Question

In: Finance

QUESTION 23 According to SFAS No. 141 on business combinations: a. Either method can be used,...

QUESTION 23

According to SFAS No. 141 on business combinations:

a.

Either method can be used, but goodwill is recorded as a nonrecurring item

b.

Goodwill is now outlawed

c.

The purchase method must be used now for all acquisitions

d.

The pooling of interests method must be used now for all acquisitions

1 points   

QUESTION 24

U.S. Steel recently acquired Marathon Oil. This is an example of a(n):

a.

Push-down merger

b.

Conglomerate merger

c.

Horizontal merger

d.

Vertical merger

1 points   

QUESTION 25

In the first quarter 2002, AOL-Time Warner wrote off $54 billion related to their recent merger. This was because:

a.

The merger was restated as a pooling of interests based on SFAS No. 141

b.

Impaired goodwill was written off based on SFAS No. 142

c.

Of normal amortization of goodwill for the year

d.

All goodwill was written off, because goodwill is no longer an asset according to SFAS No. 142

Solutions

Expert Solution

23. SFAS No. 141 on business combination now by opinion 16 states that business combination will now be accounted for by only one method- the purchase method. Option C is correct.

24. US steel acquiring Marathon oil is an example of a company acquiring business in diverse lines. Hence option B should hold true. It is an example of conglomerate merger as both business are completely in unrelated lines of business.

25. "New U.S. accounting rules require companies to quickly account for the "impairment" of assets acquired in mergers.

In a takeover, the price a company pays above the market value of the target's assets is carried as "goodwill" on the balance sheet. Under the new rules, that goodwill must be adjusted if the company believes the asset values are worth substantially less.

The adjustment is taken in the form of a one-time write-off that amounts to a balance-sheet change, but doesn't affect the company's basic operations."

Refrence: http://articles.latimes.com/2002/mar/26/business/fi-aol26

Therefore, option b should hold true.


Related Solutions

Question: In your informed opinion, should there be one method of accounting for all business combinations?...
Question: In your informed opinion, should there be one method of accounting for all business combinations? If so, which method is theoretically most appropriate? Or do economic circumstances exist that dictate more than one method? If so, which methods would be most appropriate (and under what circumstances)? Regardless of your opinion, be sure to adequately address the advantages and disadvantages of a single method vs. multiple methods. Note: In answering this question, keep in mind that a business combination could...
Question: In your informed opinion, should there be one method of accounting for all business combinations?...
Question: In your informed opinion, should there be one method of accounting for all business combinations? If so, which method is theoretically most appropriate? Or do economic circumstances exist that dictate more than one method? If so, which methods would be most appropriate (and under what circumstances)? Regardless of your opinion, be sure to adequately address the advantages and disadvantages of a single method vs. multiple methods. Note: In answering this question, keep in mind that a business combination could...
QUESTION 45 According to the text, the main methods used to resolve disputes in international business...
QUESTION 45 According to the text, the main methods used to resolve disputes in international business are arbitration, mediation and litigation True False QUESTION 50 Forum Non Conveniens (the country) and Venue (the state) both concern the location of a trial and both must be determined according to international law True False 1 points    QUESTION 51 Forum Non Conveniens refers to the discretionary power of a court to refuse to hear a case, even though jurisdiction and venue are...
Either the gross method or net method may be used to record sales with cash discounts,...
Either the gross method or net method may be used to record sales with cash discounts, but the net method requires a period-end adjusting entry to estimate expected future sales discounts taken. True or False Under FIFO, the most recent costs are assigned to ending inventory.   True or False Installment accounts receivable is another name for aging of accounts receivable. True or False An employee earned $62,500 during the year working for an employer. The FICA tax rate for Social...
Cranberries can be harvested using either a "wet" method or a "dry" method. Dry-harvested cranberries can...
Cranberries can be harvested using either a "wet" method or a "dry" method. Dry-harvested cranberries can be sold at a premium, while wet-harvested cranberries are used mainly for cranberry juice and bring in less revenue. Fresh Made Cranberry Cooperative must decide how much of its cranberry crop should be harvested wet and how much should be dry harvested. Fresh Made has 5,000 barrels of cranberries that can be harvested using either the wet or dry method. Dry cranberries are sold...
Which of the following combinations of gates can be used to make a clocked SR flip-flop?...
Which of the following combinations of gates can be used to make a clocked SR flip-flop? Assume NOT gates have one input each, all other gates have two inputs each. (One or more is true. Your answer is considered correct only if all and only the true options are selected.) A. 4 NAND gates,2 NOR gates B. 2 AND gates,1 OR gates,1 NAND gates,1 NOR gates C. 1 NAND gates,4 NOR gates D. 1 OR gates,4 NAND gates,7 NOR gates...
The pooling of interests method uses book value vs. fair value to record certain business combinations....
The pooling of interests method uses book value vs. fair value to record certain business combinations. Does this approach seem to be a fair accounting representation given the core accounting principles?
Question 23 of 25 Business interruption insurance is limited to... ? A. the reduction in turnover....
Question 23 of 25 Business interruption insurance is limited to... ? A. the reduction in turnover. B. the reduction in turnover + increased cost of working expenses. C. the reduction in turnover + fixed cost + increased cost of working expenses ? Question 24 of 25 An insurance market cycle where excess supply of risk capacity from the insurance sector leads to lower insurance pricing is termed a ... market ? A. hard B. soft C. growing Question 25 of...
Java question: Write a method printCombinationR(int[] array, int r) that generates and prints all possible combinations...
Java question: Write a method printCombinationR(int[] array, int r) that generates and prints all possible combinations of r elements in array of size n,. For example, if input array is {1, 2, 3, 4} and r is 2, then output should be {1, 2}, {1, 3}, {1, 4}, {2, 3}, {2, 4} and {3, 4}. I kind of know how to write this with DFS with four or five formal parameters, however I don't know how to solve it after...
Assume that there are 50 units of an exhaustible resource that can be used in either...
Assume that there are 50 units of an exhaustible resource that can be used in either period 1 or period 2. The demand curve is given by: P=100-Q. The interest rate is 50%. The industry is perfectly competitive. There are no costs of extraction. a) Solve for the efficient level of output and price in period 1 and period 2 b) Suppose that the government imposes a tax of $30 per unit. Solve for the level of output and price...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT