ACC exam / A+
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1. Which of the following situations best describes a business combination to be accounted for as a statutory merger?
Both companies in a combination continue to operate as separate, but related, legal entities.
Only one of the combining companies survives and the other loses its separate identity.
Two companies combine to form a new third company, and the original two companies are dissolved.
One company transfers assets to another company it has created.
2. The defense tactic that involves purchasing shares held by the would-be acquiring company at a price substantially in excess of their fair value is called
poison pill.
pac-man defense.
greenmail.
white knight.
3. The third period of business combinations started after World War II and is called
horizontal integration.
merger mania.
operating integration.
vertical integration.
4. The excess of the amount offered in an acquisition over the prior stock price of the acquired firm is the
bonus.
goodwill.
implied offering price.
takeover premium.
5. If the value implied by the purchase price of an acquired company exceeds the fair values of identifiable net assets, the excess should be
allocated to reduce any previously recorded goodwill and classify any remainder as an ordinary gain.
allocated to reduce current and long-lived assets.
allocated to reduce long-lived assets.
accounted for as goodwill.
6. In a business combination in which the total fair value of the identifiable assets acquired over liabilities assumed is greater than the consideration paid, the excess fair value is:
classified as an extraordinary gain.
allocated first to eliminate any previously recorded
1. Which of the following situations best describes a business combination to be accounted for as a statutory merger?
Both companies in a combination continue to operate as separate, but related, legal entities.
Only one of the combining companies survives and the other loses its separate identity.
Two companies combine to form a new third company, and the original two companies are dissolved.
One company transfers assets to another company it has created.
2. The defense tactic that involves purchasing shares held by the would-be acquiring company at a price substantially in excess of their fair value is called
poison pill.
pac-man defense.
greenmail.
white knight.
3. The third period of business combinations started after World War II and is called
horizontal integration.
merger mania.
operating integration.
vertical integration.
4. The excess of the amount offered in an acquisition over the prior stock price of the acquired firm is the
bonus.
goodwill.
implied offering price.
takeover premium.
5. If the value implied by the purchase price of an acquired company exceeds the fair values of identifiable net assets, the excess should be
allocated to reduce any previously recorded goodwill and classify any remainder as an ordinary gain.
allocated to reduce current and long-lived assets.
allocated to reduce long-lived assets.
accounted for as goodwill.
6. In a business combination in which the total fair value of the identifiable assets acquired over liabilities assumed is greater than the consideration paid, the excess fair value is:
classified as an extraordinary gain.
allocated first to eliminate any previously recorded