Mergers and Acquisitions Accounting Exam Bank
Course Introduction
This course explores the financial accounting and reporting aspects of mergers, acquisitions, and other forms of business combinations. Students will examine the regulatory frameworks and accounting standards governing such transactions, including purchase price allocation, goodwill recognition and impairment, non-controlling interests, and the consolidation of financial statements. The course also covers the impacts of mergers and acquisitions on financial reporting, disclosure requirements, and the analysis of post-combination performance. Through real-world cases and practical exercises, students will gain the skills necessary to navigate complex accounting issues related to corporate restructuring and growth strategies.
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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Chapter 1: Intercorporate Acquisitions and Investments in Other Entities
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42 Verified Questions
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Sample Questions
Q1) Based on the information provided,what amount will be reported immediately following the business combination for Buildings and Equipment (net)in the combined company's balance sheet?
A)$300,000
B)$370,000
C)$330,000
D)$340,000
Answer: C
Q2) Based on the preceding information,what amount of goodwill impairment will be recognized for this division if its fair value is determined to be $195,000?
A)$5,000
B)$30,000
C)$60,000
D)$55,000
Answer: D
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Chapter 2: Reporting Intercorporate Interests
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Sample Questions
Q1) On January 1,2009 Athlon Company acquired 30 percent of the common stock of Opteron Corporation,at underlying book value.For the same year,Opteron reported net income of $55,000,which includes an extraordinary gain of 40,000.It did not pay any dividends during the year.By what amount would Athlon's investment in Opteron Corporation increase for the year,if Athlon used the equity method?
A)$0
B)$16,500
C)$4,500
D)$12,000
Answer: B
Q2) Based on the preceding information,what amount of total assets will Connector report in its balance sheet on December 31,2008?
A)$646,000
B)$625,000
C)$610,000
D)$628,000
Answer: A
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4
Chapter 3: The Reporting Entity and Consolidated Financial Statements
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Sample Questions
Q1) Based on the preceding information,what amount would be reported in the consolidated financial statements for inventory on January 1,2008?
A)$39,000
B)$36,000
C)$75,000
D)$0
Answer: B
Q2) Which of the following usually does not represent a variable interest?
A)Common stock,with no special features or provisions
B)Senior debt
C)Subordinated debt
D)Loan or asset guarantees
Answer: B
Q3) 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
Page 5
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Chapter 4: Consolidation of Wholly Owned Subsidiaries
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52 Verified Questions
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Sample Questions
Q1) Based on the preceding information,what amount should be allocated to goodwill in the consolidated balance sheet,prepared after this business combination?
A)$0
B)$25,000
C)$70,000
D)$45,000
Q2) Based on the preceding information,the differential reflected in a consolidation workpaper to prepare a consolidated balance sheet immediately after the business combination is:
A)$0.
B)$25,000.
C)$70,000.
D)$45,000.
Q3) Based on the information provided,the amount of differential assigned to buildings and equipment that is amortized for the year is:
A)$5,000.
B)$4,000.
C)$10,000.
D)$3,600.
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Page 6
Chapter 5: Consolidation of Less-Than-Wholly Owned Subsidiaries
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51 Verified Questions
51 Flashcards
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Sample Questions
Q1) Based on the preceding information,the increase in the fair value of patents held by Wisden is:
A)$20,000
B)$25,000
C)$15,000
D)$5,000
Q2) Based on the preceding information,what is the amount of comprehensive income attributable to the controlling interest for 2008?
A)$123,750
B)$118,750
C)$119,000
D)$104,000
Q3) Based on the preceding information,what amount of goodwill will be reported in the consolidated balance sheet prepared immediately after the business combination?
A)$0
B)$40,000
C)$20,000
D)$15,000
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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,what amount of income should be assigned to the noncontrolling shareholders in the consolidated income statement for 2008?
A)$47,700
B)$44,400
C)$55,600
D)$60,000
Q2) Based on the preceding information,in the preparation of the 2009 consolidated income statement,depreciation expense will be:
A)Debited for $40,000 in the eliminating entries.
B)Credited for $10,000 in the eliminating entries.
C)Debited for $10,000 in the eliminating entries.
D)Credited for $40,000 in the eliminating entries.
Q3) Based on the information provided,in the preparation of a consolidated balance sheet at January 1,2009,retained earnings will be:
A)debited for $6,750 in the eliminating entries.
B)credited for $6,750 in the eliminating entries.
C)credited for $7,500 in the eliminating entries.
D)debited for $7,500 in the eliminating entries.
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Chapter 7: Intercompany Inventory Transactions
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41 Verified Questions
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Sample Questions
Q1) Based on the information given above,what balance will be reported for inventory in the consolidated balance sheet for December 31,2008?
A)$56,573
B)$23,846
C)$32,727
D)$67,000
Q2) Based on the information given above,what amount of sales will be reported in the consolidated income statement for 2008?
A)$500,000
B)$850,000
C)$600,000
D)$800,000
Q3) Based on the information given above,what amount of cost of goods sold should be eliminated in the consolidation workpaper for 2008?
A)$82,000
B)$70,000
C)$95,000
D)$60,000
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9
Chapter 8: Intercompany Indebtedness
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Sample Questions
Q1) A loss on the constructive retirement of a parent's bonds by a subsidiary is effectively recognized in the accounting records of the parent and its subsidiary: I.at the date of constructive retirement.
II)over the remaining term of the bonds.
A)I
B)II
C)Both I and II
D)Neither I nor II
Q2) Based on the information given above,what amount of interest income will be eliminated in the preparation of the 2009 consolidated financial statements?
A)$17,000
B)$13,300
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 of income will be assigned to the noncontrolling interest in the 2008 consolidated income statement?
A)$23,750
B)$25,000
C)$18,000
D)$33,750
Q2) Assume that Bricks declared a stock dividend of 3,000 shares on its $5 par value common stock.The investment elimination entry required to prepare a consolidated balance sheet immediately after the stock dividend is issued will include a debit to Retained Earnings for:
A)$185,000.
B)$65,000.
C)$155,000.
D)$140,000.
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11
Chapter 10: Additional Consolidation Reporting Issues
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Sample Questions
Q1) Based on the preceding information,what amount will be reported in the consolidated cash flow statement as net cash used in financing activities for 2009?
A)$32,000
B)$38,000
C)$42,000
D)$70,000
Q2) Based on the preceding information,what is the amount of earnings available to common shareholders reported in the consolidated financial statements for the year?
A)$89,200
B)$87,000
C)$91,000
D)$82,800
Q3) Based on the preceding information,what was the change in cash balance for the consolidated entity for 2009?
A)Decrease of $153,000
B)Increase of $450,000
C)Increase of $293,000
D)Increase of $150,000
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12
Chapter 11: Multinational Accounting: Foreign Currency
Transactions and Financial Instruments
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55 Verified Questions
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Sample Questions
Q1) Corporation X has a number of exporting transactions with companies based in Vietnam.Exporting activities result in receivables.If the settlement currency is the US dollar,which of the following will happen by changes in the direct or indirect exchange rates?
A)Option A
B)Option B
C)Option C
D)Option D
Q2) Based on the preceding information,what is the Heavy's overall net gain or net loss from its foreign currency exposure related to this transaction?
A)$4,860 loss
B)$2,600 loss
C)$7,120 gain
D)$2,260 gain
Q3) Based on the preceding information,the entries on January 30,2009,include a:
A)Debit to Dollars Payable to Exchange Broker,$184,000.
B)Credit to Foreign Currency Transaction Gain,$4,000.
C)Credit to Foreign Currency Receivable from Exchange Broker,$180,000.
D)Debit to Foreign Currency Units (SFr),$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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56 Verified Questions
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Sample Questions
Q1) Nichols Company owns 90% of the capital stock of a foreign subsidiary located in Ireland.As a result of translating the subsidiary's accounts,a debit of $160,000 was needed in the translation adjustments account so that the foreign subsidiary's debits and credits were equal in U.S.dollars.How should Nichols report its translation adjustments on its consolidated financial statements?
A)As a $144,000 increase in the stockholders' equity section of the balance sheet.
B)As a $144,000 reduction in consolidated comprehensive net income.
C)As a $160,000 debit in stockholders' equity section of the balance sheet.
D)As a $160,000 reduction in consolidated comprehensive net income.
Q2) Based on the preceding information,what amount of translation adjustment is required for increase in differential?
A)$3,000
B)$5,500
C)$4,500
D)$5,000
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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Sample Questions
Q1) Tyler Company incurred an inventory loss due to a decline in market prices during its first quarter of operations in 2008.At the end of the first quarter,management of the company believed the decline in market prices to be permanent.In the second quarter,the market prices of Tyler's inventories increased above their acquisition cost.Market prices remained higher than acquisition cost during the remainder of 2008.How should Tyler report the facts above on its first and second quarter income statements?
A)Option A
B)Option B
C)Option C
D)Option D
Q2) Assume that the replacement did not happen in November.In December,the company decided not to replace any of the 1,500 units.The entry required on December 31 to eliminate valuation accounts related to the inventory that will not be replaced will include:
A)a debit to Excess of Replacement Cost over LIFO Cost of Inventory Liquidation for $22,500.
B)a credit to Cost of Goods Sold for $15,000.
C)a debit to Inventory for $70,000.
D)a debit to Inventory for $15,000.
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Page 15
Chapter 14: Sec Reporting
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52 Flashcards
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Sample Questions
Q1) Which of the following observations is true of the shelf registration rule?
A)It is an option available to all listed companies.
B)Shelf registration is limited to 25 percent of the company's currently outstanding stock.
C)It allows private placements of an unlimited amount of securities.
D)It allows large companies to select the optimal time to sell their stock.
Q2) Comment Letter
Q3) Which of the following statements concerning the management discussion and analysis (MD&A)of a company's financial condition is true? I.It should cover the financial statements and other statistical data for the most recent three-year time span.
II)It should make year-to-year comparisons of material changes in the line items.
III)Management need not explain the cause(s)of the material changes.
IV)Disclosure of material off-balance sheet transactions,arrangements,and obligations is required in each annual and each quarterly report.
A)I,II,and IV
B)II and III
C)I,III,and IV
D)I,II,III,and IV
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Page 16
Chapter 15: Partnerships: Formation,operation,and
Changes in Membership
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Sample Questions
Q1) Based on the preceding information,if no goodwill or bonus is recorded,how much should Daniel invest for a 20 percent interest?
A)$400,000
B)$200,000
C)$300,000
D)$250,000
Q2) 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.By what amount is the land account increased?
A)$40,000
B)$10,000
C)$36,000
D)$20,000
Q3) Which of the following observations is true of an S corporation?
A)It elects to be taxed in the same manner as a corporation.
B)It does not have the burden of double taxation of corporate income.
C)Its shareholders have personal liability for the corporation's obligations.
D)Its primary income source should be passive investments.
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Chapter 16: Partnerships: Liquidation
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Sample Questions
Q1) When is a partnership considered to be insolvent? I.When the total of all partners' capital accounts results in a debit balance.
II)When at least one of the partners is personally insolvent.
A)I only
B)II only
C)Both I and II
D)Neither I nor II
Q2) 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
Q3) A partnership may be involved in "Dissociation" or "Dissolution".
Required:
Describe "Dissociation" and "Dissolution."
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Chapter 17: Governmental Entities: Introduction and General
Fund Accounting
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Sample Questions
Q1) Under the modified accrual basis of accounting for the general fund,expenditures should be recognized in the period in which the related liability is:
A)I only
B)II only
C)Both I and II
D)Neither I nor II
Q2) What amount should be reported as expenditures for the current fiscal year when accounting for inventories of supplies under the purchase method and under the consumption method?
A)Option A
B)Option B
C)Option C
D)Option D
Q3) GASB 34 established four types of interfund activities.Interfund activities are recognized as revenue in a governmental fund for an:
A)Option A
B)Option B
C)Option C
D)Option D
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Chapter 18: Governmental Entities: Special Funds and
Government-Wide Financial Statements
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Sample Questions
Q1) On October 15,2008,an enterprise fund of Blacksburg purchased office supplies at a cost of $10,000.The inventory of office supplies on hand at the June 30,2009,fiscal year end was $4,000.There was no beginning inventory.Blacksburg should make entries that include:
A)debiting Supplies $10,000 at October 15,and debiting Expenses $4,000 on June 30.
B)debiting Expenditures $10,000 at October 15,and debiting Supplies $4,000 at June 30.
C)debiting Supplies $10,000 at October 15,and crediting Supplies $6,000 on June 30.
D)debiting Expenditures $10,000 at October 15,and crediting Expenses $4,000 at June 30.
Q2) What account should be debited in the debt service fund to recognize an installment payment currently due on general obligation serial bonds? I.Matured Bonds Payable.
II)Expenditures-Principal.
A)I
B)II
C)Either I or II
D)Neither I nor II
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Chapter 19: Not-For-Profit Entities
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Sample Questions
Q1) The governing board designated assets for plant expansion.
Q2) A not-for-profit organization received a donation temporarily restricted as to use.The donated amount was later spent in accordance with the restriction.In which category(ies)of net assets should the related revenues and expenses be recognized?
A)Option A
B)Option B
C)Option C
D)Option D
Q3) Investment income for not-for-profit entities may include: I.interest from debt investments.
II)dividends from equity investments.
III)changes in the fair values of both debt and equity investments.
A)I only
B)I and II only
C)I and III only
D)I,II,and III
Q4) Depreciation expense for the year was recorded.
Q5) A gain was realized from the sale of securities which were permanently invested.The gain is restricted as to use.
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Chapter 20: Corporations in Financial Difficulty
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Sample Questions
Q1) In which of the following ways can debt be restructured? I.Assets can be transferred to the creditor.
II)An equity interest can be granted to the creditor.
III)The terms of the debt can be modified.
A)I and II only
B)I and III only
C)II and III only
D)I,II,and III
Q2) Briefly explain the three classes of creditors specified in the Bankruptcy Code.
Q3) Which of the following observations regarding the use of fresh start accounting is true?
A)It is always required under Chapter 11 bankruptcy proceedings.
B)Prior shareholders will have control of the emerging company.
C)It results in a new reporting entity.
D)It is used under Chapter 7 bankruptcy proceedings.
Q4) Based on the preceding information,what is the estimated dividend percentage?
A)23 percent
B)93 percent
C)77 percent
D)68 percent
22
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