. Historical cost as shown on the books of the subsidiary. E. Current carrying value. Study Guide – Chapter 2 23
Background image of page 5

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

View Full DocumentRight Arrow Icon
5. A 24 Advanced Accounting – 10/e
Background image of page 6
Generally, what was done with In-Process Research and Development when using the purchase method? A. Write off the accumulated costs as an expense on the consolidation worksheet. B. C. Allocate a portion of the purchase price to an expense item equal to the fair value of the D. E.
Background image of page 7

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

View Full DocumentRight Arrow Icon
Image of page 8
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 08/25/2011 for the course ACCT 440 taught by Professor Suresh during the Spring '11 term at Copenhagen Business School.

Page1 / 28

Chapter 2-solution class - Chapter 2 Consolidation of...

This preview shows document pages 1 - 8. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online