65 Accounting.. Choose the correct OptionsIn step acquisition accounting, the previouslyheld interest is:a) Remeasured to fair valueb) Maintained at original costc) Ignored in consolidation.d) Written off to reserves

Explanation of Step Acquisition: Step acquisition occurs when a company gradually increases its…

Answered: Choose the correct Options In step…

Auditing: A Risk Based-Approach to Conducting a Quality Audit

10th Edition

ISBN:9781305080577

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter16: Advanced Topics Concerning Complex Auditing Judgments

Section: Chapter Questions

Problem 21MCQ

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In an accretion/dilution analysis of an acquisition, if the purchase price exceeds the book value of the target’s assets, discuss the key components of the balance sheet that will be adjusted on the pro forma financials.
True or False Pls indicate if the statements are True or False. 1. All allocated excess/purchase differentials are amortized. 2. Allocated excess/purchase differential amortizations are the allocation over time of the difference between the market value and the book value of the subsidiary’s assets and liabilities at the acquisition date. 3.
Which of the following would NOT be included in the acquisition cost?A. Share issue costs.B. Fair value of any shares issued.C. Fair value of contingent consideration.D. Fair value of assets transferred.
How shall an acquirer in a business combination account for the changes in fair value contingent consideration classified as equity instrument if the changes result from events after the acquisition date? a. The changes in fair value of contingent consideration classified as equity shall be recognized as gain or loss in profit or loss because they are not measurement period adjustments. b. Contingent consideration classified as equity shall not be re-measured and its subsequent settlement shall be accounted for within equity. c. The changes in fair value of contingent consideration classified as equity shell be retrospectively restated to beginning retained earnings because they are prior period error. d. The change in fair value of contingent consideration classified as equity shall be retroactively adjusted to goodwill/gain on bargain purchase because they are measurement period adjustments.
Explain the adjustments made in the equity method when the fair value of the net assets underlying an investment exceeds their book value at acquisition.
The price that would be received to sell an asset or paid to transfer a liability in an orderly sale between market participants at the measurement date is termed ________. Select one alternative: fair value book value intangible value tangible value
The “excess of the acquirer’s interest in the net fair value of acquiree’sidentifiable assets, liabilities, and contingent liabilities over cost” (formerly knownas negative goodwill) should be A. Reassessed as to the accuracy of its measurement and then recognized immediately in profit or loss.B. Amortized over the life of the assets acquired.C. Carried as a capital reserve indefinitely.D. Reassessed as to the accuracy of its measurement and then recognized in retained earnings.
If a company incurs disposition obligations as a result of acquiring an asset:\\nQuestion 4 options:\\n\\nThe company recognizes the obligation at fair value when the asset is acquired.\\n\\nThe company recognizes the obligation at fair value when the asset is disposed.\\n\\nThe company records the difference between the fair value of the asset and the obligation when the asset is acquired.\\n\\nNone of the above.
if share issuance cost count as acqusition related costs?
Which statement is correct regarding derecognition of financial assets? A. Transfer of risks and rewards is evaluated by determining the transferee’s ability to sell the asset. B. A sale and repurchase transaction where the repurchase price is a fixed price is a transfer of financial asset that qualifies for derecognition. C. The entity shall continue to recognize the transferred asset in its entirety if the transfer does not qualify for derecognition because the entity has retained substantially all the risks and rewards of ownership of the transferred asset. D. If an entity neither transfers nor retains substantially all the risks and rewards of ownership of a transferred asset, the entity shall continue to recognize the transferred asset to the extent of its continuing involvement.
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.
Multiple choice 1. The transaction costs of acquiring an investment measured at amortized cost are A. Included in the initial measurement of the investment and amortized to profit or loss using the effective interest method. B. Initiallt deferred and recognized in profit or loss only when the aaset is derecognized or becomes impaired. C. Initially deferred and recognized directly in equity when the asset is derecognized or becomes impaired. D. Expensed immediately on acquisition date. 2. An entity acquired 10 year bonds at a premium. The investment is measured at amortized cost . Seven years after the acquisition, the entity sold 90% of the bonds at a discount. Which is the following is true? A. Gain is realized on the sale. B. The remaining 10% should be reclassified out of the amortized cost measument category. C. Loss is realized on the sale. D. B and C 3. There are no payments made during the life of this type of bond; both the principal and interest( computed on a…

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Choose the correct Options In step acquisition accounting, the previously held interest is: a) Remeasured to fair value b) Maintained at original cost c) Ignored in consolidation. d) Written off to reserves