Mergers and Acquisitions MCQs

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Entity A acquires all of the voting shares of Entity B for $1,000,000. At the time of the acquisition, the net fair value of the identifiable assets ...






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A business combination may be legally structured as a merger, a consolidation, or an acquisition. Which of the following describes a business combinat...






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A horizontal merger is a merger between






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Which type of acquisition does not require shareholders to have a formal vote to approve?






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The acquisition of a retail shoe store by a shoe manufacturer is an example of






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Which of the following is a combination involving the absorption of one firm by another?






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When firm B merges with firm C to create firm BC, what has occurred?






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All of the following are true of mergers except






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The merger of General Motors and Ford would be categorized as a






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When choosing a merger over an acquisition of stock to accomplish a business combination, which of the following is irrelevant to the decision?






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The merger of an oil refinery by a chain of gasoline stations is an example of a






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All of the following statements about acquisition of stock through tender offers is true except






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Business combinations are accomplished either through a direct acquisition of assets and liabilities by a surviving corporation or by stock investment...






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An attempt to replace management in which a group of shareholders try to solicit votes is a






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Which of the following is a defensive tactic against a hostile takeover by tender offer?






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Which of the following statements about the benefits and costs of mergers is correct?






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A parent company sold a subsidiary to a group of managers of the subsidiary. The purchasing group invested $1 million and borrowed $49 million against...






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Which of the following will reduce average production costs following a merger?






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All of the following are potential sources of tax savings in an acquisition except






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A firm is most likely to be a bargain for an acquirer if






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Which of the following is true if no synergies occur after the merger of two firms?






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The coinsurance effect can be reduced by Retirement of Debt before a Combination Issuance of Debt after a Combination






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Ogden Enterprises is a holding company for several successful retail businesses including bookstores, pharmacies, and gourmet food shops. Ogden has ex...






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After a merger, the difference between the value of the combined entity and the sum of the values of the separate entities is






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Which of the following is most likely to be a bad reason for a business combination involving publicly held companies?






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The synergy of a business combination can be determined by






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Which of the following is not a revenue enhancement advantage of acquiring another firm?






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A company transferred ownership of one of its divisions to the companys existing shareholders, and the shareholders received new stock representing s...






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Which of the following defense maneuvers involves the issuance of rights to buy shares at an extremely reduced price upon the occurrence of a takeover...






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A large U.S. company recently set up a new corporation based on the assets from one of its divisions. The stock of the new corporation was titled to t...






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A corporation issued a property dividend to its shareholders. The dividend was distributed in the form of 100% of the common stock of a subsidiary. Th...






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BigCo, a large conglomerate, has a division that has developed a new and highly promising technology. BigCo would like to retain control of this divis...






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When a company decides to divest a segment, the underlying reason for this decision could be any one of the following except






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Which of the following expenses related to the business acquisition should be included, in total, in the determination of net income of the combined...






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On August 31, year 1, Wood Corp. issued 100,000 shares of its $20 par value common stock for the net assets of Pine, Inc., in a business combination...






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Consolidated financial statements are typically prepared when one company has a controlling financial interest in another unless






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On January 1, year 1, Lake Corporation acquired 100% of the outstanding common stock of Shore Corporation for $800,000. On the date of acquisition, ...






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A business combination is accounted for appropriately as an acquisition. Which of the following should be deducted in determining the combined corpo...






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Which of the following situations would require the use of the acquisition method in a business combination?






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ASC Topic 805 (SFAS 141[R]) sets forth certain steps in accounting for an acquisition. Which of the following is not one of those steps?






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Kennedy Company is acquiring Ross Company in an acquisition. What date should be used as the acquisition date for the transaction?






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Lebow Corp. acquired control of Wilson Corp. by purchasing stock in steps. Which of the following regarding this type of acquisition is true?






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In accounting for a business combination, which of the following intangibles should not be recognized as an asset apart from goodwill?






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With respect to the allocation of the cost of a business acquisition, ASC Topic 805 (SFAS 141[R]) requires






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On November 30, year 1, Parlor, Inc. purchased for cash at $15 per share all 250,000 shares of the outstanding common stock of Shaw Co. At November ...






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On April 1, year 1, Parson Corp. purchased 80% of the outstanding stock of Sloan Corp. for $700,000 cash. Parson determined that the fair value of t...






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A subsidiary, acquired for cash in a business combination, owned inventories with a market value greater than the book value as of the date of combi...






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Company J acquired all of the outstanding common stock of Company K in exchange for cash. The acquisition price exceeds the fair value of net assets...






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In a business combination accounted for as an acquisition the appraised values of the identifiable assets acquired exceeded the acquisition price. H...






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Shep Co. has a receivable from its parent, Pep Co. Should this receivable be separately reported in Sheps balance sheet and in Peps consolidated b...






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On January 1, year 1, Palm, Inc. purchased 80% of the stock of Stone Corp. for $4,000,000 cash. Prior to the acquisition, Stone had 100,000 shares o...






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When a parent-subsidiary relationship exists, consolidated financial statements are prepared in recognition of the accounting concept of






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A subsidiary was acquired for cash in a business combination on January 1, year 1. The consideration given exceeded the fair value of identifiable n...






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Pride, Inc. owns 80% of Simba, Inc.s outstanding common stock. Simba, in turn, owns 10% of Prides outstanding common stock. What percentage of the...






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It is generally presumed that an entity is a variable interest entity subject to consolidation if its equity is






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Morton Inc., Gilman Co., and Willis Corporation established a special-purpose entity (SPE) (variable interest entity) to perform leasing activities ...






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The determination of whether an interest holder must consolidate a variable interest entity is made






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Matt Co. included a foreign subsidiary in its year 5 consolidated financial statements. The subsidiary was acquired in year 1 and was excluded from ...






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Clark Co. had the following transactions with affiliated parties during year 1: Sales of $60,000 to Dean, Inc., with $20,000 gross profit. Dean h...






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During year 1, Pard Corp. sold goods to its 80%-owned subsidiary, Seed Corp. At December 31, year 1, one-half of these goods were included in Seeds...






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On January 1, year 1, Poe Corp. sold a machine for $900,000 to Saxe Corp., its wholly owned subsidiary. Poe paid $1,100,000 for this machine, which ...






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Wagner, a holder of a $1,000,000 Palmer, Inc. bonds, collected the interest due on March 31, year 1, and then sold the bonds to Seal, Inc. for $975,...






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Sun, Inc. is a wholly owned subsidiary of Patton, Inc. On June 1, year 1, Patton declared and paid a $1 per share cash dividend to stockholders of r...






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Perez, Inc. owns 80% of Senior, Inc. During year 1, Perez sold goods with a 40% gross profit to Senior. Senior sold all of these goods in year 1. Fo...






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Winston Co. owns 80% of the outstanding common stock of Foster Co. On December 31, year 2, Winston sold equipment to Foster at a price in excess of ...






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Port, Inc. owns 100% of Salem, Inc. On January 1, year 6, Port sold Salem delivery equipment at a gain. Port had owned the equipment for two years a...






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P Co. purchased term bonds at a premium on the open market. These bonds represented 20% of the outstanding class of bonds issued at a discount by S ...






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Planet Company acquired a 70% interest in the Star Company in year 1. For the year ended December 31, year 2, Star reported net income of $80,000. D...






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On January 1, year 1, Ritt Corp. purchased 80% of Shaw Corp.s $10 par common stock for $975,000. On this date, the carrying amount of Shaws net as...






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On January 1, year 1, Ritt Corp. purchased 80% of Shaw Corp.s $10 par common stock for $975,000. On this date, the carrying amount of Shaws net as...






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In a business acquisition, consideration transferred includes which of the following? I. The fair value of assets transferred by the acquirer. II. ...






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On June 30, year 1, Wyler Corporation acquires Boston Corporation in a transaction properly accounted for as a business acquisition. At the time of ...






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When does the measurement period end for a business combination in which there was incomplete accounting information on the date of acquisition?






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Ross Corporation recorded a provisional amount for an identifiable asset at the date of its acquisition of Layton Inc. because the assets fair valu...






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Able Corp. acquires Bailey Company in a transaction that is properly accounted for as a business acquisition. The acquisition contract and Baileys ...






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On January 1, year 1, Post Inc. acquires Sam Company in a transaction properly accounted for as a business combination. Sams employees have share-b...






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When should an acquirer derecognize a contingent liability recognized as the result of an acquisition?






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On September 1, year 1, Phillips, Inc. issued common stock in exchange for 20% of Sago, Inc.s outstanding common stock. On July 1, year 2, Phillips...






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On September 1, year 1, Phillips, Inc. issued common stock in exchange for 20% of Sago, Inc.s outstanding common stock. On July 1, year 2, Phillips...






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Mr. & Mrs. Dart own a majority of the outstanding capital stock of Wall Corp., Black Co., and West, Inc. During year 1, Wall advanced cash to Black ...






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Combined statements may be used to present the results of operations of Companies under common management Commonly controlled companies






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Which of the following items should be treated in the same manner in both combined financial statements and consolidated statements? Income taxes ...






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Which of the following items should be treated in the same manner in both combined financial statements and consolidated statements? Different fisc...






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Under IFRS the asset goodwill may be recognized






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Under IFRS a parent may exclude a subsidiary from consolidation only if all of the following conditions exist, except






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A parent company sold a subsidiary to a group of managers of the subsidiary. The purchasing group invested $1 million and borrowed $49 million again...






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The acquisition of a retail shoe store by a shoe manufacturer is an example of






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A horizontal merger is a merger between






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A soft drink producer acquiring a bottle manufacturer is an example of a






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A shoe manufacturing firm acquiring a brokerage house is an example of a