1. When considering an acquisition, which of the following is not a method by which one company may gain control of another company a. Purchase of the majority of outstanding voting stock of the acquired company. b. Purchase of all assets and liabilities of another company. c. Purchase the assets, but not necessarily the liabilities, of another company previously in bankruptcy. d. All of the above methods result in a company gaining control over another company. 2. Parr Company purchased 100% of the voting common stock of Super Company for $2,000,000. There are no liabilities. The following book and fair values pertaining to Super Company are available: Book Value Fair Value Current assets 5300,000 $600,000 Land and building 600,000 900.000 Machinery 500.000 600.000 Goodwill 100,000 2 The amount of machinery that will be included in on the consolidated balance sheet is: a. $560,000 b. 5860,000 c. $600.000 d$900,000 Which of the following is not an advantage of the parent issuing shares of stock in exchange for the subsidiary common shares being acquired? a. It is not necessary to determine the fair values of the subsidiary's net assets. b. It may allow the subsidiary's shareholders to have a tax-free exchange c. It avoids the depletion of cash. d. If the parent is publicly held, the share price is readily determinable 4. On April 1.2021. Papen Company paid $950,000 for all the issued and outstanding stock of Simon Corporation. The recorded assets and liabilities of the Simon Corporation on April 1, 2021, follow: Cash $80,000 Inventory 240.000 Property and equipment (net of accumulated depreciation of 5320,000) 480,000 Liabilities 10,000) On April 1, 2021. It was determined that the inventory of Simon had a fair value of S190,000, and the property and equipment (net) had a fair value of $500,000. What is the amount of goodwill resulting from the business combination a SO $120.000 e $300,000 d. $210.000 $. A parent muy acquire a subsidiary in a different industry from its own is a means of diversifying its overall business risk a. The b. False 6 The SEC requires publicly held companies to report their consolidation policies under Regulation X. Rule 2 1. Fale Thue