UNIVERSITY OF LOUISIANA, LAFAYETTE - ACCT 526 FINAL EXAM 2026/2027 Page 1
UNIVERSITY OF LOUISIANA, LAFAYETTE
ACCT 526 - Advanced Accounting
Final Examination - Fall 2026 / Spring 2027
Time Allowed: 180 minutes | Total Questions: 100 | Total Marks: 100 | Format: Multiple Choice (closed book)
Instructor: ACCT 526 Faculty | Program: Master of Accountancy | Aligned with: AACSB Accounting Accreditation
Standards & 2026/2027 Advanced Accounting Curriculum
EXAM INSTRUCTIONS
• This examination consists of 100 multiple-choice questions organized into seven sections. Each question carries equal weight
(1 mark). Select the single best answer for each question.
• Cognitive coverage: approximately 25% recall, 50% application, and 25% analysis (including calculations, consolidation
entries, foreign currency translation, and partnership liquidation).
• Approximately 70% of questions are scenario-based reflecting real-world advanced accounting situations; 30% are direct
knowledge questions. Distractors are designed around common accounting errors.
• Each question shows the correct answer followed by a rationale referencing the UL Lafayette ACCT 526 curriculum, FASB
ASC, GASB standards, and advanced accounting principles.
• Calculators permitted. Phones and smart devices must be turned off and stored away.
Section 1: Business Combinations & Consolidations
Q1. Patriot Inc. acquires 100% of Summit Corp.'s voting stock for $480 million cash. Summit's identifiable net assets
have a book value of $390 million and a fair value of $445 million. Under ASC 805 (acquisition method), at what
amount should Patriot record the acquisition?
A. $390 million, the book value of Summit's net assets.
B. $445 million, the fair value of Summit's identifiable net assets.
C. $480 million, the consideration transferred, with $35 million recognized as goodwill. *[CORRECT]*
D. $480 million consideration plus $55 million goodwill, for a total acquisition cost of $535 million.
Correct Answer: C
Rationale: Under ASC 805-10-30, the acquirer records identifiable assets and liabilities at fair value ($445 million) and
recognizes goodwill as the excess of consideration transferred ($480 million) over the fair value of net identifiable assets
($445 million), or $35 million. Options A and B incorrectly ignore either the consideration or the net-asset fair value. Option
D compounds the error by adding goodwill on top of consideration, double-counting the premium.
ACCT 526 - Advanced Accounting - Final Examination Confidential - For Authorized Use Only
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Q2. In a business combination, which of the following factors is LEAST relevant for identifying the acquirer under
ASC 805-10-25?
A. The entity whose owners receive the largest portion of the voting rights in the combined entity.
B. The entity whose fair value is significantly larger than the other entity.
C. The entity whose senior management dominates the post-combination management of the combined entity.
D. The entity that issued the press release announcing the transaction. *[CORRECT]*
Correct Answer: D
Rationale: ASC 805-10-25-5 through 25-19 provide guidance for identifying the acquirer based on substantive factors such
as relative voting rights, fair value, ownership interest, and composition of senior management. The party that issued the
press release is a public-relations formality, not an indicator of substantive control, so it is the least relevant factor.
Q3. Atlas Corp. and Beacon Ltd. sign a binding merger agreement on October 15, 2026. The acquisition closes on
November 30, 2026, and Atlas obtains control on that date. Atlas's fiscal year ends December 31. What is the
acquisition date under ASC 805?
A. October 15, 2026, the date the agreement was signed.
B. November 30, 2026, the date Atlas obtains control of Beacon. *[CORRECT]*
C. December 31, 2026, Atlas's fiscal year-end.
D. The date Atlas's board formally approves the consideration transferred.
Correct Answer: B
Rationale: ASC 805-10-25-3 defines the acquisition date as the date the acquirer obtains control of the acquiree, which is
typically the closing date when consideration is transferred and assets/liabilities are assumed. Signing the agreement (A) is
merely the commitment date, and the fiscal year-end (C) is irrelevant unless control is transferred on that date.
Q4. On January 1, 2026, Riviera Co. acquires 80% of Seaside Corp. for $5,200,000 cash. Seaside's identifiable net
assets have a fair value of $5,500,000. Riviera elects to measure noncontrolling interest at fair value, and the fair
value of the 20% NCI is $1,300,000. What is the goodwill recognized in the consolidated financial statements?
A. $800,000.
B. $1,000,000. *[CORRECT]*
C. $1,100,000.
D. $1,300,000.
Correct Answer: B
Rationale: When NCI is measured at fair value, goodwill is computed as: Consideration transferred ($5,200,000) + Fair
value of NCI ($1,300,000) - Fair value of identifiable net assets ($5,500,000) = $1,000,000. Option A ($800,000) results from
using only proportionate NCI ($5,500,000 × 20% = $1,100,000): $5,200,000 + $1,100,000 - $5,500,000 = $800,000. The
fair-value NCI method gives full goodwill of $1,000,000.
Q5. Under ASC 805, which measurement alternative for noncontrolling interest permits the recognition of "full
goodwill"?
A. Measuring NCI at the acquiree's proportionate share of identifiable net assets.
B. Measuring NCI at fair value as of the acquisition date. *[CORRECT]*
C. Measuring NCI at book value as reported on the acquiree's balance sheet.
D. Measuring NCI at the acquiree's historical cost basis.
Correct Answer: B
Rationale: Under ASC 805-30-30-2, the acquirer may elect to measure NCI at fair value, which produces "full goodwill"
(goodwill on 100% of the acquiree). The proportionate-share method produces only the parent's share of goodwill. Book
value (C) and historical cost (D) are not acceptable measurement bases for NCI under acquisition accounting.
ACCT 526 - Advanced Accounting - Final Examination Confidential - For Authorized Use Only
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Q6. Crestwood Co. acquires 70% of Delta Inc. for $3,150,000 cash. Delta's identifiable net assets have a fair value of
$4,000,000 on the acquisition date. The fair value of the 30% noncontrolling interest is $1,350,000. What amount of
goodwill is reported if Crestwood elects the fair-value option for NCI?
A. $350,000.
B. $500,000. *[CORRECT]*
C. $700,000.
D. $850,000.
Correct Answer: B
Rationale: Goodwill = Consideration transferred ($3,150,000) + Fair value of NCI ($1,350,000) - Fair value of identifiable
net assets ($4,000,000) = $500,000. Option A ($350,000) results from the proportionate-share method (NCI = $4,000,000 ×
30% = $1,200,000): $3,150,000 + $1,200,000 - $4,000,000 = $350,000. The fair-value NCI method recognizes full goodwill
of $500,000.
Q7. On April 1, 2026, Park Co. acquires 100% of Sterling Inc. for $4.2 million. Sterling's identifiable net assets have
a fair value of $4.6 million. No underlying transaction involves a bargain purchase exception. How should Park
report this acquisition in its consolidated financial statements?
A. Recognize goodwill of $400,000.
B. Recognize a bargain purchase gain of $400,000 in earnings, after a reassessment of fair values.
*[CORRECT]*
C. Recognize a deferred credit of $400,000 and amortize it over five years.
D. Adjust the consideration paid downward to $4.6 million to match net assets.
Correct Answer: B
Rationale: Under ASC 805-30-25-8, when consideration transferred is less than the fair value of identifiable net assets
acquired, a bargain purchase exists. The acquirer must reassess the fair values of consideration, identifiable assets, and
liabilities, and any remaining excess is recognized as a gain in earnings on the acquisition date. Option A mischaracterizes
the situation as goodwill. Options C and D are prohibited by ASC 805.
Q8. Privately held TargetCo is acquiring publicly traded AcquirerCo through a share-exchange in which TargetCo's
shareholders end up holding 65% of AcquirerCo's outstanding voting shares. Although legal form indicates
AcquirerCo is the legal acquirer, which entity is the accounting acquirer under ASC 805?
A. AcquirerCo, because it is the legal acquirer and survives the merger.
B. TargetCo, because its shareholders obtained control of the combined entity. *[CORRECT]*
C. Whichever entity has the larger book value of assets.
D. Whichever entity has the more recent audit opinion.
Correct Answer: B
Rationale: ASC 805-10-25-21 through 25-24 address reverse acquisitions: the entity whose shareholders obtain control of the
combined entity is the accounting acquirer, even though another entity is the legal acquirer. Because TargetCo's shareholders
hold 65% of the voting shares post-transaction, TargetCo is the accounting acquirer. Relative book value (C) and audit timing
(D) are not relevant indicators under ASC 805.
ACCT 526 - Advanced Accounting - Final Examination Confidential - For Authorized Use Only
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Q9. On January 1, 2026, Wexler Co. held a 10% interest in Norris Inc. purchased for $600,000 (fair value option,
trading security). On July 1, 2026, Wexler acquires an additional 70% interest for $4,500,000 cash, obtaining control.
Norris's identifiable net assets have a fair value of $6,000,000 on July 1, and the fair value of the 10% preexisting
interest is $700,000. The fair value of the 20% NCI is $1,400,000. Compute the total goodwill recognized by Wexler.
A. $200,000.
B. $300,000.
C. $600,000. *[CORRECT]*
D. $800,000.
Correct Answer: C
Rationale: For a step acquisition under ASC 805-30-30-9, the acquisition-date fair value of the acquirer's previously held
equity interest is included in the consideration transferred. Total consideration = Cash ($4,500,000) + Fair value of
preexisting interest ($700,000) + Fair value of NCI ($1,400,000) = $6,600,000. Goodwill = $6,600,000 - $6,000,000 =
$600,000. Option A omits the NCI, option B omits the preexisting interest, and option D double-counts the preexisting interest
at cost.
Q10. Pushdown accounting under ASC 805-50-25 requires that:
A. The acquiree establishes a new basis of accounting in its standalone financial statements when an
acquirer obtains control. *[CORRECT]*
B. The acquirer establishes a new basis in its consolidated financial statements only.
C. Goodwill is amortized over 10 years for reporting purposes.
D. Pushdown is mandatory for all business combinations regardless of percentage acquired.
Correct Answer: A
Rationale: ASC 805-50-25-1 through 25-4 (as updated by ASU 2014-17) permit an acquiree to apply pushdown accounting in
its standalone financial statements upon a change-in-control event, establishing a new basis of accounting reflecting the
acquirer's basis. Option B confuses consolidated versus standalone reporting. Option C incorrectly implies goodwill
amortization; goodwill is tested for impairment under ASC 350. Option D is incorrect because pushdown is an accounting
policy election, not mandatory for all transactions.
Q11. Pooling-of-interests accounting for business combinations:
A. Remains permissible under ASC 805 for transactions involving two U.S. GAAP registrants.
B. Was abolished for business combinations occurring after June 30, 2001, by FASB Statement No. 141
and is not permitted under ASC 805. *[CORRECT]*
C. Remains required when the consideration consists entirely of voting common stock.
D. Is permitted only when both entities are privately held.
Correct Answer: B
Rationale: FASB Statement No. 141 (issued June 2001) eliminated the pooling-of-interests method for business combinations
initiated after June 30, 2001; ASC 805 (issued 2007) perpetuates this prohibition. All business combinations within its scope
must apply the acquisition method. Options A, C, and D describe conditions that may have applied under superseded pooling
rules but are no longer authoritative.
ACCT 526 - Advanced Accounting - Final Examination Confidential - For Authorized Use Only
UNIVERSITY OF LOUISIANA, LAFAYETTE
ACCT 526 - Advanced Accounting
Final Examination - Fall 2026 / Spring 2027
Time Allowed: 180 minutes | Total Questions: 100 | Total Marks: 100 | Format: Multiple Choice (closed book)
Instructor: ACCT 526 Faculty | Program: Master of Accountancy | Aligned with: AACSB Accounting Accreditation
Standards & 2026/2027 Advanced Accounting Curriculum
EXAM INSTRUCTIONS
• This examination consists of 100 multiple-choice questions organized into seven sections. Each question carries equal weight
(1 mark). Select the single best answer for each question.
• Cognitive coverage: approximately 25% recall, 50% application, and 25% analysis (including calculations, consolidation
entries, foreign currency translation, and partnership liquidation).
• Approximately 70% of questions are scenario-based reflecting real-world advanced accounting situations; 30% are direct
knowledge questions. Distractors are designed around common accounting errors.
• Each question shows the correct answer followed by a rationale referencing the UL Lafayette ACCT 526 curriculum, FASB
ASC, GASB standards, and advanced accounting principles.
• Calculators permitted. Phones and smart devices must be turned off and stored away.
Section 1: Business Combinations & Consolidations
Q1. Patriot Inc. acquires 100% of Summit Corp.'s voting stock for $480 million cash. Summit's identifiable net assets
have a book value of $390 million and a fair value of $445 million. Under ASC 805 (acquisition method), at what
amount should Patriot record the acquisition?
A. $390 million, the book value of Summit's net assets.
B. $445 million, the fair value of Summit's identifiable net assets.
C. $480 million, the consideration transferred, with $35 million recognized as goodwill. *[CORRECT]*
D. $480 million consideration plus $55 million goodwill, for a total acquisition cost of $535 million.
Correct Answer: C
Rationale: Under ASC 805-10-30, the acquirer records identifiable assets and liabilities at fair value ($445 million) and
recognizes goodwill as the excess of consideration transferred ($480 million) over the fair value of net identifiable assets
($445 million), or $35 million. Options A and B incorrectly ignore either the consideration or the net-asset fair value. Option
D compounds the error by adding goodwill on top of consideration, double-counting the premium.
ACCT 526 - Advanced Accounting - Final Examination Confidential - For Authorized Use Only
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Q2. In a business combination, which of the following factors is LEAST relevant for identifying the acquirer under
ASC 805-10-25?
A. The entity whose owners receive the largest portion of the voting rights in the combined entity.
B. The entity whose fair value is significantly larger than the other entity.
C. The entity whose senior management dominates the post-combination management of the combined entity.
D. The entity that issued the press release announcing the transaction. *[CORRECT]*
Correct Answer: D
Rationale: ASC 805-10-25-5 through 25-19 provide guidance for identifying the acquirer based on substantive factors such
as relative voting rights, fair value, ownership interest, and composition of senior management. The party that issued the
press release is a public-relations formality, not an indicator of substantive control, so it is the least relevant factor.
Q3. Atlas Corp. and Beacon Ltd. sign a binding merger agreement on October 15, 2026. The acquisition closes on
November 30, 2026, and Atlas obtains control on that date. Atlas's fiscal year ends December 31. What is the
acquisition date under ASC 805?
A. October 15, 2026, the date the agreement was signed.
B. November 30, 2026, the date Atlas obtains control of Beacon. *[CORRECT]*
C. December 31, 2026, Atlas's fiscal year-end.
D. The date Atlas's board formally approves the consideration transferred.
Correct Answer: B
Rationale: ASC 805-10-25-3 defines the acquisition date as the date the acquirer obtains control of the acquiree, which is
typically the closing date when consideration is transferred and assets/liabilities are assumed. Signing the agreement (A) is
merely the commitment date, and the fiscal year-end (C) is irrelevant unless control is transferred on that date.
Q4. On January 1, 2026, Riviera Co. acquires 80% of Seaside Corp. for $5,200,000 cash. Seaside's identifiable net
assets have a fair value of $5,500,000. Riviera elects to measure noncontrolling interest at fair value, and the fair
value of the 20% NCI is $1,300,000. What is the goodwill recognized in the consolidated financial statements?
A. $800,000.
B. $1,000,000. *[CORRECT]*
C. $1,100,000.
D. $1,300,000.
Correct Answer: B
Rationale: When NCI is measured at fair value, goodwill is computed as: Consideration transferred ($5,200,000) + Fair
value of NCI ($1,300,000) - Fair value of identifiable net assets ($5,500,000) = $1,000,000. Option A ($800,000) results from
using only proportionate NCI ($5,500,000 × 20% = $1,100,000): $5,200,000 + $1,100,000 - $5,500,000 = $800,000. The
fair-value NCI method gives full goodwill of $1,000,000.
Q5. Under ASC 805, which measurement alternative for noncontrolling interest permits the recognition of "full
goodwill"?
A. Measuring NCI at the acquiree's proportionate share of identifiable net assets.
B. Measuring NCI at fair value as of the acquisition date. *[CORRECT]*
C. Measuring NCI at book value as reported on the acquiree's balance sheet.
D. Measuring NCI at the acquiree's historical cost basis.
Correct Answer: B
Rationale: Under ASC 805-30-30-2, the acquirer may elect to measure NCI at fair value, which produces "full goodwill"
(goodwill on 100% of the acquiree). The proportionate-share method produces only the parent's share of goodwill. Book
value (C) and historical cost (D) are not acceptable measurement bases for NCI under acquisition accounting.
ACCT 526 - Advanced Accounting - Final Examination Confidential - For Authorized Use Only
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Q6. Crestwood Co. acquires 70% of Delta Inc. for $3,150,000 cash. Delta's identifiable net assets have a fair value of
$4,000,000 on the acquisition date. The fair value of the 30% noncontrolling interest is $1,350,000. What amount of
goodwill is reported if Crestwood elects the fair-value option for NCI?
A. $350,000.
B. $500,000. *[CORRECT]*
C. $700,000.
D. $850,000.
Correct Answer: B
Rationale: Goodwill = Consideration transferred ($3,150,000) + Fair value of NCI ($1,350,000) - Fair value of identifiable
net assets ($4,000,000) = $500,000. Option A ($350,000) results from the proportionate-share method (NCI = $4,000,000 ×
30% = $1,200,000): $3,150,000 + $1,200,000 - $4,000,000 = $350,000. The fair-value NCI method recognizes full goodwill
of $500,000.
Q7. On April 1, 2026, Park Co. acquires 100% of Sterling Inc. for $4.2 million. Sterling's identifiable net assets have
a fair value of $4.6 million. No underlying transaction involves a bargain purchase exception. How should Park
report this acquisition in its consolidated financial statements?
A. Recognize goodwill of $400,000.
B. Recognize a bargain purchase gain of $400,000 in earnings, after a reassessment of fair values.
*[CORRECT]*
C. Recognize a deferred credit of $400,000 and amortize it over five years.
D. Adjust the consideration paid downward to $4.6 million to match net assets.
Correct Answer: B
Rationale: Under ASC 805-30-25-8, when consideration transferred is less than the fair value of identifiable net assets
acquired, a bargain purchase exists. The acquirer must reassess the fair values of consideration, identifiable assets, and
liabilities, and any remaining excess is recognized as a gain in earnings on the acquisition date. Option A mischaracterizes
the situation as goodwill. Options C and D are prohibited by ASC 805.
Q8. Privately held TargetCo is acquiring publicly traded AcquirerCo through a share-exchange in which TargetCo's
shareholders end up holding 65% of AcquirerCo's outstanding voting shares. Although legal form indicates
AcquirerCo is the legal acquirer, which entity is the accounting acquirer under ASC 805?
A. AcquirerCo, because it is the legal acquirer and survives the merger.
B. TargetCo, because its shareholders obtained control of the combined entity. *[CORRECT]*
C. Whichever entity has the larger book value of assets.
D. Whichever entity has the more recent audit opinion.
Correct Answer: B
Rationale: ASC 805-10-25-21 through 25-24 address reverse acquisitions: the entity whose shareholders obtain control of the
combined entity is the accounting acquirer, even though another entity is the legal acquirer. Because TargetCo's shareholders
hold 65% of the voting shares post-transaction, TargetCo is the accounting acquirer. Relative book value (C) and audit timing
(D) are not relevant indicators under ASC 805.
ACCT 526 - Advanced Accounting - Final Examination Confidential - For Authorized Use Only
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Q9. On January 1, 2026, Wexler Co. held a 10% interest in Norris Inc. purchased for $600,000 (fair value option,
trading security). On July 1, 2026, Wexler acquires an additional 70% interest for $4,500,000 cash, obtaining control.
Norris's identifiable net assets have a fair value of $6,000,000 on July 1, and the fair value of the 10% preexisting
interest is $700,000. The fair value of the 20% NCI is $1,400,000. Compute the total goodwill recognized by Wexler.
A. $200,000.
B. $300,000.
C. $600,000. *[CORRECT]*
D. $800,000.
Correct Answer: C
Rationale: For a step acquisition under ASC 805-30-30-9, the acquisition-date fair value of the acquirer's previously held
equity interest is included in the consideration transferred. Total consideration = Cash ($4,500,000) + Fair value of
preexisting interest ($700,000) + Fair value of NCI ($1,400,000) = $6,600,000. Goodwill = $6,600,000 - $6,000,000 =
$600,000. Option A omits the NCI, option B omits the preexisting interest, and option D double-counts the preexisting interest
at cost.
Q10. Pushdown accounting under ASC 805-50-25 requires that:
A. The acquiree establishes a new basis of accounting in its standalone financial statements when an
acquirer obtains control. *[CORRECT]*
B. The acquirer establishes a new basis in its consolidated financial statements only.
C. Goodwill is amortized over 10 years for reporting purposes.
D. Pushdown is mandatory for all business combinations regardless of percentage acquired.
Correct Answer: A
Rationale: ASC 805-50-25-1 through 25-4 (as updated by ASU 2014-17) permit an acquiree to apply pushdown accounting in
its standalone financial statements upon a change-in-control event, establishing a new basis of accounting reflecting the
acquirer's basis. Option B confuses consolidated versus standalone reporting. Option C incorrectly implies goodwill
amortization; goodwill is tested for impairment under ASC 350. Option D is incorrect because pushdown is an accounting
policy election, not mandatory for all transactions.
Q11. Pooling-of-interests accounting for business combinations:
A. Remains permissible under ASC 805 for transactions involving two U.S. GAAP registrants.
B. Was abolished for business combinations occurring after June 30, 2001, by FASB Statement No. 141
and is not permitted under ASC 805. *[CORRECT]*
C. Remains required when the consideration consists entirely of voting common stock.
D. Is permitted only when both entities are privately held.
Correct Answer: B
Rationale: FASB Statement No. 141 (issued June 2001) eliminated the pooling-of-interests method for business combinations
initiated after June 30, 2001; ASC 805 (issued 2007) perpetuates this prohibition. All business combinations within its scope
must apply the acquisition method. Options A, C, and D describe conditions that may have applied under superseded pooling
rules but are no longer authoritative.
ACCT 526 - Advanced Accounting - Final Examination Confidential - For Authorized Use Only
