Ch 2 Multiple Choice Questions

Ch 2 Multiple Choice Questions - Multiple Choice Questions...

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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 . 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 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 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. 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.
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Ch 2 Multiple Choice Questions - Multiple Choice Questions...

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