Advanced Accounting
14th Edition
ISBN: 9781260247824
Author: Joe Ben Hoyle, Thomas F. Schaefer, Timothy S. Doupnik
Publisher: RENT MCG
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Question
Chapter 2, Problem 4P
To determine
Introduction: In a business, a combination business must account for both considerations transferred and the individual amounts of identified assets and liabilities acquired. When the purchase consideration exceeds the assumed net assets the acquirer recognizes this gain as
To choose: The correct option to define goodwill.
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Students have asked these similar questions
Which of the following statements is true about goodwill?
O a. Goodwill may be recorded when it is identified within a
company.
O b. Goodwill may be recorded when a company has
exceptional customer relations.
O c. Goodwill may be recorded when the fair value of a
company's assets exceeds their cost.
O d. Goodwill may be recorded when one company acquires
another in a business combination.
Which of the following statements is true about goodwill?
Goodwill may be recorded when the fair value of a company's assets exceeds their
а.
cost.
b. Goodwill may be recorded when one company acquires another in a business
combination.
С.
Goodwill may be recorded when a company has exceptional customer relations.
d. Goodwill may be recorded when it is identified within a company.
Explain the concept of goodwill in accounting and how it is recognized and measured. Provide an example to illustrate the recognition of goodwill in a business acquisition.
Chapter 2 Solutions
Advanced Accounting
Ch. 2 - Prob. 1QCh. 2 - Describe the concept of a synergy. What are some...Ch. 2 - Prob. 3QCh. 2 - What does the term consolidated financial...Ch. 2 - Within the consolidation process, what is the...Ch. 2 - Prob. 6QCh. 2 - Prob. 7QCh. 2 - Prob. 8QCh. 2 - Prob. 9QCh. 2 - Prob. 10Q
Ch. 2 - Prob. 11QCh. 2 - Prob. 12QCh. 2 - Which of the following does not represent a...Ch. 2 - Prob. 2PCh. 2 - Prob. 3PCh. 2 - Prob. 4PCh. 2 - Prob. 5PCh. 2 - Prob. 6PCh. 2 - Prob. 7PCh. 2 - When does gain recognition accompany a business...Ch. 2 - Prob. 9PCh. 2 - Prob. 10PCh. 2 - Prob. 11PCh. 2 - On June 1, Cline Co. paid 800,000 cash for all of...Ch. 2 - On May 1, Donovan Company reported the following...Ch. 2 - Prob. 14PCh. 2 - Prob. 15PCh. 2 - Prob. 16PCh. 2 - Prob. 17PCh. 2 - On its acquisition-date consolidated balance...Ch. 2 - On its acquisition-date consolidated balance...Ch. 2 - Prob. 20PCh. 2 - Prob. 21PCh. 2 - Prob. 22PCh. 2 - The following book and fair values were available...Ch. 2 - Prob. 24PCh. 2 - Prob. 25PCh. 2 - Prob. 26PCh. 2 - Prob. 27PCh. 2 - Prob. 28PCh. 2 - SafeData Corporation has the following account...Ch. 2 - Prob. 34PCh. 2 - Prob. 35PCh. 2 - Prob. 39APBCh. 2 - Prob. 40APB
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Similar questions
- The identifiable assets acquired and liabilities assumed in a business combination are generally measured at: a. Acquisition-date fair values b. Previous carrying amounts c. Fair value less cost to sell d. Costarrow_forwardNeed Answerarrow_forwardWhat type of "event" results in goodwill being recorded on a company's balance sheet? How is goodwill evaluated to determine whether this specific asset is impaired? If it is deemed to be impaired, what actions does a company need to take?arrow_forward
- This distinguishes a business combination from other types of investment transactions. Obtaining of control Acquisition of stocks Acquisition of assets All of these The entity that obtains control over another business in a business combination called the Controller Acquiree Acquirer Controllee 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? Entity B’s research and development projects that were already charged as expenses, but have a fair value as at the acquisition date. Entity B’s unrecorded identifiable intangible assets Operating lease between Entity A and Entity B, wherein Entity B is the lessee. Entity A’s expected costs of exiting or terminating some or all of Entity B’s activities after the combination. A contingent liability assumed in a business combination Is not accounted for by the acquirer if the contingent liability has an improbable outflow of economic…arrow_forwardAn entity has financial assets held under a business model with the objective of holding financial assets in order to collect contractual cash flows. Prior to maturity date, the entity sells a significant portion of the financial assets. Which of the following statements is correct? The remaining financial assets within the "hold to collect" business model need not be reclassified. However, the change in circumstance may be relevant in assessing the business model for new financial assets that have been acquired or originated. The change in circumstance is a prior period error. Under the "hold to collect" business model, the entity needs to hold financial assets until their maturity dates. A significant sale of financial assets before their maturity date evidences an inability to hold and collect cash flows. Therefore, the remaining financial assets shall be reclassified to either FVPL or FVOCI. The entity shall change its business model because of the change in circumstance. The…arrow_forwardWhich statement is incorrect regarding classification of financial assets? a. An entity can classify financial assets that meet the amortized cost criteria as at FVPL if doing so eliminates or reduces an accounting mismatch. B. In order to be classified at fair value through OCI, a debt instrument needs to have either simple principal and interest cash flows or be held in a business model in which both holding and selling financial assets are integral to meeting management’s objectives. C. An investment in equity instrument may not be classified as financial asset subsequently measured at amortized cost. D. Reclassifications of financial assets are only permitted on the change of an entity’s business model and are expected to occur only infrequently.arrow_forward
- Discuss the main challenges in recognising and measuring intangible assets, suchas brands, in an entity's individual statement of financial position.arrow_forwardWhich of the following statement best defines an asset? a. An asset is a resource owned by the entity with a financial value b. An asset is resource controlled by the entity from which future economic benefits are expected to be generated c. An asset is a resource controlled by an entity because of past events d. An asset is a resource controlled by an entity as a result of past events from future economic benefits are expected to be generatedarrow_forwardMatching Type Equity. Intangible assets. Property, plant, and equipment Assets Resources of a durable nature used in nature Economic rights or competitive advantages Resources expected to provide future economic benefits Residual interest in the net assets of an entityarrow_forward
- In business goodwill is: combinations under common control, a) Calculated as in regular business combinations b) Amortized immediately c) Always recognized at fair value d) Not recognized, difference goes to equityarrow_forwardExplain the concept of fair value accounting. When is a company required to measure its assets and liabilities at fair value?arrow_forwardHow do changes in accounting policies and estimates affect the recognition and measurement of goodwill?arrow_forward
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