Essay about ACC 440 Week 2 Learning Team Assignment Ch. 1 Textbook Exercises

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Multiple-Choice Questions on Recording Business

Combinations [AICPA Adapted]

Select the correct answer for each of the following questions.

1. Goodwill represents the excess of the sum of the consideration given over the:

2. In a business combination, costs of registering equity securities to be issued by the acquiring company are a(n):

3. Which of the following is the appropriate basis for valuing fixed assets acquired in a business combination carried out by exchanging cash for common stock?

4. In a business combination, the fair value of the identifiable net assets acquired exceeds the fair value of the consideration given. The excess should be reported as a:

5. A and B Companies have been operating separately for five years. Each company has a minimal amount of liabilities and a simple capital structure consisting solely of voting common stock. A Company, in exchange for 40 percent of its voting stock, acquires 80 percent of the common stock of B Company. This is a “tax-free” stock-for-stock (type B) exchange for tax purposes. B Company assets have a total net fair market value of $800,000 and a total net book value of $580,000. The fair market value of the A stock used in the exchange is $700,000 and the fair value of the no controlling interest is $175,000. The goodwill reported following the acquisition would be:

a. Zero.

b. $60,000.

c. $75,000.

d. $295,000.


Journal Entries to Record a Business Combination

On January 1, 20X2,