29 Jun 19. Based on the preceding information, what amount of goodwill will be reported in consolidated financial statements presented immediately following the combination if Zenith paid $550,000
uestion
12. Which of the following situations best describes a business combination to be accounted for as a statutory merger?
A. Both companies in a combination continue to operate as separate, but related, legal entities.
B. Only one of the combining companies survives and the other loses its separate identity.
C. Two companies combine to form a new third company, and the original two companies are dissolved.
D. One company transfers assets to another company it has created.
13. A statutory consolidation is a type of business combination in which:
A. one of the combining companies survives and the other loses its separate identity.
B. one company acquires the voting shares of the other company and the two companies continue to operate as separate legal entities.
C. two publicly traded companies agree to share a board of directors.
D. each of the combining companies is dissolved and the net assets of both companies are transferred to a newly created corporation.
Rivendell Corporation and Foster Company merged as of January 1, 20X9. To effect the merger, Rivendell paid finder’s fees of $40,000, legal fees of $13,000, audit fees related to the stock issuance of $10,000, stock registration fees of $5,000, and stock listing application fees of $4,000.
14. Based on the preceding information, under the acquisition method, what amount relating to the business combination would be expensed?
A. $72,000
B. $19,000
C. $53,000
D. $63,000
15. Based on the preceding information, under the acquisition method:
A. $72,000 of stock issue costs are treated as goodwill.
B. $19,000 of stock issue costs are treated as a reduction in the issue price.
C. $19,000 of stock issue costs are expensed.
D. $72,000 of stock issue costs are expensed.
16. Using the preceding information, what amount would have been expensed if the purchase method of accounting was used?
A. $0
B. $19,000
C. $53,000
D. $72,000
17. Using the preceding information, what amount would have been expensed if the pooling-of-interests method of accounting was used?
A. $0
B. $19,000
C. $53,000
D. $72,000
18. Burrough Corporation paid $80,000 to acquire all of Helyar Company’s 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
Plummet Corporation reported the book value of its net assets at $400,000 when Zenith Corporation acquired 100 percent ownership. The fair value of Plummet’s net assets was determined to be $510,000 on that date.
19. Based on the preceding information, what amount of goodwill will be reported in consolidated financial statements presented immediately following the combination if Zenith paid $550,000 for the acquisition?
A. $0
B. $50,000
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