【正文】 . Polka paid the following costs and expenses related to the business bination:Costs of special shareholders39。Advanced Accounting, 11e (Beams/Anthony/Bettinghaus/Smith)Chapter 1 Business CombinationsMultiple Choice Questions1) Which of the following is not a reason for a pany to expand through a bination, rather than by building new facilities?A) A bination might provide cost advantages.B) A bination might provide fewer operating delays.C) A bination might provide easier access to intangible assets.D) A bination might provide an opportunity to invest in a pany without having to take responsibility for its financial results.Answer: DObjective: LO1Difficulty: Easy2) A business merger differs from a business consolidation becauseA) a merger dissolves all but one of the prior entities, but a consolidation dissolves all of the prior entities.B) a consolidation dissolves all but one of the prior entities, but a merger dissolves all of the prior entities.C) a merger is created when two entities join, but a consolidation is created when more than two entities join.D) a consolidation is created when two entities join, but a merger is created when more than two entities join.Answer: AObjective: LO2Difficulty: Easy3) Following the accounting concept of a business bination, a business bination occurs when a pany acquires an equity interest in another entity and hasA) at least 20% ownership in the entity.B) more than 50% ownership in the entity.C) 100% ownership in the entity.D) control over the entity, irrespective of the percentage owned.Answer: DObjective: LO2Difficulty: Easy4) Historically, much of the controversy concerning accounting requirements for business binations involved the ________ method.A) purchaseB) pooling of interestsC) equityD) acquisitionAnswer: BObjective: LO2Difficulty: Easy5) Pitch Co. paid $50,000 in fees to its accountants and lawyers in acquiring Slope Company. Pitch will treat the $50,000 asA) an expense for the current year.B) a prior period adjustment to retained earnings.C) additional cost to investment of Slope on the consolidated balance sheet.D) a reduction in additional paidin capital.Answer: AObjective: LO3, 4Difficulty: Moderate6) Picasso Co. issued 5,000 shares of its $1 par mon stock, valued at $100,000, to acquire shares of Seurat Company in an allstock transaction. Picasso paid the investment bankers $35,000 and will treat the investment banker fee asA) an expense for the current year.B) a prior period adjustment to Retained Earnings.C) additional goodwill on the consolidated balance sheet.D) a reduction to additional paidin capital.Answer: DObjective: LO3Difficulty: Moderate7) Durer Inc. acquired Sea Corporation in a business bination and Sea Corp went out of existence. Sea Corp developed a patent listed as an asset on Sea Corp39。 meeting to vote on the merger $12,000Registering and issuing securities 10,000Accounting and legal fees 18,000Salaries of Polka39。 meeting would be treated as expenses.Answer: CObjective: LO3Difficulty: Moderate14) Which of the following methods does the FASB consider the best indicator of fair values in the evaluation of goodwill impairment?A) Senior executive39。s only noncurrent assets were land and buildings with book values of $100,000 and $520,000, respectively, and fair values of $180,000 and $730,000, respectively. At what value will the buildings be recorded by Pepper?A) $730,000B) $520,000C) $210,000D) $0Answer: AObjective: LO4Difficulty: Moderate16) According to FASB Statement No. 141, liabilities assumed in an acquisition will be valued at the ________.A) estimated fair valueB) historical book valueC) current replacement costD) present value using market interest ratesAnswer: AObjective: LO3Difficulty: Easy17) In reference to the FASB disclosure requirements about a business bination in the period in which the bination occurs, which of the following is correct?A) Firms are not required to disclose the name of the acquired pany.B) Firms are not required to disclose the business purpose for a bination.C) Firms are required to disclose the nature, terms and fair value of consideration transferred in a business bination.D) All of the above are correct.Answer: CObjective: LO4Difficulty: Easy18) Goodwill arising from a business bination isA) charged to Retained Earnings after the acquisition is pleted.B) amortized over 40 years or its useful life, whichever is longer.C) amortized over 40 years or its useful life, whichever is shorter.D) never amortized.Answer: DObjective: LO4Difficulty: Easy19) In reference to international accounting for goodwill, . panies have plained that past . accounting rules for goodwill placed them at a disadvantage in peting against foreign panies for merger partners. Why?A) Previous rules required immediate write off of goodwill which resulted in a onetime expense that was not required under international rules.B) Previous rules required amortization of goodwill which resulted in an ongoing expense that was not required under international rules.C) Previous rules did not permit the recording of goodwill, thus resulting in a lower asset base than international counterparts would recognize.D) All of the above are correct.Answer: BObjective: LO4Difficulty: Moderate20) When considering an acquisition, which of the following is NOT a method by which one pany may gain control of another pany?A) Purchase of the majority of outstanding voting stock of the acquired pany.B) Purchase of all assets and liabilities of another pany.C) Purchase the assets, but not necessarily the liabilities, of another pany previously in bankruptcy.D) All of the above methods result in a pany gaining control over another pany.Answer: DObjective: LO2Difficulty: Moderat