1. P buys 100% of S on January 1, Year 1. True/False: the Year 1 consolidated financial statements will show the same figures regardless of whether P accounts for its investment in its ledger on the equity basis or the initial value method.

   True

   False

1. Alpha obtains 100% of Beta on January 1, Year 1. Alpha gave to Betas shareholders some Alpha Company stock that had a fair value of $10,000,000. Alpha spent $20,000 on lawyer and accounting fees in connection with the deal, and $10,000 on stock registration fees. Also, Alpha agreed to pay Betas shareholders an extra amount, of up to $1,000,000, if the income from Beta over the next two years exceeds certain targets. The estimated fair value of this contingent consideration is $150,000 on January 1, Year 1. The total consideration transferred as part of this acquisition is: ( point)

   		9,970,000
   		9,980,000
   		10,000,000
   		10,120,000
   		10,130,000
   		10,150,000
   		11,000,000