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Date Submitted: 09/30/2012 01:58 PM

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1. A statutory ______________ results when one company acquires all the net assets of another company and the acquired company ceases to exist as a separate legal entity. (Points: 4)

       a. acquisition.

       b. combination.

       c. consolidation.

       d. merger.

2. Under the economic unit concept, non-controlling interest in net assets is treated as (Points: 4)

       a. a liability.

       b. an asset.

       c. stockholders' equity.

       d. an expense.

3. The parent company concept adjusts subsidiary net asset values for the (Points: 4)

       a. differences between cost and fair value.

       b. differences between cost and book value.

       c. total fair value implied by the price paid by the parent.

       d. total cost implied by the price paid by the parent.

4. SFAS 141R requires that all business combinations be accounted for using (Points: 4)

       the pooling of interests method.

       the acquisition method.

       either the acquisition or the pooling of interests methods.

       neither the acquisition nor the pooling of interests methods.

5. On May 1, 2011, the Phil Company paid $1,200,000 for 80% of the outstanding common stock of Sage Corporation in a transaction properly accounted for as an acquisition. The recorded assets and liabilities of Sage Corporation on May 1, 2011, follow:

On May 1, 2011, it was determined that the inventory of Sage had a fair value of $220,000 and the property and equipment (net) has a fair value of $1,200,000. What is the amount of goodwill resulting from the business combination? (Points: 4)





6. Following its acquisition of the net assets of Sandy Company, Potter Company assigned goodwill of $60,000 to one of the reporting divisions. Information for this division follows:

Based on the preceding information, what amount of goodwill will be reported for this division if its fair value is...

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