UL Lafayette ACCT 526 - Final Exam 2026/2027 Advanced Accounting
UNIVERSITY OF LOUISIANA, LAFAYETTE
ACCT 526 - Advanced Accounting
COMPREHENSIVE FINAL EXAMINATION - 2026/2027
INSTRUCTIONS TO CANDIDATES
1. This examination contains 100 multiple-choice questions distributed across 7 sections.
2. Time allowed: 3 hours. Total points: 100 (1 point per question).
3. Cognitive distribution: 25% recall, 50% application, 25% analysis (including calculations, consolidation
entries, and foreign currency translation).
4. Question style: 70% scenario-based; 30% direct knowledge.
5. Select the BEST single answer for each question. Each question has exactly one correct option (A, B, C, or D).
6. Special inclusions: 20 calculation-based questions; 15 consolidation entry and worksheet questions; 10
governmental and fund accounting questions.
7. Permitted references: FASB Accounting Standards Codification (ASC), GASB Statements, and UL Lafayette
ACCT 526 curriculum materials.
8. Mark your answers as instructed. The correct answer and detailed rationale are provided after each question
for review purposes.
Section 1: Business Combinations & Consolidations
Q1. Under FASB ASC 805 (Business Combinations), the acquisition method requires that identifiable assets
acquired and liabilities assumed be measured at:
A. Book value as recorded on the acquiree's books
B. Carrying amount net of accumulated depreciation
C. Fair value as of the acquisition date *[CORRECT]*
D. Historical cost adjusted for inflation
Correct Answer: C
Rationale: ASC 805-20-25 requires identifiable assets acquired and liabilities assumed to be measured at fair value as of the
acquisition date. This fair-value measurement principle is foundational to the acquisition method and is emphasized
throughout the UL Lafayette ACCT 526 curriculum. Book value, carrying amount, and historical cost were characteristic of
the older purchase method and pooling-of-interests, both superseded by ASC 805.
Q2. Paco Co. acquires 100% of Sun Corp. for $2,500,000 cash. Sun's identifiable net assets have a fair value of
$2,100,000 at the acquisition date. The goodwill recognized in the consolidated financial statements is:
A. $0 (no goodwill is recognized)
B. $400,000 *[CORRECT]*
C. $2,100,000
D. $2,500,000
Correct Answer: B
Rationale: Goodwill = Consideration transferred - Fair value of identifiable net assets acquired = $2,500,000 - $2,100,000
= $400,000. Per ASC 805-30-30, goodwill represents the excess of consideration over the fair value of identifiable net assets
and is recognized as an intangible asset on the consolidated balance sheet, subject to annual impairment testing rather than
amortization.
University of Louisiana at Lafayette Page 1
,UL Lafayette ACCT 526 - Final Exam 2026/2027 Advanced Accounting
Q3. Atlanta Inc. acquires 80% of Bayou Co. for $1,600,000 cash. Bayou's identifiable net assets have a fair
value of $1,800,000 at acquisition. The noncontrolling interest is measured at fair value of $420,000 (full
goodwill method). What is the consolidated goodwill?
A. $80,000
B. $220,000 *[CORRECT]*
C. $300,000
D. $400,000
Correct Answer: B
Rationale: Under the full goodwill method (ASC 805-30-30), goodwill = Consideration transferred + Fair value of NCI -
Fair value of identifiable net assets = $1,600,000 + $420,000 - $1,800,000 = $220,000. This method recognizes goodwill
attributable to both the acquirer and the noncontrolling interest. Under the partial goodwill method, only $80,000 of
goodwill ($1,600,000 - 80% x $1,800,000) would be recognized.
Q4. Delta Co. acquires 100% of Echo Inc. for $850,000 cash. Echo's identifiable net assets have a fair value of
$1,000,000. After reassessing the identification and measurement of all identifiable assets and liabilities, the
difference remains. What does Delta recognize?
A. Goodwill of $150,000
B. A bargain purchase gain of $150,000 in current earnings *[CORRECT]*
C. A deferred credit of $150,000 amortized over 5 years
D. Negative goodwill amortized over 10 years
Correct Answer: B
Rationale: When the consideration transferred is less than the fair value of identifiable net assets acquired, a bargain
purchase (formerly 'negative goodwill') results. ASC 805-30-25 requires the acquirer to recognize the difference as a gain in
current earnings, but only after reassessing whether all identifiable assets and liabilities have been properly identified and
measured. The $150,000 gain ($1,000,000 - $850,000) is reported in the consolidated income statement.
Q5. Under ASC 805, which of the following is NOT a factor used to identify the acquirer in a business
combination?
A. Relative voting rights in the combined entity
B. The size of the combining entities (relative fair value)
C. The existence of a large noncontrolling interest in the combined entity *[CORRECT]*
D. The composition of senior management of the combined entity
Correct Answer: C
Rationale: ASC 805-10-25-19 through 25-21 lists factors to identify the acquirer, including relative voting rights, size of the
combining entities, composition of senior management, and terms of the exchange transaction. The mere existence of a large
noncontrolling interest is not a determining factor by itself. Identification of the acquirer follows the guidance in ASC
805-10, while IFRS 3 contains parallel guidance for international comparability.
University of Louisiana at Lafayette Page 2
, UL Lafayette ACCT 526 - Final Exam 2026/2027 Advanced Accounting
Q6. In a reverse acquisition, Private Co. (a private company, legal acquirer) issues shares to the shareholders
of Public Co. (a public company, legal acquiree). For financial reporting purposes, the consolidated financial
statements should be presented as if:
A. Private Co. is the acquirer
B. Public Co. is the acquirer *[CORRECT]*
C. A new combined entity is being formed
D. Both entities remain separate reporting companies
Correct Answer: B
Rationale: Under ASC 805-10-25 (reverse acquisition guidance), the financial statements are prepared as if Public Co. (the
legal acquiree) acquired Private Co. (the legal acquirer) because Public Co.'s shareholders obtain control of the combined
entity through the share exchange. The legal acquiree's historical financial statements become the consolidated historical
financial statements, adjusted for the new capital structure.
Q7. Cypress Inc. previously held a 10% equity interest in Delta Corp., accounted for at fair value through
earnings. Cypress now acquires an additional 60% interest, achieving control. Under ASC 805, the previously
held 10% interest is:
A. Carried forward at its original book value
B. Remeasured to fair value at the acquisition date, with any gain or loss recognized in earnings
*[CORRECT]*
C. Carried at historical cost with no remeasurement
D. Written off as an impairment loss
Correct Answer: B
Rationale: Under ASC 805-10-25-10 (step acquisition guidance), when an acquirer obtains control of an acquiree in stages,
the previously held equity interest must be remeasured to its fair value at the acquisition date. Any resulting gain or loss is
recognized in current earnings. The remeasured fair value is then included in the calculation of total consideration
transferred for goodwill purposes.
Q8. Under ASC 810 (Consolidation), the primary beneficiary of a Variable Interest Entity (VIE) is identified
as the entity that:
A. Has the largest equity investment in the VIE
B. Has the power to direct the activities most significantly impacting the VIE's economic performance AND
the obligation to absorb losses or right to receive benefits potentially significant to the VIE *[CORRECT]*
C. Holds the highest percentage of voting rights in the VIE
D. Has the longest-standing contractual relationship with the VIE
Correct Answer: B
Rationale: ASC 810-10-25-38A establishes a two-prong qualitative test for identifying the primary beneficiary of a VIE: (1)
the power to direct the activities most significantly impacting the VIE's economic performance, and (2) the obligation to
absorb losses or the right to receive benefits that could potentially be significant to the VIE. Both criteria must be met. This
replaced the former voting-interest approach used for SPEs prior to the post-Enron revisions.
University of Louisiana at Lafayette Page 3
UNIVERSITY OF LOUISIANA, LAFAYETTE
ACCT 526 - Advanced Accounting
COMPREHENSIVE FINAL EXAMINATION - 2026/2027
INSTRUCTIONS TO CANDIDATES
1. This examination contains 100 multiple-choice questions distributed across 7 sections.
2. Time allowed: 3 hours. Total points: 100 (1 point per question).
3. Cognitive distribution: 25% recall, 50% application, 25% analysis (including calculations, consolidation
entries, and foreign currency translation).
4. Question style: 70% scenario-based; 30% direct knowledge.
5. Select the BEST single answer for each question. Each question has exactly one correct option (A, B, C, or D).
6. Special inclusions: 20 calculation-based questions; 15 consolidation entry and worksheet questions; 10
governmental and fund accounting questions.
7. Permitted references: FASB Accounting Standards Codification (ASC), GASB Statements, and UL Lafayette
ACCT 526 curriculum materials.
8. Mark your answers as instructed. The correct answer and detailed rationale are provided after each question
for review purposes.
Section 1: Business Combinations & Consolidations
Q1. Under FASB ASC 805 (Business Combinations), the acquisition method requires that identifiable assets
acquired and liabilities assumed be measured at:
A. Book value as recorded on the acquiree's books
B. Carrying amount net of accumulated depreciation
C. Fair value as of the acquisition date *[CORRECT]*
D. Historical cost adjusted for inflation
Correct Answer: C
Rationale: ASC 805-20-25 requires identifiable assets acquired and liabilities assumed to be measured at fair value as of the
acquisition date. This fair-value measurement principle is foundational to the acquisition method and is emphasized
throughout the UL Lafayette ACCT 526 curriculum. Book value, carrying amount, and historical cost were characteristic of
the older purchase method and pooling-of-interests, both superseded by ASC 805.
Q2. Paco Co. acquires 100% of Sun Corp. for $2,500,000 cash. Sun's identifiable net assets have a fair value of
$2,100,000 at the acquisition date. The goodwill recognized in the consolidated financial statements is:
A. $0 (no goodwill is recognized)
B. $400,000 *[CORRECT]*
C. $2,100,000
D. $2,500,000
Correct Answer: B
Rationale: Goodwill = Consideration transferred - Fair value of identifiable net assets acquired = $2,500,000 - $2,100,000
= $400,000. Per ASC 805-30-30, goodwill represents the excess of consideration over the fair value of identifiable net assets
and is recognized as an intangible asset on the consolidated balance sheet, subject to annual impairment testing rather than
amortization.
University of Louisiana at Lafayette Page 1
,UL Lafayette ACCT 526 - Final Exam 2026/2027 Advanced Accounting
Q3. Atlanta Inc. acquires 80% of Bayou Co. for $1,600,000 cash. Bayou's identifiable net assets have a fair
value of $1,800,000 at acquisition. The noncontrolling interest is measured at fair value of $420,000 (full
goodwill method). What is the consolidated goodwill?
A. $80,000
B. $220,000 *[CORRECT]*
C. $300,000
D. $400,000
Correct Answer: B
Rationale: Under the full goodwill method (ASC 805-30-30), goodwill = Consideration transferred + Fair value of NCI -
Fair value of identifiable net assets = $1,600,000 + $420,000 - $1,800,000 = $220,000. This method recognizes goodwill
attributable to both the acquirer and the noncontrolling interest. Under the partial goodwill method, only $80,000 of
goodwill ($1,600,000 - 80% x $1,800,000) would be recognized.
Q4. Delta Co. acquires 100% of Echo Inc. for $850,000 cash. Echo's identifiable net assets have a fair value of
$1,000,000. After reassessing the identification and measurement of all identifiable assets and liabilities, the
difference remains. What does Delta recognize?
A. Goodwill of $150,000
B. A bargain purchase gain of $150,000 in current earnings *[CORRECT]*
C. A deferred credit of $150,000 amortized over 5 years
D. Negative goodwill amortized over 10 years
Correct Answer: B
Rationale: When the consideration transferred is less than the fair value of identifiable net assets acquired, a bargain
purchase (formerly 'negative goodwill') results. ASC 805-30-25 requires the acquirer to recognize the difference as a gain in
current earnings, but only after reassessing whether all identifiable assets and liabilities have been properly identified and
measured. The $150,000 gain ($1,000,000 - $850,000) is reported in the consolidated income statement.
Q5. Under ASC 805, which of the following is NOT a factor used to identify the acquirer in a business
combination?
A. Relative voting rights in the combined entity
B. The size of the combining entities (relative fair value)
C. The existence of a large noncontrolling interest in the combined entity *[CORRECT]*
D. The composition of senior management of the combined entity
Correct Answer: C
Rationale: ASC 805-10-25-19 through 25-21 lists factors to identify the acquirer, including relative voting rights, size of the
combining entities, composition of senior management, and terms of the exchange transaction. The mere existence of a large
noncontrolling interest is not a determining factor by itself. Identification of the acquirer follows the guidance in ASC
805-10, while IFRS 3 contains parallel guidance for international comparability.
University of Louisiana at Lafayette Page 2
, UL Lafayette ACCT 526 - Final Exam 2026/2027 Advanced Accounting
Q6. In a reverse acquisition, Private Co. (a private company, legal acquirer) issues shares to the shareholders
of Public Co. (a public company, legal acquiree). For financial reporting purposes, the consolidated financial
statements should be presented as if:
A. Private Co. is the acquirer
B. Public Co. is the acquirer *[CORRECT]*
C. A new combined entity is being formed
D. Both entities remain separate reporting companies
Correct Answer: B
Rationale: Under ASC 805-10-25 (reverse acquisition guidance), the financial statements are prepared as if Public Co. (the
legal acquiree) acquired Private Co. (the legal acquirer) because Public Co.'s shareholders obtain control of the combined
entity through the share exchange. The legal acquiree's historical financial statements become the consolidated historical
financial statements, adjusted for the new capital structure.
Q7. Cypress Inc. previously held a 10% equity interest in Delta Corp., accounted for at fair value through
earnings. Cypress now acquires an additional 60% interest, achieving control. Under ASC 805, the previously
held 10% interest is:
A. Carried forward at its original book value
B. Remeasured to fair value at the acquisition date, with any gain or loss recognized in earnings
*[CORRECT]*
C. Carried at historical cost with no remeasurement
D. Written off as an impairment loss
Correct Answer: B
Rationale: Under ASC 805-10-25-10 (step acquisition guidance), when an acquirer obtains control of an acquiree in stages,
the previously held equity interest must be remeasured to its fair value at the acquisition date. Any resulting gain or loss is
recognized in current earnings. The remeasured fair value is then included in the calculation of total consideration
transferred for goodwill purposes.
Q8. Under ASC 810 (Consolidation), the primary beneficiary of a Variable Interest Entity (VIE) is identified
as the entity that:
A. Has the largest equity investment in the VIE
B. Has the power to direct the activities most significantly impacting the VIE's economic performance AND
the obligation to absorb losses or right to receive benefits potentially significant to the VIE *[CORRECT]*
C. Holds the highest percentage of voting rights in the VIE
D. Has the longest-standing contractual relationship with the VIE
Correct Answer: B
Rationale: ASC 810-10-25-38A establishes a two-prong qualitative test for identifying the primary beneficiary of a VIE: (1)
the power to direct the activities most significantly impacting the VIE's economic performance, and (2) the obligation to
absorb losses or the right to receive benefits that could potentially be significant to the VIE. Both criteria must be met. This
replaced the former voting-interest approach used for SPEs prior to the post-Enron revisions.
University of Louisiana at Lafayette Page 3
