1.

1. Viceroy Company owns 40% of the voting stock of Wagner Enterprises, and reports the investment using the equity method. The investment balance is currently $6,000,000, but its fair value is $10,000,000. Viceroy pays $16,000,000 in cash to acquire the remainder of Wagner's stock. Wagner's reported net assets have a book value of $7,000,000 and a fair value of $5,000,000, and it has unreported technology valued at $2,000,000. If the acquisition is reported as a merger, how much goodwill is recognized?

   	A.	$ 1,000,000
   	B.	$19,000,000
   	C.	$14,000,000
   	D.	$ 6,000,000

2.

Fizzy Corporation uses the equity method to account for its 25% investment in Organic Juices Company, for which it paid $10 million in excess of its share of Organic Juices' book value five years ago. In 2020 Organic Juices reports net income of $2 million, and Fizzy reports equity in net income from Organic Juices on its 2020 income statement in the amount of $500,000. We can determine from this information that Fizzy attributed the $10 million extra it paid for Organic Juices to any of the following except:

	A.	Technology rights with a 3-year life
	B.	Goodwill
	C.	Bottler franchise rights with indefinite life
	D.	Favorable leaseholds with an 8-year life

3.

An AFS debt security's market value is less than its original cost. The loss is reported in income when:

	A.	Current market value is below cost, and it is more likely than not that the investor will sell it before the loss is recovered.
	B.	Current market value is at least 50% below cost.
	C.	Current market value is below carrying value.
	D.	Current market value is below carrying value and the decline is due to increases in market interest rates.