Fundamentals of Advanced Accounting
6th Edition
ISBN: 9780077862237
Author: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik
Publisher: McGraw-Hill Education
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Question
Chapter 5, Problem 11Q
To determine
Explain the manner in which the business combination accounts for these events.
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Students have asked these similar questions
Assuming the existence of two companies, A and B, which of the following is not a business combination?
Company C is formed to acquire all the assets and liabilities of Company A and Company B. Both Company A and Company B liquidate.
Company A acquires all assets and liabilities of Company B, and Company B liquidates.
Company A acquires all assets and liabilities of Company B. Company B continues as a company, holding shares of Company A.
Company A acquires a group of assets of Company B, the group of assets not constituting a business. Company B continues to operate as a company.
Assuming the existence of two companies, A and B, which of the following is not a business combination?
a. Company A acquires all assets and liabilities of Company B. Company B continues as a company, holding shares of Company A.
b. Company C is formed to acquire all the assets and liabilities of Company A and Company B. Both Company A and Company B liquidate.
c. Company A acquires all assets and liabilities of Company B, and Company B liquidates.
d. Company A acquires a group of assets of Company B, the group of assets not constituting a business. Company B continues to operate as a company.
Which of the following is not considered in the determination of Total Assets after business combination?
Group of answer choices
a.Book value of the acquirer’s total assets.
b.Fair value of the acquiree’s total assets.
c.Expenses that are actually paid in relation to business combination
d.Contingent consideration
Chapter 5 Solutions
Fundamentals of Advanced Accounting
Ch. 5 - Prob. 1QCh. 5 - Prob. 2QCh. 5 - Prob. 3QCh. 5 - Prob. 4QCh. 5 - James, Inc., sells inventory to Matthews Company,...Ch. 5 - Prob. 6QCh. 5 - Prob. 7QCh. 5 - Prob. 8QCh. 5 - Prob. 9QCh. 5 - Prob. 10Q
Ch. 5 - Prob. 11QCh. 5 - Prob. 12QCh. 5 - Prob. 13QCh. 5 - Prob. 1PCh. 5 - Prob. 2PCh. 5 - Prob. 3PCh. 5 - Prob. 4PCh. 5 - Prob. 5PCh. 5 - Use the same information as in problem (5) except...Ch. 5 - Prob. 7PCh. 5 - Prob. 8PCh. 5 - Prob. 9PCh. 5 - Prob. 10PCh. 5 - What is the total of consolidated cost of goods...Ch. 5 - Prob. 12PCh. 5 - Prob. 13PCh. 5 - Prob. 14PCh. 5 - What is the consolidated total for inventory at...Ch. 5 - Prob. 16PCh. 5 - Prob. 17PCh. 5 - Prob. 18PCh. 5 - Prob. 19PCh. 5 - Prob. 20PCh. 5 - Prob. 21PCh. 5 - Prob. 22PCh. 5 - Prob. 23PCh. 5 - Prob. 24PCh. 5 - Prob. 25PCh. 5 - Prob. 26PCh. 5 - Prob. 27PCh. 5 - Prob. 28PCh. 5 - Prob. 29PCh. 5 - Prob. 30PCh. 5 - Prob. 31PCh. 5 - Prob. 32PCh. 5 - Prob. 33PCh. 5 - Prob. 34PCh. 5 - Prob. 35PCh. 5 - Prob. 36PCh. 5 - Prob. 1DYSCh. 5 - Prob. 2DYS
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- Hippo Co. is a holding company. It holds all the shares of Opco. Shareholder H holds all the shares of Hippo Co. What should Opco be directed to do prior to its sale in order to minimize taxable capital gains? a. Transfer all assets to Hippo Co. before sale. b. Transfer all shares in Opco to Shareholder H prior to the sale c. Transfer all the shares of Hippo Co. to shareholder H prior to the sale. d. Pay a tax-free dividend to Hippo Co. from Opco prior to the salearrow_forwardWhen does gain recognition accompany a business combination?a. When a bargain purchase occurs.b. In a combination created in the middle of a fiscal year.c. In an acquisition when the value of all assets and liabilities cannot be determined.d. When the amount of a bargain purchase exceeds the value of the applicable noncurrent assets (other than certain exceptions) held by the acquired company.arrow_forwardA parent acquires the outstanding bonds of a subsidiary company directly from an outside third party. For consolidation purposes, this transaction creates a gain of $45,000. Should this gain be allocated to the parent or the subsidiary? Why?arrow_forward
- When two proprietors decide to combine their businesses, generally accepted accounting principles usually require that noncash assets be taken over at their a.book value as of the date of formation. b.historical cost value as of the date of formation. c.fair market value as of the date of formation. d.residual value as of the date of formation.arrow_forwardChoose the correct. When does gain recognition accompany a business combination?a. When a bargain purchase occurs.b. In a combination created in the middle of a fiscal year.c. In an acquisition when the value of all assets and liabilities cannot be determined.d. When the amount of a bargain purchase exceeds the value of the applicable noncurrent assets (other than certain exceptions) held by the acquired company.arrow_forwardABC Company acquired XYZ Company in an acquisition. What date should be used as the acquisition date for the transaction? * The date ABC signs the contract to purchase the business. The date ABC obtains control of XYZ. The date that all contingencies related to the transaction are resolved. The date ABC purchased more than 20% of the stock of XYZ.arrow_forward
- In a business combination, the acquiree is the business that: Select one: a. Finances the business combination. b. Pays the acquisition consideration. c. The acquirer obtains control of in a business combination. d. Obtains control of the acquiree.arrow_forwardAn IPO of an UPREIT (Explain) a) Defers capital gains tax for the properties contributed to the Operating Partnership. b) Creates a non-publicly traded security that represents the property contributors’ residual ownership interest in the entity that owns the REIT’s properties. c) Does both (a) and (b). d) Does neither (a) nor (b).arrow_forwardAn entity acquires a subsidiary exclusively with a view to selling it. The subsidiary meets the criteria to be classified as held for sale. At the balance sheet date, the subsidiary has not yet been sold, and six months have passed since its acquisition. how will the subsidiary be valued in the balance sheet at the date of the first financial statements after acquisition? a. fair value b. lower of its cost and fair value less cost to sellarrow_forward
- In the year a subsidiary sells land to its parent company at a gain, a workpaper entry is made debiting i.Retained Earnings- Parent Company ii.Retained Earnings- Subsidiary Company iii.Gain on sale of land A. i only B. iii only C. ii only D. both i and ii onlyarrow_forwardWhen one company buys the assets and liabilities of another company, this is known as which of the following?Choose one answer.a. Limited liability company b. Merger c. Conventional corporation d. Acquisitionarrow_forwardWhen an entity sells a non-current asset at a profit to another entity within the same group, which of the following adjustments is necessary on consolidation? Select one: a. Dr Asset, DR Gain on sale b. Dr Gain on sale, CR Asset c. Dr Gain on sale, CR Cash d. Dr Asset, CR Casharrow_forward
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