11– Occurs when a new corporation is formed to take over the
assets and operations of two or more separate business entities and
dissolves the previously separate entities
A- Legal consolidation
B- Legal merger
D- Trading securities
12 – T Corporation acquired a 40% interest in K Corporation at
book value several years ago. K declared $50,000 dividends in 2011
and reported its income for $300,000. T’s Investment in K account
for 2011 should increase by:
13 – On March 31, 2010, P Corporation acquired for $1,000,000
cash all the outstanding common stocks of S company when S's
balance sheet showed net assets of $1,100,000 at the FMV.
Out-of-pocket cost of the business combination was $100,000
indirect costs and $200,000 direct costs. The goodwill is
$300,000 negative goodwill
$300,000 positive goodwill
$100,000 positive goodwill
$100,000 negative goodwill
14- The realized gains or losses that related to the stock
investment- long term [18%] securities will be treated:
In the retained earnings
In the balance sheet.
In the stockholders equity.
In the cash flows statement.
15 – On Jan 1, 2011, X Company acquired 15% of the voting
common stocks of Z Company for $200000. The intent of X is to hold
the shares for five years. Z Company achieved $100000 net income
and announced $80000 cash dividends. On December 31, 2011. The
account of "stock investment in Z" will be:
16 – B Co. acquires all of the voting stock of N Co. for
$900,000 cash. The book values of N’s assets are $850,000, but the
fair value of N’s net assets $820,000. Goodwill from the
combination is computed as?
17 – X acquires 80% of Y net assets. The carrying value of
stock investment in Y voting common stocks is $1000,000 and the
fair market value of Y net assets is $1,100,000 . The goodwill
18– S Corporation owns 92% of the outstanding common stock of
H company; the other 8% is owned by Z Corporation. In the
consolidated financial statements of S Corporation and subsidiary,
Z is considered:
A minority interest
19– In a statutory merger, a new corporation is formed to
issue its common stock for the common stock of two or more existing
corporations, which then are liquidated
20– Legal fees for bourse registration of business combination
are direct costs.