Advanced Financial Accounting Exam 1 MC
Questions With Solutions 100% Correct
Which of the following actions is likely to result in recording goodwill on Poker Company's
books?
A. Poker acquires a majority of Spade's common stock in a business combination and continues
to operate it as a subsidiary.
B. Poker distributes ownership of a newly created subsidiary in a distribution considered to be a
spin-off.
C. Poker distributes ownership of a newly created subsidiary in a distribution considered to be a
split-off.
D. Poker acquires Spade Corporation in a business combination recorded as a merger.
Which of the following actions is likely to result in recording goodwill on Poker
Company's books?
D. Poker acquires Spade Corporation in a business combination recorded as a merger.
When an existing company creates a new subsidiary and transfers a portion of its assets and
liabilities to the new entity
A. The new entity records both the assets and liabilities it received at the carrying values of the
original company.
, Advanced Financial Accounting Exam 1 MC
Questions With Solutions 100% Correct
B. The original company records the difference between the carrying values and the fair values
of the assets transferred to the new entity as goodwill.
C. The new entity records both the assets and liabilities it received at fair values.
D. The original company records a gain or loss on the difference between its carrying values and
the fair values of the assets transferred to the new entity. When an existing company
creates a new subsidiary and transfers a portion of its assets and liabilities to the new entity
A. The new entity records both the assets and liabilities it received at the carrying values of the
original company.
When a company assigns goodwill to a reporting unit acquired in a business combination, it must
record an impairment loss if
A. The fair value of the reporting unit decreases.
B. The fair value of the net identifiable assets held by a reporting unit decreases.
C. The fair value of the reporting unit is less than its carrying value.
D. The carrying value of the reporting unit is less than the fair value of the reporting unit.
When a company assigns goodwill to a reporting unit acquired in a business combination,
it must record an impairment loss if
C. The fair value of the reporting unit is less than its carrying value.
, Advanced Financial Accounting Exam 1 MC
Questions With Solutions 100% Correct
Goodwill represents the excess of the sum of the fair value of the (1) consideration given, (2)
shares already owned, and (3) the noncontrolling interest over the
A. Book value of an acquired company.
B. Sum of the fair values assigned to identifiable assets acquired less liabilities assumed.
C. Sum of the fair values assigned to intangible assets acquired less liabilities assumed.
D. Sum of the fair values assigned to tangible assets acquired less liabilities assumed.
Goodwill represents the excess of the sum of the fair value of the (1) consideration given,
(2) shares already owned, and (3) the noncontrolling interest over the
B. Sum of the fair values assigned to identifiable assets acquired less liabilities assumed.
In a business combination, costs of registering equity securities to be issued by the acquiring
company are a(n)
A. Direct addition to stockholders' equity of the combined company.
Questions With Solutions 100% Correct
Which of the following actions is likely to result in recording goodwill on Poker Company's
books?
A. Poker acquires a majority of Spade's common stock in a business combination and continues
to operate it as a subsidiary.
B. Poker distributes ownership of a newly created subsidiary in a distribution considered to be a
spin-off.
C. Poker distributes ownership of a newly created subsidiary in a distribution considered to be a
split-off.
D. Poker acquires Spade Corporation in a business combination recorded as a merger.
Which of the following actions is likely to result in recording goodwill on Poker
Company's books?
D. Poker acquires Spade Corporation in a business combination recorded as a merger.
When an existing company creates a new subsidiary and transfers a portion of its assets and
liabilities to the new entity
A. The new entity records both the assets and liabilities it received at the carrying values of the
original company.
, Advanced Financial Accounting Exam 1 MC
Questions With Solutions 100% Correct
B. The original company records the difference between the carrying values and the fair values
of the assets transferred to the new entity as goodwill.
C. The new entity records both the assets and liabilities it received at fair values.
D. The original company records a gain or loss on the difference between its carrying values and
the fair values of the assets transferred to the new entity. When an existing company
creates a new subsidiary and transfers a portion of its assets and liabilities to the new entity
A. The new entity records both the assets and liabilities it received at the carrying values of the
original company.
When a company assigns goodwill to a reporting unit acquired in a business combination, it must
record an impairment loss if
A. The fair value of the reporting unit decreases.
B. The fair value of the net identifiable assets held by a reporting unit decreases.
C. The fair value of the reporting unit is less than its carrying value.
D. The carrying value of the reporting unit is less than the fair value of the reporting unit.
When a company assigns goodwill to a reporting unit acquired in a business combination,
it must record an impairment loss if
C. The fair value of the reporting unit is less than its carrying value.
, Advanced Financial Accounting Exam 1 MC
Questions With Solutions 100% Correct
Goodwill represents the excess of the sum of the fair value of the (1) consideration given, (2)
shares already owned, and (3) the noncontrolling interest over the
A. Book value of an acquired company.
B. Sum of the fair values assigned to identifiable assets acquired less liabilities assumed.
C. Sum of the fair values assigned to intangible assets acquired less liabilities assumed.
D. Sum of the fair values assigned to tangible assets acquired less liabilities assumed.
Goodwill represents the excess of the sum of the fair value of the (1) consideration given,
(2) shares already owned, and (3) the noncontrolling interest over the
B. Sum of the fair values assigned to identifiable assets acquired less liabilities assumed.
In a business combination, costs of registering equity securities to be issued by the acquiring
company are a(n)
A. Direct addition to stockholders' equity of the combined company.
