Week 4 - BLT Questons - Key (new)

• Match the following phrase to the term -Costs that are expensed rather than capitalized -A series of equal payment made at equal intervals -The translation of new knowledge into new products -Attempt to find new knowledge -Price paid for a subsidiary in excess of the fair value of its net assets Options: -Research -Annuity -Development -Goodwill -Research and Development • Match the following phrase to the term -Gives rise to deferred taxes -EBIT minus interest -Lease agreement where the risks and benefits are not conveyed to the lessee -Account holding both interest expense and amortization expense on an operating lease -Lease agreement where the risks and benefits are conveyed to the lessee Options: Operating lease -Lease expense -Finance lease -Temporary difference -Times -Interest -earned

Using the acquisition method for a business combination, goodwill is generally defined as Select one: O a. Fair value of the consideration transferred less the fair value of the subsidiary at the acquisition date O b. Fair value of the consideration transferred less the fair value of the subsidiary at the beginning of the year c. Fair value of the consideration transferred less the book value of the subsidiary at the beginning of the year O d. Fair value of the consideration transferred less the book value of the subsidiary at the acquisition date

S1: Under the acquisition method, if the fair values of identifiable net assetsexceed the value implied by the purchase price of the acquired company, theexcess should be accounted for goodwill. S2: With an acquisition, direct andindirect expenses are considered a par of the total cost of the acquiredcompany. A. Only S1 is correct.B. Both statements are correct.C. Both statements are incorrect.D. Only S2 is correct.

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Using this information how would I go about calculating Goodwill?

S1: Under the acquisition method, if the fair values of identifiable net assets exceed the value implied by the purchase price of the acquired company, the excess should be accounted for goodwill. S2: With an acquisition, direct and indirect expenses are considered a par of the total cost of the acquired company. Both statements are Only S1 is Only S2 is Both statements are 2. Following the completion of a business combination in the form of a statutory consolidation, what is the balance in the new corporation’s Retained earningsaccount? The acquirer retained earnings accountbalance Thesum of the acquirer and acquiree retained earnings account  The acquiree retained earnings accountbalance Zero 3. S1: The acquisition-related costs in a business combination to be expensed immediately include cost of issuing debt securities. S2: In a business combination any “gain on bargain purchase” shall be recognized in other comprehensive income. Only S2 is Both statements are Both statements…

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Question (10)   1- Elimination of intra-entity profit or loss may be allocated between the parent and noncontrolling interest. True or False   2- Consolidating entries to eliminate intra-entity transfers of property need to be made only in the year of transfer. True or False   3- In consolidations, downstream sales (from parent to subsidiary) are eliminated, and the intra-entity gain needs to be allocated between the parent and subsidiary. True or False   4- Intra-entity transactions transferring assets subject to depreciation or amortization are handled in the same manner as land transactions each year. True or False   5- Reporting financial statements values reflecting the single entity perspective is the primary objective of consolidating entries. True or False

1. At the date of an acquisition which resulted to either goodwill or gain on bargain purchase, the acquisition method: A. Consolidates the subsidiary's assets and liabilities at book value. B. Consolidates the subisdiary's assets at fair value and libailities at book value. C. Consolidates the subsidiary's assets at book value and liabilities at fair value. D. Consolidates the subsidiary's assets and liabilities at fair value. 2. The consideration transferred in a business combination will most likely include which of the following? A. The transaction price in an arrangement that is primarily for the benefit of the acquirer or the combined entity. B. A contingent liability with an acquisition-date fair value but imposes an improbable outflow that the acquirer assumes in a business combination. C. The "off-market" value of a reacquired right. D. The acquisition-date fair value of a contingent consideration that is dependent upon the occurrence of a possible, but not probable,…

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a. Since its enactment, PSAK 22: Business Combinations must be applied to all acquisitions. Explain how the treatment for goodwill should be based on PSAK 22.  b. From a consolidated point of view, when should the profit be recognized on intercompany sales of depreciable assets and non-depreciable assets?

On January 1, Year 5, Pic Company acquired 7,500 ordinary shares of Sic Company for $726,000. On January 1, Year 6, Pic Company acquired an additional 2,000 ordinary shares of Sic Company for $260,000. On January 1, Year 5, the shareholders' equity of Sic was as follows: Ordinary shares (10,000 no par value shares issued) Retained earnings $200,000 324,000 pok $524,000 Int ences The following are the statements of retained earnings for the two companies for Years 5 and 6: Pic Sic Year 5 Year 6 Year 5 Year 6 Retained earnings, beginning of year $ 548,000 178,000 (100,000) $ 626,000 $ 626,000 159,000 (120,000) $ 665,000 $ 324,000 $ 380,500 159,500 Profit 146,500 (90,000) $ 380,500 Dividends (90,000) $ 450,000 Retained earnings, end of year Additional Information • Pic uses the cost method to account for its investment in Sic. Any acquisition differential is allocated to customer contracts, which are expected to provide future benefits until December 31, Year 7. Neither company has any…

64 Analyze the following: I – Any gain on a subsequent increase in the fair value less cost of disposal of a noncurrent asset classified as held for sale should always be recognized in full. II – Results from discontinued operation should be presented in the income statement as a single amount on the face of the said statement below the income from continuing operations. III – The total external revenue of all reportable segments should be 75% or more of the entity's external revenue to pass the 75% overall size test for reportable segments. Given these, we can conclude that: Group of answer choices Only statement II is not false. Only statement I is not false. Only statements II and III are not true. Statement III is not false.

How many of the following statements regarding goodwillare true?• Goodwill is not reported unless purchased in an exchange.• Private companies can elect to amortize goodwill over10 years or less.• Impairment of goodwill results in a decrease in net income.a. None c. Twob. One d. Three

H4. you are told that the common integration complexities that arise in a merger and acquisition include the folloqing: I computer systems ii retention agreements iii human resource policies iv performance measurement v acquisition price which of these are valid integration complexities a. all of the aboce b. all except v c. all except II and V d. all except II e. all except III and IV

1. Goodwill arising from business combination on January 1, 2018 isA. 15,840 B. 25,000 C. 84,000 D. 110,200 2. How much of the goodwill is attributable to the parent and non-controlling interest, respectively?A. 15,840; 9,160 B. 15,840; 0 C. 84,000; 26,200 D. 191,840; 47,960 3. How much is the (1) operating income and (2) net income of the parent for the year ended 2018?A. (1) 196,800; (2) 196,800B. (1) 168,000; (2) 168,000C. (1) 196,800; (2) 168,000D. (1) 168,000; (2) 196,800 4. How much is the consolidated net income for the year 2018?A. 203,232 B. 211,000 C. 239,800 D. 256,800 5. How much of the 2018 consolidated net income is attributable to the parent and non-controlling interest, respectively?A. 202,400; 8,600 B. 168,800; 42,200 C. 203,232; 7,768 D. 191,840; 47,960PLEASE SHOW SOLUTIONS

Which of the following represent potential gains from an acquisition? I. Increased use of debt II. Lower costs per unit produced III. Diseconomies of scale Select one: a. II and III only b. I and III only c. I and II only d. I, II, and III

A proposed acquisition may create synergy by:             I. increasing the market power of the combined firm.   II. improving the distribution network of the acquiring firm.         III. providing the combined firm with a strategic advantage. IV. reducing the utilization of the acquiring firm’s assets.a. I and III onlyb. II and III onlyc. I and IV onlyd. I, II, and III onlye. I, II, III, and IV

Which of the following statements is true regarding the acquisition method of accounting for a business combination? a. Assets of the acquired company are recorded at book values. b. Assets of the acquired company are recorded at fair value, but only if the acquisition cost equals or exceeds fair value of the subsidiary's net assets. c. Assets of the acquired company are recorded at fair values regardless of the acquisition cost. d. Consulting costs related to the combination reduce additional paid-in capital.

(1) Goodwill Calculation: Goodwill is the excess of the purchase consideration transferred over the fair value of the identifiable net assets acquired. Goodwill = Purchase Consideration - Fair Value of Identifiable Net Assets Purchase Consideration = Fair value of Black's investment + Fair value of non- controlling interest Purchase Consideration (21,000,000 + 21,000) + 11,800,000 Identifiable Net Assets = (40,000 + 3,890 +6,280 +2,570) (2,480 + 10,000) Goodwill (21,021,000) + 11,800,000-(52,740) Goodwill = 32,768, 260-52,740 Goodwill = 32,715, 520 Explanation: Goodwill arising on the acquisition of white is RM 32, 715,520 Can you do it in a debit credit format?

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Which of the following statements is correct?   Statement 1: Any unrealized profit or loss made by the subsidiary should be eliminated from its profit.   Statement 2: only the group portion of any unrealized profit need to be eliminated.

The existence of overvalued assets (when comparing book and market value) onthe books of the entity acquired in an acquisition method business combination: A. Increase the excess of cost over book value applicable to unrecorded goodwill. B. Has the same effect as overvalued liabilities on the excess of cost over book value applicable to unrecorded goodwill C. Means that there will never be goodwill recorded in the business combination. D. Decrease the excess of cost over book value applicable to unrecorded goodwill.