ACCT 405 Chapter 2 Problems: 3, 4, 11, 12

ACCT 405 Chapter 2 Problems: 3, 4, 11, 12

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ACCT 405 Chapter 2 Problems: 3, 4, 11, 12

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ACCT 405 Chapter 2 Problems: 3, 4, 11, 12

Chapter 2 Problems: 3, 4, 11, 12

3.     What is a statutory merger?

1.     A merger approved by the Securities and Exchange Commission.

2.     An acquisition involving the purchase of both stock and assets.

3.     A takeover completed within one year of the initial tender offer.

4.     A business combination in which only one company continues to exist as a legal entity.

4.     FASB ASC 805, Business Combinations, provides principles for allocating the fair value of an acquired business. When the collective fair values of the separately identified assets acquired and liabilities assumed exceed the fair value of the consideration transferred, the difference should be:

1.     Recognized as an ordinary gain from a bargain purchase.

2.     Treated as negative goodwill to be amortized over the period benefited, not to exceed 40 years.

3.     Treated as goodwill and tested for impairment on an annual basis.

4.     Applied pro rata to reduce, but not below zero, the amounts initially assigned to specific noncurrent assets of the acquired firm.

11.  What should Beasley record as total liabilities incurred or assumed in connection with the Donovan merger?

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