During an acquisition, when should intangible assets NOT be recognized apart from Goodwill? A. The assets have been identified but not accounted for by the subsidiary. B. The assets have been identified and accounted for by the subsidiary. C. The assets can be sold, licensed or exchanged. D. The assets have been accounted for by the subsidiary but have no Fair Value on the date of acquisition.

During an acquisition, when should intangible assets NOT be recognized apart from Goodwill? A. The assets have been identified but not accounted for by the subsidiary. B. The assets have been identified and accounted for by the subsidiary. C. The assets can be sold, licensed or exchanged. D. The assets have been accounted for by the subsidiary but have no Fair Value on the date of acquisition.

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter8: Investing Activities

Section: Chapter Questions

Problem 8QE

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Which of the following is not an application of the acquisition method?a) Measuring the consideration transferred at fair value.b) Determining the acquisition date which is the date the acquirer obtains control over acquiree.c) Identifying the acquirer which is the entity that obtains control over another business in a business combination.d) Measuring the non-controlling interest at the NCI’s proportionate share in the acquiree’s net identifiable assets or fair value, whichever is higher.
Choose the correct. An acquired firm’s financial records sometimes show goodwill from previous business combinations. How does a parent company account for the preexisting goodwill of its newly acquired subsidiary?a. The parent tests the preexisting goodwill for impairment before recording the goodwill as part of the acquisition.b. The parent includes the preexisting goodwill as an identified intangible asset acquired.c. The parent ignores preexisting subsidiary goodwill and allocates the subsidiary’s fair value among the separately identifiable assets acquired and liabilities assumed.d. Preexisting goodwill is excluded from the identifiable assets acquired unless the subsidiary can demonstrate its continuing value.
An acquired firm’s financial records sometimes show goodwill from previous business combinations. How does a parent company account for the preexisting goodwill of its newly acquired subsidiary?a. The parent tests the preexisting goodwill for impairment before recording the goodwill as part of the acquisition.b. The parent includes the preexisting goodwill as an identified intangible asset acquired.c. The parent ignores preexisting subsidiary goodwill and allocates the subsidiary’s fair value among the separately identifiable assets acquired and liabilities assumed.d. Preexisting goodwill is excluded from the identifiable assets acquired unless the subsidiary can demonstrate its continuing value.
During the measurement period, which of the following may affect the amount ofgoodwill from business combination? A.New information regarding estimates in the contingent consideration that are not existing atthe date of acquisitionB.Nothing can affect the amount of goodwill.C.New information regarding estimates in the contingent consideration that are existing at thedate of acquisition.D.New information regarding estimates in the contingent consideration
Entity A obtained control of Entity B in a business combination. When computing for goodwill, Entity A would least likely account for which of the following? A. Entity B’s research and development projects that were already charged as expenses, but have a fair value as at the acquisition date. B. Entity B’s unrecorded identifiable intangible assets C. Operating lease between Entity A and Entity B, wherein Entity B is the lessee. D. Entity A’s expected costs of exiting or terminating some or all of Entity B’s activities after the combination.
Which of the following is/are true regarding goodwill achieved through acquisition as part of business combination? Where the acquirer was able to purchase the business at a discount, the excess of the market capitalization over the consideration transferred will be recognized in profit or loss. The acquirer shall recognize goodwill as of the acquisition date measured as the excess of the aggregate of the consideration transferred over the net of the fair values of all the assets acquired and the liabilities assumed Group of answer choices Both statements are true. None of these statements are true. 2 only. 1 only.
if the value implied by the purchase price of an acquired company exceeds the fair values of the identifiable net assets, the excess should be a. allocated to reduce any previously recorded goodwill and classify any remainder as an ordinary gain b. allocated to reduce current and longlived assets c. allocated to gain on acquisition d. allocated to goodwill
Which of the following is not an application of the acquisition method? a. Measuring the non-controlling interest at the non-controlling interest’s proportionate share in the acquiree’s net identifiable assets or fair value, whichever is higher. b. Measuring the consideration transferred at fair value. c. Identifying the acquirer which is the entity that obtains control over another business in a business combination. d. Determining the acquisition date which is the date the acquirer obtains control over acquiree.
If an intangible asset is acquired as a part of the business combination it's recognised at: a. Fair value b. Cost c. Carring amount d. None of the given options
Statement I. Upon consolidation, the goodwill account should be debited in the elimination entry if the consideration transferred, previously held interest, and non-controlling interest are less than the fair value of net assets acquired.Statement II. In a net asset acquisition, the acquirer should recognize the goodwill as an asset in its separate financial statements. a. Both statements are true. b. Both statements are false. c. Statement I is true; Statement II is false. d. Statement I is false; Statement II is true.
The cost of intangible asset acquired in business combination is recognized by entity in its book at: a. Cost of acquisition date b. Either at cost or fair value at acquisition date c. Fair value at acquisition date d. Fair value at end of the reporting period
In reference to the downstream or upstream sale of depreciable assets, which of the following statements is correct? A. Gains and losses appear in the parent-company accounts in the year of sale and must be eliminated by the parent company determining its investment income under equity method of accounting. B. The initial effect of unrealized gains and losses from downstream sales of depreciable asset is different from the sale of non-depreciable assets. C. Gains, but not losses, appear in the parent-company accounts in the year of sale and must be eliminated by the parent company in determining its investment income under the equity method of accounting. D. Upstream sales from the subsidiary to the parent company always result in unrealized gains or losses.