1, In a business combination that is accounted for as a purchase and does not create negative goodwill, the acquiring company records the assets of the acquired company at the

a. Original cost

b. Original cost minus accumulated depreciation

c. Fair market value

d. Book value

2. Which of the following most accurately describes the position taken by current generally accepted accounting principles?

a. Both pooling of interests and the purchase method are still permitted under certain circumstances

b. The purchase method results in the assets of the acquired company being recognized on the acquiring company's balance sheet at their fair value at the date of acquisition

c. Goodwill may arise as a result of a business acquisition accounted for as a pooling of interests

d. The purchase method requires a business acquisition transaction to be structured to neet twelve very specific criteria required by generally acvepted accounting principles (GAAP)

3, An entity that participates in a joint arrangement is referred to under PFRS 11 as

a. partly to a joint arrangement

b. joint arranger

c. choice A only if the part contains joint control

d. choice B regardless of whether the party obtains joint control

4. Which of the following is not a financial risk in derivatives?

1 point

a. volatility risk

b. price risk

c. foreign currency risk

d. interest rate risk

5. On January 13, 2017, Kiss Co. purchased 10% of Black, Inc.'s outstanding common shares for P400,000. Kiss is the largest single shareholder in Black, and all of Kiss' officers are on Black's board of directors. Black reported net income of P500,000 for 2017, and paid dividends of P150,000. The fair value of the investment on December 31, 2017 is P450,000. In it's December 31, 2017, separate balance sheet, what amount should Kiss report as investment in Black?

a. P450,000

b. P400,000

c. P435,000

d. None of the above

6. According to PAS 27, which of the following should produce separate financial statements?

a. associates

b. subsidiaries

c. a & b

Option 4

d. neither a nor b