Financial Accounting for Mergers and Acquisitions
Final
Exam
Course Introduction
Financial Accounting for Mergers and Acquisitions explores the accounting principles, regulations, and practices crucial for the successful execution and integration of mergers and acquisitions. The course examines key topics such as business combination accounting under ASC 805/IFRS 3, purchase price allocation, valuation of intangible assets, goodwill recognition and impairment, and post-merger financial reporting. Students will learn to analyze financial statements impacted by mergers and acquisitions, address tax and legal considerations, and understand the role of due diligence. Through case studies and real-world scenarios, the course equips students with the knowledge and skills to interpret complex financial disclosures and support informed decision-making in corporate restructuring activities.
Recommended Textbook
Advanced Financial Accounting 8th Edition by Richard Baker
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20 Chapters
1041 Verified Questions
1041 Flashcards
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Page 2
Chapter 1: Intercorporate Acquisitions and Investments in Other Entities
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42 Verified Questions
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Sample Questions
Q1) Burrough Corporation concluded that the fair value of Helyar Company was $80,000 and paid that amount to acquire all of its net assets.Helyar reported assets with a book value of $60,000 and fair value of $98,000 and liabilities with a book value and fair value of $23,000 on the date of combination.Burrough also paid $3,000 to a search firm for finder's fees related to the acquisition.What amount will be recorded as goodwill by Burrough Corporation while recording its investment in Helyar?
A)$0
B)$5,000
C)$8,000
D)$13,000 Answer: B
Q2) Based on the preceding information,what amount of goodwill will be reported for Alpha at year-end?
A)$0
B)$20,000
C)$30,000
D)$10,000 Answer: B
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Chapter 2: Reporting Intercorporate Interests
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Sample Questions
Q1) A change from the cost method to the equity method of accounting for an investment in common stock resulting from an increase in the number of shares held by the investor requires:
A)only a footnote disclosure.
B)that the cumulative amount of the change be shown as a line item on the income statement,net of tax.
C)that the change be accounted for as an unrealized gain included in other comprehensive income.
D)retroactive restatement as if the investor always had used the equity method.
Answer: D
Q2) Based on the information provided,what will be the balance in the investment account on December 31,2007 reported by Wheeley?
A)$172,000
B)$173,800
C)$183,800
D)$194,400
Answer: B
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Chapter 3: The Reporting Entity and Consolidated Financial Statements
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Sample Questions
Q1) FASB issued Interpretation No.46 R related to the Consolidation of Variable Interest Entities.Why does FASB have difficulty in prescribing when these entities are consolidated?
Answer: A Variable Interest Entity (VIE)is a legal structure used for business purposes that either:
1.Does not have equity investors that: a.have voting rights or b.doesn't share in all of the entity's profits or losses.
2.Has equity investors that do not provide sufficient financial resources to support the entity's activities.
Therefore,FASB has been trying to define the Primary Beneficiary and from this lead to consolidation not just control as presumed under FASB 141.
Q2) Goodwill under the parent theory:
A)exceeds goodwill under the proprietary theory.
B)exceeds goodwill under the entity theory.
C)is less than goodwill under the entity theory.
D)is less than goodwill under the proprietary theory.
Answer: C
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Chapter 4: Consolidation of Wholly Owned Subsidiaries
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Sample Questions
Q1) Based on the information given above,what will be the amount of net assets reported in the consolidated balance sheet,prepared immediately following the combination?
A)$1,150,000
B)$1,550,000
C)$1,700,000
D)$1,830,000
Q2) Based on the preceding information,what amount will be reported for total accounts payable in the consolidated balance sheet for the year 2008?
A)$56,000
B)$46,000
C)$60,000
D)$42,000
Q3) What portion of the balances of subsidiary stockholders' equity accounts are eliminated in preparing the consolidated balance sheet?
A)Common stock
B)Additional paid-in capital
C)Retained Earnings
D)All of the balances are eliminated
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6
Chapter 5: Consolidation of Less-Than-Wholly Owned Subsidiaries
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Sample Questions
Q1) Based on the information given,what amount will be reported as total controlling interest in the consolidated balance sheet?
A)$254,000
B)$285,000
C)$364,000
D)$395,000
Q2) Based on the preceding information,what amount will be reported as investment in Silver Corporation stock in the consolidated balance sheet immediately following the acquisition?
A)$0
B)$210,000
C)$300,000
D)$400,000
Q3) Based on the preceding information,what amount of total liabilities will be reported in the consolidated balance sheet prepared immediately after the business combination?
A)$395,000
B)$280,000
C)$265,000
D)$195,000
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Chapter 6: Intercompany Transfers of Services and
Noncurrent Assets
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44 Verified Questions
44 Flashcards
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Sample Questions
Q1) Based on the preceding information,in the preparation of the 2009 consolidated income statement,depreciation expense will be:
A)debited for $25,000 in the eliminating entries.
B)credited for $15,000 in the eliminating entries.
C)debited for $15,000 in the eliminating entries.
D)credited for $25,000 in the eliminating entries.
Q2) Which of the following are examples of intercompany balances and transactions that must be eliminated in preparing consolidated financial statements? I.Security holdings
II)Interest and dividends
III)Sales and purchases
A)I,II
B)I,III
C)I,II,III
D)II
Q3) Based on the preceding information,consolidated net income for 2009 will be:
A)$150,000.
B)$100,000.
C)$148,000.
D)$130,000.
Page 8
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Chapter 7: Intercompany Inventory Transactions
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Sample Questions
Q1) Based on the information given above,what amount should be eliminated from cost of goods sold in the combined income statement for 2008?
A)$31,250
B)$25,000
C)$56,892
D)$6,250
Q2) Based on the information given above,what amount of inventory must be eliminated from the consolidated balance sheet for 2008?
A)$2,400
B)$9,000
C)$12,000
D)$3,000
Q3) Based on the information given above,what will be the income to controlling interest for 2008?
A)$615,375
B)$686,250
C)$690,000
D)$694,000
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9
Chapter 8: Intercompany Indebtedness
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Sample Questions
Q1) Based on the information given above,what amount of interest expense should be reported in the 2008 consolidated income statement?
A)$6,000
B)$6,500
C)$5,000
D)$10,000
Q2) Based on the information given above,what amount of gain or loss on bond retirement will be reported in the 2008 consolidated financial statements?
A)$17,000 loss
B)$12,800 loss
C)$18,500 gain
D)$22,200 gain
Q3) Based on the information given above,what amount of gain or loss on bond retirement will be reported in the 2008 consolidated financial statements?
A)$17,000
B)$12,800
C)$18,500
D)$22,200
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Chapter 9: Consolidation Ownership Issues
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Sample Questions
Q1) Based on the information provided,what amount will be reported as dividends declared in X Corporation's 2008 consolidated retained earnings statement?
A)$30,000
B)$50,000
C)$60,000
D)$0
Q2) Based on the preceding information,what is the total noncontrolling interest reported in the consolidated balance sheet as of January 1,2008?
A)$80,000
B)$40,000
C)$50,000
D)$60,000
Q3) Based on the preceding information,what is the total stockholders' equity reported in the consolidated balance sheet as of January 1,2008?
A)$450,000
B)$530,000
C)$490,000
D)$370,000
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11
Chapter 10: Additional Consolidation Reporting Issues
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Sample Questions
Q1) Based on the information provided,what is the consolidated net income reported for the year 2008?
A)$120,000
B)$138,000
C)$140,000
D)$192,000
Q2) Assume the Company A holds the land at the end of 2009.Based on the information given,the eliminating entry relating to the intercorporate sale of land to be entered in the consolidation workpaper prepared at the end of 2009 will include:
A)a debit to Retained Earnings for $7,500.
B)a debit to Noncontrolling Interest for $4,500.
C)a credit to Land for $150,000.
D)a credit to Land for $15,000.
Q3) Based on the preceding information,what is the book value of shares acquired by Fair Logic on July 1,2008?
A)$240,000
B)$191,250
C)$230,000
D)$180,000
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Page 12
Chapter 11: Multinational Accounting: Foreign Currency
Transactions and Financial Instruments
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55 Verified Questions
55 Flashcards
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Sample Questions
Q1) On September 3,2008,Jackson Corporation purchases goods for a U.S.dollar equivalent of $17,000 from a Swiss company.The transaction is denominated in Swiss francs (SFr).The payment is made on October 10.The exchange rates were: What entry is required to revalue foreign currency payable to U.S.dollar equivalent value on October 10?
A)Option A
B)Option B
C)Option C
D)Option D
Q2) Based on the preceding information,the entries on December 31,2008,include a:
A)Credit to Foreign Currency Payable to Exchange Broker,$4,000.
B)Debit to Foreign Currency Receivable from Exchange Broker,$6,000.
C)Debit to Foreign Currency Receivable from Exchange Broker,$186,000.
D)Debit to Foreign Currency Transaction Gain,$4,000.
Q3) Based on the preceding information,the entries on January 30,2009,include a:
A)Credit to Foreign Currency Units (SFr),$184,000.
B)Credit to Cash,$180,000.
C)Debit to Foreign Currency Transaction Loss,$4,000.
D)Debit to Dollars Payable to Exchange Broker,$184,000.
Page 13
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Chapter 12: Multinational Accounting: Issues in Financial
Reporting and Translation of Foreign Entity Statements
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Sample Questions
Q1) If the restatement method for a foreign subsidiary involves remeasuring from the local currency into the functional currency,then translating from functional currency to U.S.dollars,the functional currency of the subsidiary is: I.U.S.dollar.
II)Local currency unit.
III)A third country's currency.
A)I
B)III
C)II
D)Either I or II
Q2) Based on the preceding information,the receipt of the dividend will result in a credit to the investment account for:
A)$16,800
B)$17,680
C)$18,000
D)$17,600
Q3) Use the information given in question 52 to prepare a schedule providing a proof of the translation adjustment.
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Page 14
Chapter 13: Segment and Interim Reporting
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50 Flashcards
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Sample Questions
Q1) Based on the preceding information,in the entry to record the replacement of the 1,500 units in November,Inventory will be debited for:
A)$52,500.
B)$75,000.
C)$67,500.
D)$60,000.
Q2) Main Manufacturing Corporation reported consolidated revenues of $50,000,000 on its income statement for 2008.The management of the corporation identified 3 industry segments,M,N,and O.These segments had the following intersegment sales and transfers during 2008: For Main Manufacturing Corporation,the revenue test would be satisfied if any of its industry segments had revenue equal to or greater than which of the following?
A)$7,400,000
B)$5,740,000
C)$5,000,000
D)$4,260,000
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15
Chapter 14: Sec Reporting
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Sample Questions
Q1) Accounting and Auditing Enforcement Releases
Q2) Customary Review
Q3) The items below are associated with the Securities and Exchange Commission.Describe or explain each item as concisely as possible.
(a)Customary Review
(b)Comment Letter
(c)"Red Herring" Prospectus
(d)"Tombstone Ad"
(e)Financial Reporting Releases
(f)Staff Accounting Bulletins
(g)Accounting and Auditing Enforcement Releases
(h)Management's Discussion and Analysis
Q4) Form 8-K
Q5) Regulation D of the SEC presents important exemptions from full registration requirements for:
A)private placements.
B)issuances of securities by savings and loan associations.
C)issuances of securities by common carriers regulated by the Interstate Commerce Commission.
D)foreign companies.
Page 16
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Chapter 15: Partnerships: Formation,operation,and
Changes in Membership
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53 Verified Questions
53 Flashcards
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Sample Questions
Q1) Refer to the information provided above.David directly purchases a one-fifth interest by paying Allen $34,000 and Daniel $10,000.The land account is increased before David is admitted.What are the capital balances of Allen and Daniel after David is admitted into the partnership?
A)Option A
B)Option B
C)Option C
D)Option D
Q2) Apple and Betty are planning on beginning a new business.They plan on forming a partnership.Apple will contribute $300,000 and will not be working.Betty will be working full time.They plan on splitting profits equally.They approach you,as an accounting major,to confirm their thoughts.What do you recommend?
Q3) Refer to the above information.Which statement below is correct if a new partner receives a bonus upon contributing assets into the partnership?
A)B < A and D = C - A
B)B > A and D = C + A
C)A = B and A = D + C
D)B > A and C = D + A
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Chapter 16: Partnerships: Liquidation
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Sample Questions
Q1) Based on the preceding information,what amounts will be distributed to Page and Larry upon liquidation of the partnership?
A)Option A
B)Option B
C)Option C
D)Option D
Q2) Listen and Hear are thinking of dissolving their partnership.Listen has a friend who told him to complete a "lump-sum" liquidation.Hear wants to complete an "installment" liquidation.They have come to you for advice.What do you recommend and Why?
Q3) Partner A has a smaller capital balance than Partner L.Partner A,however,has a higher profit-and-loss-sharing percentage than Partner L.The LA partnership has decided to liquidate.As a result of the information given,
A)Partner L will have a smaller loss absorption power than A
B)Partner L will receive cash only after A has received cash.
C)Partner A will have a smaller loss absorption power than L.
D)Partner A will never receive any cash from partnership liquidation.
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Chapter 17: Governmental Entities: Introduction and General
Fund Accounting
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Sample Questions
Q1) The general fund of the City of Columbia transferred money to establish an internal service fund for the city's data processing needs.The general fund of Columbia should account for this transaction as a(n):
A)expenditure.
B)interfund transfer.
C)interfund reimbursement.
D)loan.
Q2) The general ledger of Broadway contains the following selected account balances: Broadway wants to order additional goods and services before the fiscal year end.What is the unencumbered balance of the budget that may be expended by Broadway?
A)$850,000
B)$760,000
C)$180,000
D)$130,000
Q3) Briefly discuss the various types of governmental funds and proprietary funds.
Q4) Discuss major differences between a governmental entity's uses of the modified accrual method and a for-profit corporation's use of the accrual method.
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Chapter 18: Governmental Entities: Special Funds and Government-Wide Financial Statements
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Sample Questions
Q1) Required financial statements of funds may include the following,among others: The financial statements that should be issued by governmental funds and by proprietary funds include the following:
A)Option A
B)Option B
C)Option C
D)Option D
Q2) What account is debited in a debt service fund when it records matured interest payable? I.Interest Expense
II)Expenditures
A)I only
B)II only
C)Either I or II
D)Neither I nor II
Q3) Which of the following funds use the accrual basis of accounting?
A)I only
B)II only
C)I and III only
D)I,II,and III
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Chapter 19: Not-For-Profit Entities
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Sample Questions
Q1) Based on the information provided,in Golden Path's statement of activities for the year ended December 31,2008,what amount should be reported under the classification of revenue from unrestricted funds?
A)$980,000
B)$1,100,000
C)$1,210,000
D)$1,020,000
Q2) During the fiscal year ended June 30,2009,Global Charities,a voluntary health and welfare organization,received unrestricted cash contributions of $500,000 and temporarily restricted cash contributions of $300,000.All of the temporarily restricted contributions were restricted by the donors for equipment acquisitions.During the year ended June 30,2009,equipment costing $250,000 was acquired with the restricted contributions.As a result of these two contributions,Global Charities' statement of cash flows,prepared for the year ended June 30,2009,would report an increase in net cash provided by operating activities of:
A)$500,000.
B)$800,000.
C)$750,000.
D)$550,000.
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Page 21
Chapter 20: Corporations in Financial Difficulty
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Sample Questions
Q1) The accounting statement of affairs is prepared:
A)at the end of the reorganization process.
B)at the end of the liquidation process.
C)at the beginning of the reorganization process.
D)at the beginning of the liquidation process.
Q2) Which monthly report shows the results of the trustee's fiduciary actions beginning at the point the trustee accepts the debtor's assets?
A)Statement of affairs
B)Statement of realization and liquidation
C)Statement of financial position
D)Statement of activities
Q3) Creditors may file which type of petition when seeking remedy under the Bankruptcy Code? I.Voluntary
II)Involuntary
A)I only
B)II only
C)Either I or II
D)Neither I nor II
Q4) Briefly explain the three classes of creditors specified in the Bankruptcy Code.
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