Advanced Accounting

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ASSIGNMENT, CHAP 2

1. | Lisa Co. paid cash for all of the voting common stock of Victoria Corp. Victoria will continue to exist as a separate corporation. Entries for the consolidation of Lisa and Victoria would be recorded in:

  A.  | A worksheet. |

B.  | Lisa's general journal. |

C.  | Victoria's general journal. |

D.  | Victoria's secret consolidation journal. |

E.  | The general journals of both companies. |

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2. | Using the acquisition method for a business combination, goodwill is generally defined as: 

A.  | Cost of the investment less the subsidiary's book value at the beginning of the year. |

B.  | Cost of the investment less the subsidiary's book value at the acquisition date. |

C.  | Cost of the investment less the subsidiary's fair value at the beginning of the year. |

D.  | Cost of the investment less the subsidiary's fair value at acquisition date. |

E.  | None of the above; it is no longer allowed under federal law. |

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3. | How are direct and indirect costs accounted for when applying the acquisition method for a business combination?

A.  | Option A |

B.  | Option B |

C.  | Option C |

D.  | Option D |

E.  | Option E |

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4. | A statutory merger is a(n):

  A.  | Business combination in which only one of the two companies continues to exist as a legal corporation. |

B.  | Business combination in which both companies continues to exist. |

C.  | Acquisition of a competitor. |

D.  | Acquisition of a supplier or a customer. |

E.  | Legal proposal to acquire outstanding shares of the target's stock. |

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5, 6. 5. | Bullen Inc. acquired 100% of the voting common stock of Vicker Inc. on January 1, 20X1. The book value and fair value of Vicker's accounts on that date (prior to creating the combination) follow, along with the book value of Bullen's accounts:

Assume that Bullen issued 12,000...