江西财经大学高级财会计国际学院题库chapter_01.docVIP

Advanced Accounting, 11e Beams/Anthony/Bettinghaus/Smith Chapter 1 Business Combinations Multiple Choice Questions 1 Which of the following is not a reason for a company to expand through a combination, rather than by building new facilities? A A combination might provide cost advantages. B A combination might provide fewer operating delays. C A combination might provide easier access to intangible assets. D A combination might provide an opportunity to invest in a company without having to take responsibility for its financial results. Answer: D Objective: LO1 Difficulty: Easy 2 A business merger differs from a business consolidation because A 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: A Objective: LO2 Difficulty: Easy 3 Following the accounting concept of a business combination, a business combination occurs when a company acquires an equity interest in another entity and has A 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: D Objective: LO2 Difficulty: Easy 4 Historically, much of the controversy concerning accounting requirements for business combinations involved the ________ method. A purchase B pooling of interests C equity D acquisition Answer: B Objective: LO2 Difficulty: Easy 5 Pitch Co. paid $50,000 in fees to its accountants and lawyers in acquiring Slope Company. Pitch will treat the $50,000 as A an expense for the current year. B a prior period adjustment to retained earnings.