MERGER

THEORY QUESTION # 1
A BUSINESS COMBINATION MAY BE LEGALLY STRUCTURED AS A
MERGER, A CONSOLIDATION, OR AN INVESTMENT IN STOCK
WHICH OF THE FOLLOWING DESCRIBES A BUSINESS COMBINATION
THAT IS LEGALLY STRUCTURED AS A MERGER?
A. THE SURVIVING COMPANY IS ONE OF THE TWO COMBINING
COMPANIES
B. A PARENT-SUBSIDIARY RELATIONSHIP IS ESTABLISHED.
C. NONE OF THE CHOICES
THEORY QUESTION # 2
A HORIZONTAL MERGER IS A MERGER BETWEEN
A. TWO OR MORE FIRMS FROM DIFFERENT AND UNRELATED MARKETS
B. A PRODUCER AND SUPPLIER
C. TWO OR MORE FIRMS IN THE SAME MARKET
THEORY QUESTION # 3
MASAYA Co. ACQUIRED ALL OF THE ASSETS AND LIABILITIES OF SABA
Co. for CASH IN A LEGAL MERGER.
WHICH ONE OF THE FOLLOWING WOULD NOT BE RECOGNIZED IN
ACCOUNTING FOR THE BUSINESS COMBINATION
A. ACCOUNTS RECEIVABLE
B. INVESTMENT IN SABA CO.
C. INTANGIBLE ASSET - PATENT
THEORY QUESTION # 4
SHOULD THE FOLLOWING COSTS BE INCLUDED IN THE
CONSIDERATION TRANSFERRED IN A BUSINESS COMBINATION?
1. DIRECT COSTS
2. INDIRECT COSTS

A. 1 – YES 2- YES
B. 1 – NO 2- NO
C. 1 – YES 2- NO
THEORY QUESTION # 5
IN RELATION TO THE GOODWILL ARISING FROM BUSINESS
COMBINATION, WHICH ONE OF THE FOLLOWING STATEMENTS IS IN
ACCORDANCE WITH IFRS 3?

A. GOODWILL WILL BE AMORTIZED ON A STRAIGHT-LINE BASIS OVER

20 YEARS.
B. GOODWILL WILL BE MEASURED AT COST.
C. GOODWILL WILL BE MEASURED AT COST LESS ACCUMULATED
IMPAIRMENT LOSSES.
THEORY QUESTION # 5
IN RELATION TO THE GOODWILL ARISING FROM BUSINESS
COMBINATION, WHICH ONE OF THE FOLLOWING STATEMENTS IS IN
ACCORDANCE WITH IFRS 3?

A. GOODWILL WILL BE AMORTIZED ON A STRAIGHT-LINE BASIS OVER

20 YEARS.
B. GOODWILL WILL BE MEASURED AT COST.
C. GOODWILL WILL BE MEASURED AT COST LESS ACCUMULATED
IMPAIRMENT LOSSES.
Problem 1