1. When the acquisition price of an acquired firm is less than the fair value of the identifiable net assets, all of the following are recorded at fair value except

	a.	Current assets.
	b.	Assumed liabilities.
	c.	Long-lived assets.
	d.	Each of the above is recorded at fair value.

2. Under SFAS 141R,

	a.	indirect costs are to be capitalized and direct costs are to be expensed.
	b.	both direct and indirect costs are to be expensed.
	c.	both direct and indirect costs are to be capitalized.
	d.	direct costs are to be capitalized and indirect costs are to be expensed.

3. Stock given as consideration for a business combination is valued at

	a.	fair market value
	b.	historical cost
	c.	par value
	d.	None of the above

4. Stock given as consideration for a business combination is valued at

	a.	fair market value
	b.	historical cost
	c.	par value
	d.	None of the above

Question 5

A firm can use which method of financing for an acquisition structured as either an asset or stock acquisition?

	a.	Issuing Stock
	b.	Cash
	c.	Issuing Debt
	d.	All of the above

6. Eliminating entries are made to cancel the effects of intercompany transactions and are made on the

	a.	books of the subsidiary company.
	b.	books of the parent company.
	c.	books of both the parent company and the subsidiary.
	d.	workpaper only.

7. Princeton Company acquired 75 percent of the common stock of Sheffield Corporation on December 31, 2011. On the date of acquisition, Princeton held land with a book value of $150,000 and a fair value of $300,000; Sheffield held land with a book value of $100,000 and fair value of $500,000. What amount would land be reported in the consolidated balance sheet prepared immediately after the combination?

	a.	$650,000
	b.	$500,000
	c.	$550,000
	d.	$375,000

Question 8

Assume that on January 1, 2010, P Company acquired 80% (8,000 shares) of the stock of S Company for $148,000. What is the implied book value of the company?

	a.	118,400
	b.	148,000
	c.	225,000
	d.	185,000

Question 9

The Difference between Implied and Book Value account is:

	a.	used in allocating the amounts paid for recorded balance sheet accounts that are different than their fair values.
	b.	the excess implied value assigned to goodwill.
	c.	the unamortized excess that cannot be assigned to any related balance sheet accounts
	d.	None of the above

Question 10

Which of the following situations best describes a business combination to be accounted for as a statutory merger?

	a.	Both companies in a combination continue to operate as separate, but related, legal entities.
	b.	Only one of the combining companies survives and the other loses its separate identity.
	c.	One company transfers assets to another company it has created.
	d.	Two companies combine to form a new third company, and the original two companies are dissolved.