odwill to be amortized periodically for 20 years. G. Goodwill to be amortized for 40 yearsD. Expenses immediately.B. Goodwill not subject to amortization but subject to impairment.3. Two methods of arranging business combinations:C. Acquisition and uniting of interestD. Merger and acquisition of stocksA/ Merger and consolidationB. Consolidation and Acquisition of stocks. The cost of registering equity securities in a business combination should be recorded as:A. An income of the periodB. An expense of the periodC. Deduction from additional paid-in capitalD. Part of the cost of the stock acquired5. In acquisition-type combination, the appropriate accounting for the excess of fair values of net assets acquireder the price paid is to:A. Recognize as income in the books of the acquirerB. Recognize as additional paid-in capital in the books of the acquirerblbe C. Reduce proportionately current fair values assigned to the acquiree's non-current assets anyremaining excess as a deferred credit.D. Reduce proportionately current fair values assigned to the acquiree's non-current assets otherinvestments in marketable securities and recognize any remaining excess as a deferred credit,016. Which of the following is included as part of the consideration given?A. Direct and indirect acquisition costs attributable to the acquisition. C. Contingent considerationB. Indirect cost and contingent consideration D. All expenses and liabilities relating to the acquisition7. Which of the following is not included in the price paid in an acquisition type business combination?C. Investment banker's finder's fee for the combination .000.0.1yA. Cash paidB. Fair value of shares issued D. Contingent consideration8. Under the acquisition method the retained earnings of the acquirer after the combination is equal to:A. The sum of the retained earnings of the acquiree and the acquirerB. The retained earnings of the acquirer plus any income from acquisitionC. The retained earnings of the acquirer only.D. The retained earnings of the acquirer less any amortization of goodwill.9.Which of the following is not true of a business combination classified as acquisition?A. The acquirér continues tó exist ás á sepárátė légal entityB. The acquiree ceases to exist as a separate legal entityC. Both companies continue their legal existenceD. One company acquires the assets and liabilities of one or more other companies in exchange forstock, cash or other consideration.10. Shares issued as consideration in an acquisition are recorded at:A. Their fair value as at the date when the acquirer obtains control over the net assets and operations ofthe acquiree.B. At cost.C. At cost or fair value whichever is lowerD. At cost or fair value whichever is higher21 P age-Accounting for Business Combination

not subject to amortization but subject to impairment. D. Expenses im 3. Two methods of arranging business combinations: A/ Merger and consolidation B. Consolidation and Acquisition of stocks C. Acquisition and uniting of interest D. Merger and acquisition of stocks

not subject to amortization but subject to impairment. D. Expenses im 3. Two methods of arranging business combinations: A/ Merger and consolidation B. Consolidation and Acquisition of stocks C. Acquisition and uniting of interest D. Merger and acquisition of stocks

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 17E

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Peer Company acquired of the common stock of Sight Company on January 1, year one, for On that date, Sight had the following trial balance: account debit Additional paid in capital Building (12-year life) Common stock Current assets Equipment (6-yr life) Land Liabilities (due in 4 years) Retained earnings 1/year 1 Totals $250,000 170,000 160,000 110,000 $690,000 During year one, Sight reported net income of During year two, Sight reported net income of During year one, Sight paid dividends of During year two, Sight paid dividends of Building Equipment credit $100,000 170,000 300,000 120,000 $690,000 On January 1, year one, fair values of some Sight's accounts were: Land $122,000 $274,000 $196,000 There was no impairment of any goodwill arising from the acquisition. Peer uses the equity method for this investment. Part A. Use the data for the Peer Company acquisition of the Sight Company to prepare the consolidation journal entries (such as entry S, A,....) for December 31 of year one.…
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