Accounting for Acquisition of Net Assets

The excess of price paid over the fair value of the net identifiable assets acquired should be recognized as:

(a)  

The excess of the fair value of the net identifiable assets acquired over the price paid should be recognized as:

(a)  

The cost of registering equity securities in a business a business combination should be recorded as:

• income of the period

• expense of the period

• deduction from shares premium

• debit to shares premium

Which of the following is recorded as business combination expense?

• legal fees

• stock registration fees

• finders fees

• audit fees

Shares issued as consideration in an acquisition of all net assets are recorded by:

• Crediting ordinary shares account at its fair value

• Crediting ordinary shares account at par value

• Crediting shares premium of the excess of fair value over par value

• Crediting ordinary shares of the excess of par value over fair value

Which of the following is NOT included as the consideration in acquisition of net assets?

• Payment to auditor

• Fair value of stocks issued

• Liabilities incurred

• Cost to register shares of stocks in SEC

• Cash paid to acquiree

After acquisition of net assets, how many entity/ies continue to exist as a separate legal entity?

(a)  

Which of the following net assets of an acquiree may not be included when computing for the goodwill arising from combination?

• Accounts receivable

• Trademark

• Goodwill

• Long-term liabilities

If the acquisition of all net assets of a company resulted to a gain on acquisition, which of the following is/are TRUE?

• The price paid is greater than the fair value of the net asset of the acquiree

• The price paid is greater than the book value of the net asset of the acquiree

• The price paid is less than the fair value of the net asset of acquiree

• The price paid is less than the book value of the net asset of the acquiree

Which of the following incidental cost is/are charged to business combination expenses?

• audit fees paid to external auditors in relation to financial statement of acquiree

• legal fees paid to lawyers for drafting the legal documents for the merger

• commission paid to the banks for facilitating the business combinations

• registration fees for issuance of equity securities

• fee to various consultants