Question 1

Something that results whenever the cost of an acquisition is in excess of the current value of the acquired business's net assets is called ___________________ ______________________.

Accepted Answer

goodwill

Question 2

The amount by which the total cost of an acquisition is below the current value of the acquired business's net assets is called _________________________________.

Accepted Answer

bargain purchase element

Question 3

Something that must be paid if certain future conditions are satisfied is called _____________________________________.

Accepted Answer

contingent consideration

Question 4

In purchase accounting, goodwill is determined in a(n) _________________________ ____________________ manner.

Accepted Answer

The answer of In purchase accounting, goodwill is determined in...

Question 5

The portion of a bargain purchase element that could not be extinguished is reported as a(n) __________________________, if material.

Accepted Answer

The answer of The portion of a bargain purchase element...

Question 6

In a business combination being accounted for as a purchase, registration costs of equity securities issued are to be charged to ________________________________.

Accepted Answer

The answer of In a business combination being accounted for...

Question 7

The overhead costs of an internal acquisitions department are charged to ___________________________ when incurred.

Accepted Answer

The answer of The overhead costs of an internal acquisitions...

Question 8

Acquiring common stock and revaluing the subsidiary's assets to their current values in the subsidiary's general ledger is an application of __________________________________________.

Accepted Answer

The answer of Acquiring common stock and revaluing the subsidiary's...

Question 9

Revaluing an acquired subsidiary's assets and liabilities to their current values in the consolidation process is called ________________________________________.

Accepted Answer

The answer of Revaluing an acquired subsidiary's assets and liabilities...

Question 10

A difference between the current value and the book value of an acquired subsidiary's long-term debt at the combination date is ultimately reported in the consolidated income statement as an adjustment to ___________________________.

Accepted Answer

The answer of A difference between the current value and...

Question 11

To recognize an intangible asset other than goodwill in a business combination, the intangible asset must either (1) arise from a ________________________ or ____________________ right or (2) be ________________________.

Accepted Answer

The answer of To recognize an intangible asset other than...

Question 12

An intangible asset other than goodwill recognized in a business combintion must be amortized to earnings if the intangible asset does not have a(n) _______________________________________________________________________________.

Accepted Answer

The answer of An intangible asset other than goodwill recognized...

Question 13

All intangible assets other than goodwill that (1) result from a business combination and (2) are required to be amortized, are subject to _______________________ _________________________.

Accepted Answer

The answer of All intangible assets other than goodwill that...

Question 14

Goodwill that arises from a business combination cannot be subsequently _________________________ but is subject to _____________________________________.

Accepted Answer

The answer of Goodwill that arises from a business combination...

Question 15

When control over a company is achieved in steps, a method of analyzing the cost of each separate block of stock purchased is called the ___________________ ________________________ method.

Accepted Answer

The answer of When control over a company is achieved...

Question 16

When control over a company is achieved in steps, a method of analyzing the total cost of all of the blocks using information only as of the date at which control was obtained is called the _____________________________________ method.

Accepted Answer

The answer of When control over a company is achieved...

Question 17

When control over a company has been achieved after having had ownership in the 20-50% range, the ____________________________________ method must be used in analyzing the total cost of the investment.

Accepted Answer

The answer of When control over a company has been...

Question 18

When control over a company has been achieved and the 20-50% ownership range was bypassed, the method of analyzing the total cost of the investment that can be used in only this situation is the __________________________ method.

Accepted Answer

The answer of When control over a company has been...

Question 19

In purchase accounting, all out-of-pocket costs incurred as a result of a business combination can be added to the cost of the acquisition.

Accepted Answer

In purchase accounting, not all out-of-pocket costs incurred as a result of a business combination are added to the cost of the acquisition. Direct costs related to the acquisition can be capitalized, but indirect costs must be expensed as incurred.

Question 20

In purchase accounting, costs of registering equity securities issued as consideration cannot be added to the cost of the acquisition.

Accepted Answer

In purchase accounting, costs related to issuing or registering equity securities, such as underwriting, accounting, and legal fees, are not capitalized as part of the acquisition cost. Instead, they are typically expensed as incurred.

Quiz 5: The Purchase Method: at Date of Acquisition-100 Ownership

Something that results whenever the cost of an acquisition is in excess of the current value of the acquired business's net assets is called _ ____.