EXERCISES E1-1 General questions 1. Penang Corporation acquired Minang Corporation and took over its assets and operations, at the same time dis- solving Minang Corporation. This type of business combination is considered as a: a Consolidation b Merger C Pooling of Interests d Subsidiary 2. Singh Corporation paid a certain sum in accounting and legal costs when it acquired Khumar Corporation. These costs should be: a Charged against other pald-in capital of the combined entity b Added to the parent/investor company's Investment account C Deducted from parent/investor company's Income in the period of combination d None of the above 3. Ahmad Corporation agrees to issue additional shares of stock to its acquired entity, Bahrun Corporation, on the condition that Bahrun Corporation meet a certain earnings goal in the future. This contingency is: a Classified as contingent liability b Measured at its fair value on each reporting date until it resolved C Not remeasured d None of the above 4. In a business combination, the additional price paid over the fair value of net assets acquired is: a Recorded as a gain from a bargain purchase b Amortized according to its useful life c Subject to annual impairment tests d None of the above