1. Impairment of goodwill

Multiple Choice

a) is only tested for on the date of acquisition and then again on the date of disposition.

b) is used in addition to the regular amortization of the goodwill.

c) is the only time goodwill from a business combination is expensed since goodwill is not generally amortized.

d) causes the goodwill asset account of the acquirer to be decreased.

2. The acquisition method of accounting for a business combination:

Multiple Choice

a) records the identifiable net assets of the acquired company at their fair market value.

b) records the identifiable net assets of the acquired company at the price paid by the acquiring company and the goodwill at its fair market value.

c) records the identifiable net assets of the acquired company at the price paid by the acquiring company.

d) records the identifiable net assets of the acquired company at their book value.

3. Which of the following statements concerning the preparation of consolidated financial statements is correct?

Multiple Choice

a) Consolidated financial statements replace the financial statements of the parent company.

b) Consolidated financial statements must be prepared if the parent company has control of another company.

c) Consolidated financial statements are prepared in addition to the financial statements of the parent company and subsidiary company and they are distributed to the shareholders of both companies.

d) Consolidated financial statements must be prepared if the parent company owns 51% of another company.