11年FA3学生期末练习题.docVIP

Part 1 1. An excess of the fair value of net assets acquired in a purchase business combination over the price paid is: a Reported as negative goodwill and amortized over a maximum period of 40 years b Applied to a reduction of noncash assets before negative goodwill may be reported c Applied to reduce noncurrent assets other than marketable securities to zero before negative goodwill may be reported d Applied to reduce goodwill to zero before negative goodwill may be reported 2. Fast Corporation paid $50,000 cash for the net assets of Agge Company, which consisted of the following: Book Value Fair Value Current assets $10,000 $14,000 Plant and equipment 40,000 55,000 Liabilities assumed (10,000) (9,000) $40,000 $60,000 The plant and equipment acquired in this business combination should be recorded at: a $55,000 b $50,000 c $45,833 d $45,000 3. On April 1, Jack Company paid $800,000 for all the issued and outstanding common stock of Ann Corporation in a transaction properly accounted for as a purchase. The recorded assets and liabilities of Ann Corporation on April 1 are as follow: Cash $ 80,000 Inventory 240,000 Property and equipment (net of accumulated depreciation of $320,000) 480,000 Liabilities (180,000) On April 1, it was determined that the inventory of Ann had a fair value of $190,000 and the property and equipment (net) had a fair value of $560,000. What is the amount of goodwill resulting from the business combination? a 0 b $50,000 c $150,000 d $180,000 4. Investor Company owns 40% of Alimand Corporation. During the calendar year, Alimand had net earnings of $100,000 and paid dividends of $10,000. Investor mistakenly recorded these transactions using the cost method rather than the