Business Combination

Which of the following is not a step in the acquisition method of business combination?

• Recognizing and measuring goodwill/GBP

• Determining the acquisition date

• Identifying the acquirer/control

• Recognizing and measuring the identifiable assets acquired, the liabilities assumed, and any controlling interest in the acquiree

How should the value of recognized assets and liabilities be measured?

• By its market value on the date of acquisition

• By its fair value on the date of acquisition

• by its appraisal value on the date of acquisition

• by its value in use on the date of acquisition

What do you call a merger that happens between two firms that produce the same type of goods and services?

• Conglomerate Merger

• Vertical Merger

• Horizontal Merger

• Opposite Merger

TRUE OR FALSE: The only method of acquiring control over one company is through payment of cash or issuance of debt instrument.

• TRUE

• FALSE

When the consideration paid is greater than the assets acquired, _______arises.

• Gain on Bargain Purchase

• Goodwill

• Revaluation Surplus

• Share Premium

What are the two classifications of Business Combinations?

• According to the structure of combination and according to the form of acquisition

• According to the structure of acquisition and according to the form of combination

• According to the Statutory Merger and according to the statutory consolidation

• None of the above

The table above shows the Statement of Financial Position of Keith Co. and Spencer Inc. on January 1, 20x1 (Hint: Book value is equal to Fair Value):

Alpha Corporation acquired the net asset of both Keith Co. and Spencer Inc. Paying the cash of 840,000 and 210,000 shares to Keith Co. and paying the cash of 670,000 and 175,000 shares to Spencer Inc. The par value of these shares is 20 per share and market value as of January 1, 20x1 is 25 per share. 



How much is the goodwill?

• 630,000

• 975,000

• 245,000

• 75,000

The table above shows the Statement of Financial Position of Keith Co. and Spencer Inc. on January 1, 20x1 (Hint: Book value is equal to Fair Value):

Alpha Corporation acquired the net asset of both Keith Co. and Spencer Inc. Paying the cash of 840,000 and 210,000 shares to Keith Co. and paying the cash of 670,000 and 175,000 shares to Spencer Inc. The par value of these shares is 20 per share and market value as of January 1, 20x1 is 25 per share.

How much is the gain on bargain sale?

• 630,000

• 975,000

• 245,000

• 75,000

The table above shows the Statement of Financial Position of Keith Co. and Spencer Inc. on January 1, 20x1 (Hint: Book value is equal to Fair Value):

Alpha Corporation acquired the net asset of both Keith Co. and Spencer Inc. Paying the cash of 840,000 and 210,000 shares to Keith Co. and paying the cash of 670,000 and 175,000 shares to Spencer Inc. The par value of these shares is 20 per share and market value as of January 1, 20x1 is 25 per share.

How much is the Total Consideration given to Spencer Inc.?

• 6,090,000

• 5,045,000

• 5,190,000

• 4,170,000

What do you call a merger of companies in totally different industries?

• Vertical Merger

• Horizontal Merger

• Conglomerate Merger

• None of these