ADVANCED FINANCIAL ACCOUNTING-ACCESS
12th Edition
ISBN: 9781260518740
Author: Christensen
Publisher: MCG
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Question
Chapter 1, Problem 1.2.4E
To determine
Business combination
Business combination refers to a transaction by a which a company acquires majority of shares some other existing company and obtains the control of other company.
To choose:The correct option out of four given options.
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Students have asked these similar questions
BUSINESS COMBINATION
Answer it with solution:
Which of the following is NOT included in the cost of an acquired company? (applying section 19 of IFRS for SMEs)
a. Contingent consideration determinable at the consummation date of the combination
b. Finder’s fee for arranging the combination
c. Cost of registering and issuing equity securities
d. None of the above
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.
Chapter 1 Solutions
ADVANCED FINANCIAL ACCOUNTING-ACCESS
Ch. 1 - What types of circumstances would encourage...Ch. 1 - How would the decision to dispose of a segment of...Ch. 1 - Prob. 1.3QCh. 1 - Prob. 1.4QCh. 1 - Prob. 1.5QCh. 1 - Prob. 1.6QCh. 1 - Prob. 1.7QCh. 1 - Prob. 1.8QCh. 1 - Prob. 1.9QCh. 1 - Prob. 1.10Q
Ch. 1 - Prob. 1.11QCh. 1 - Prob. 1.12QCh. 1 - Prob. 1.13QCh. 1 - Prob. 1.14QCh. 1 - Within the measurement period following a business...Ch. 1 - Prob. 1.16QCh. 1 - Prob. 1.1CCh. 1 - Prob. 1.2CCh. 1 - Prob. 1.3CCh. 1 - Prob. 1.4CCh. 1 - Risks Associated with Acquisitions Not all...Ch. 1 - Prob. 1.6CCh. 1 - Prob. 1.1.1ECh. 1 - Prob. 1.1.2ECh. 1 - Prob. 1.1.3ECh. 1 - Multiple-Choice Questions on Complex Organizations...Ch. 1 - Prob. 1.1.5ECh. 1 - Prob. 1.2.1ECh. 1 - Prob. 1.2.2ECh. 1 - Multiple-Choice Questions on Recording Business...Ch. 1 - Prob. 1.2.4ECh. 1 - Multiple-Choice Questions on Recording Business...Ch. 1 - Multiple-Choice Questions on Reported Balances...Ch. 1 - Multiple-Choice Questions on Reported Balances...Ch. 1 - Prob. 1.3.3ECh. 1 - Prob. 1.3.4ECh. 1 - Prob. 1.4.1ECh. 1 - Prob. 1.4.2ECh. 1 - Prob. 1.4.3ECh. 1 - Multiple-Choice Questions Involving Account...Ch. 1 - Prob. 1.4.5ECh. 1 - Prob. 1.5ECh. 1 - Prob. 1.6ECh. 1 - Prob. 1.7ECh. 1 - Prob. 1.8ECh. 1 - Prob. 1.9ECh. 1 - Prob. 1.10ECh. 1 - Balances Reported Following Combination Palm...Ch. 1 - Goodwill Recognition Spur Corporation reported the...Ch. 1 - Acquisition Using Debentures Planter Corporation...Ch. 1 - Bargain Purchase Using the data resented in E1-13,...Ch. 1 - Prob. 1.15ECh. 1 - Prob. 1.16ECh. 1 - Prob. 1.17ECh. 1 - Prob. 1.18ECh. 1 - Prob. 1.19ECh. 1 - Prob. 1.20ECh. 1 - Prob. 1.21ECh. 1 - Prob. 1.22ECh. 1 - Prob. 1.23ECh. 1 - Prob. 1.24PCh. 1 - Prob. 1.25PCh. 1 - Prob. 1.26PCh. 1 - Acquisition in Multiple Steps Peal Corporation...Ch. 1 - Prob. 1.28PCh. 1 - Prob. 1.29PCh. 1 - Prob. 1.30PCh. 1 - Prob. 1.31PCh. 1 - Computation of Account Balances Saspro Division is...Ch. 1 - Prob. 1.33PCh. 1 - Prob. 1.34PCh. 1 - Prob. 1.35PCh. 1 - Business Combination Following are the balance...Ch. 1 - Prob. 1.37PCh. 1 - Prob. 1.38PCh. 1 - Prob. 1.39PCh. 1 - Prob. 1.40P
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Similar questions
- 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…arrow_forwardStatement I: In a business combination achieved in stages, the resulting gain or loss from the remeasurement of the acquirer’s previously held equity interest to its acquisition-date fair values shall be recognize in profit or loss or other comprehensive income.Statement II: The measurement period shall not exceed one year from the acquisition date. a. True, False b. False, False c. True, True d. False, Truearrow_forward3. X transfers a publicly traded marketable equity security to Y with a date-of transfer price equal to $25. For each of the following transfer provisions [considered independently], identify the affected condition (#1, 2 or 3) for sale accounting and whether the provision prevents sale accounting for the transfer. A) A legal letter included a "would" opinion stating that the security would be beyond the reach of the powers of a bankruptcy trustee of X. Thus, the transferred asset is isolated from X. B) Y may sell the security to a third party. In the event when X exercise a call option to buy back the security, Y may purchase the same security from the open market as a replacement. C) X writes a put to Y, having an exercise price of $29 (Giving Y the right to sell at $29). The asset price is unlikely to rise beyond $28.arrow_forward
- A bargain purchase arises when the price paid to acquire a controlling interest in another company is less than the acquirer’s share of the fair value of net assets of the company being acquired. At the end of your preliminary analysis, you believe that a business combination results in a bargain purchase. What is your next step? A. Recognize an immediate gain in the consolidated statement of profit and loss without further analysis. B. Recognize a liability in the consolidated balance sheet. C. Contact the acquiree to confirm its intention. D. Reassess each step of your analysis to confirm your preliminary findings.arrow_forwardAnswer thisarrow_forwardN3. Accountarrow_forward
- 1. what is the basis for consolidation?2. is goodwill being remeasured to fair value at each reporting period? if false, what is the correct answer?3.a. Before consolidation, entity A's retained is how much? 3.b.he consolidated earning is how much?this is the scenario for #3a and b:entity A acquired 90% interest in ENtity B on January 1, 20x1 when entity B's net assets had a fair value of 100. On December 31, 20x2, Entity B's net assets increased to 200 after adjustments for acquisition date fair values, net of depreciation.arrow_forwardPlease answer the following questions relating to unrealized profit in a business combination. 1) Intra entity transfers between the components of business combinations are quite common. Why do these intra company transactions occur frequently? 2) How are unrealized inventory gross profit created, and what are the necessary consolidation entries created to account for these gains? 3) How do intra entity profit present in any year affect the noncontrolling Interest calculation?arrow_forwardQuestion (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 Falsearrow_forward
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