Magpantay, Katherine M.

QUIZ 2 ACCT221A

BSACCTY2 – BACC2A

1. Two methods of arranging busines combinations:

a. Merger and consolidation
b. Merger and acquisition of stock
c. Acquisition and uniting of interests
d. Consolidation and acquisition of stock

2. A business combination must be accounted for as:

a. An acquisition
b. A pooling
c. A merger
d. A consolidation

3. The excess of price paid over the fair value of net identifiable assets acquired should be
recognized as:
a. Goodwill to be amortized periodically for 20 years.
b. Expenses immediately
c. Goodwill and not subject to amortization but subject to impairment
d. Goodwill to be amortized for 40 years.

4. In an acquisition-type combination, the appropriate accounting for the excess of fair values of
net assets acquired over the price paid is to:
a. Recognize as income in the books of the acquirer
b. Recognize as additional paid-in-capital in the books of the acquirer
c. Reduce proportionately current fair values assigned to the acquiree’s non-current assets an
recognize any remaining excess as a deferred credit
d. Reduce proportionately current fair values assigned to the acquiree’s non-current assets
other investments in marketable securities and recognize any remaining excess as a
deferred credit

5. The cost of registering equity securities in a business combination should be recorded as:
a. An income for the period
b. AN expense for the period
c. Deduction from additional paid-in capital
d. Part of the cost of the stock acquired
6. 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 acquirer
b. The retained earnings of the acquirer plus any income from acquisition
c. The retained earnings of the acquirer only
d. The retained earnings of the acquirer less any amortization of goodwill

7. Which of the following is included as part of the consideration given?

a. Direct and indirect acquisition costs attributable to the acquisition
b. Indirect costs and contingent consideration
c. Contingent consideration
d. All expenses and liabilities relating to the acquisition

8. Which of the following is not included in the price paid in an acquisition type business
combination?
a. Cash paid
b. Fair value of shares issued
c. Investment banker’s finder’s fee for the combination
d. Contingent consideration

9. Which of the following is not true of a business combination classified as acquisition?

a. The acquirer continues to exist as a separate legal entity
b. The acquiree ceases to exist as a separate legal entity
c. Both companies continue their legal existence
d. One company acquires the assets and liabilities of one or more other companies in
exchange of stock, cash or other consideration

10. Shares issued as consideration in a acquisition are recorded at:

a. The fair value as at the date when the acquirer obtains control over the net assets and
operations of the acquiree.
b. AT cost
c. At cost or fair value whichever is lower
d. At cost or fair value whichever is higher