Intercorporate Acquisitions and Investments in other Entities Exam Questions with Verified Solutions
Latest Update 2024 (Graded A+)
consolidated financial statements - Answers Portrays related companies as if they were actually a single
company.
subsidiary - Answers A corporation that another corporation controls, usually through a majority
ownership of its common stock.
The parent company - Answers controls the subsidiary.
special purpose entity - Answers A financing vehicle that is not a substantive operating entity, usually
created for a single specified purpose.
A special purpose entity may be in the form of ... - Answers a corporation, trust, or partnership.
business combination - Answers Occurs when an acquirer obtains control of one or more businesses
merger - Answers A business combo in which the acquired company's assets and liabilities are combined
with those of the acquiring company.
controlling ownership - Answers A business combo in which the acquired company remains a separate
legal entity with a majority of its common stock owned by the purchasing company leads to a parent-
subsidiary relationship.
noncontrolling ownership - Answers The purchase of a less than majority interest in another corporation
does not usually result in a business combination or controlling situation.
statutory merger - Answers A type of business combo in which only one of the combining companies
survives and the other loses its separate identity.
statutory consolidation - Answers A business combo in which both combing companies are dissolved
and the assets and liabilities of both companies are transferred ti a newly created corporation.
stock acquisition - Answers Occurs when one company acquires the voting shares of another company
and the two companies continue to operate as separate, but related, legal entities.
noncontrolling interest - Answers The total of the share of an acquired company not held by the
controlling shareholder.
acquisition method - Answers The acquirer recognizes all assets acquired and liabilities assumed in a
business combo and measures them at their acquisition date fair values.
goodwill - Answers An asset representing the future economic benefits arising from other assets
acquired in a business combo that are not individually identified and separately recognized.
Latest Update 2024 (Graded A+)
consolidated financial statements - Answers Portrays related companies as if they were actually a single
company.
subsidiary - Answers A corporation that another corporation controls, usually through a majority
ownership of its common stock.
The parent company - Answers controls the subsidiary.
special purpose entity - Answers A financing vehicle that is not a substantive operating entity, usually
created for a single specified purpose.
A special purpose entity may be in the form of ... - Answers a corporation, trust, or partnership.
business combination - Answers Occurs when an acquirer obtains control of one or more businesses
merger - Answers A business combo in which the acquired company's assets and liabilities are combined
with those of the acquiring company.
controlling ownership - Answers A business combo in which the acquired company remains a separate
legal entity with a majority of its common stock owned by the purchasing company leads to a parent-
subsidiary relationship.
noncontrolling ownership - Answers The purchase of a less than majority interest in another corporation
does not usually result in a business combination or controlling situation.
statutory merger - Answers A type of business combo in which only one of the combining companies
survives and the other loses its separate identity.
statutory consolidation - Answers A business combo in which both combing companies are dissolved
and the assets and liabilities of both companies are transferred ti a newly created corporation.
stock acquisition - Answers Occurs when one company acquires the voting shares of another company
and the two companies continue to operate as separate, but related, legal entities.
noncontrolling interest - Answers The total of the share of an acquired company not held by the
controlling shareholder.
acquisition method - Answers The acquirer recognizes all assets acquired and liabilities assumed in a
business combo and measures them at their acquisition date fair values.
goodwill - Answers An asset representing the future economic benefits arising from other assets
acquired in a business combo that are not individually identified and separately recognized.
