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Question No . 1 : True or False 1 . A merger is a business combination in which the acquired business s assets and liabilities
Question No: True or False A merger is a business combination in which the acquired businesss assets and liabilities are combined with those of the acquiring company. Thus, two companies are merged into a double entity. Controlling ownership A business combination in which the acquired company remains as a separate legal entity with a majority of its common stock owned by the purchasing company leads to a parentsubsidiary relationship. A business combination occurs when one party acquires control over one or more businesses. A stock acquisition occurs when one company acquires the voting shares of another company and the two companies continue to operate as separate, but related, legal entities. The legal form of a business combination, the substance of the combination agreement, and the circumstances surrounding the combination all affect how the combination is recorded initially and the accounting and reporting procedures used subsequent to the combination. A business combination effected through a stock acquisition does not necessarily have to involve the acquisition of all of a companys outstanding voting shares. Some parties involved in a business combination must believe they have an opportunity to benefit before they will agree to participate. The value of a companys individual assets and liabilities is usually determined by appraisal. Current assets are often viewed as having fair values equal to their book values because they will be paid at face amount within a short time. When one company acquires another, the acquiring company must place a value on the consideration given in the exchange. Goodwill as it relates to business combinations consists of all those intangible factors that allow a business to earn aboveaverage profits. Under the acquisition method, an acquirer measures and recognizes goodwill from a business combination based on the difference between the total fair value of the acquired company and the fair value of its net identifiable assets. Many business combinations are effected by acquiring the voting stock of another company rather than by acquiring its net assets. Consolidation entries are used in the consolidation worksheet to adjust the totals of the individual account balances of the separate consolidating companies to reflect the amounts that would appear if the legally separate companies were actually a single company. All revenues and expenses of the individual consolidating companies arising from transactions with unaffiliated companies are included in the consolidated financial statements.
Question No:
True or False
A merger is a business combination in which the acquired businesss assets and liabilities are combined with those of the acquiring company. Thus, two companies are merged into a double entity.
Controlling ownership A business combination in which the acquired company remains as a separate legal entity with a majority of its common stock owned by the purchasing company leads to a parentsubsidiary relationship.
A business combination occurs when one party acquires control over one or more businesses.
A stock acquisition occurs when one company acquires the voting shares of another company and the two companies continue to operate as separate, but related, legal entities.
The legal form of a business combination, the substance of the combination agreement, and the circumstances surrounding the combination all affect how the combination is recorded initially and the accounting and reporting procedures used subsequent to the combination.
A business combination effected through a stock acquisition does not necessarily have to involve the acquisition of all of a companys outstanding voting shares.
Some parties involved in a business combination must believe they have an opportunity to benefit before they will agree to participate.
The value of a companys individual assets and liabilities is usually determined by appraisal.
Current assets are often viewed as having fair values equal to their book values because they will be paid at face amount within a short time.
When one company acquires another, the acquiring company must place a value on the consideration given in the exchange.
Goodwill as it relates to business combinations consists of all those intangible factors that allow a business to earn aboveaverage profits.
Under the acquisition method, an acquirer measures and recognizes goodwill from a business combination based on the difference between the total fair value of the acquired company and the fair value of its net identifiable assets.
Many business combinations are effected by acquiring the voting stock of another company rather than by acquiring its net assets.
Consolidation entries are used in the consolidation worksheet to adjust the totals of the individual account balances of the separate consolidating companies to reflect the amounts that would appear if the legally separate companies were actually a single company.
All revenues and expenses of the individual consolidating companies arising from transactions with unaffiliated companies are included in the consolidated financial statements.
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