1.Which of the following statements regarding the differences between the purchase method of accounting for mergers and acquisitions and the pooling of interests method is least accurate? A) The purchase method recognizes one firm as being acquired by another, while the pooling of interests method views both participants as equals. B) The operating results of both companies prior to the acquisition are restated under the purchase method, but are not restated under the pooling of interests method. C) The purchase method recognizes any excess purchase price on the balance sheet as an intangible asset, while the pooling of interest method does not acknowledge market value and combines the two companies using accounting book values. D) The underlying cash flows and economics of a merger or acquisition are same whether the purchase or the pooling of interests method is utilized. The correct answer was B) Operating results are restated under the pooling of interests methods but not the purchase method. 2.Which of the following statements regarding the pooling of interests method of accounting for a merger or acquisition is least accurate? A) The pooling of interests method combines two companies using fair market values at the time of the transaction. B) Operating results for prior periods are restated as though the two firms always operated as a single entity. C) Ownership interests continue and former accounting bases are maintained. D) U.S. GAAP standards changed in 2001, no longer permitting the use of the pooling of interests method. The correct answer was A) Under the pooling of interests method, accounting book value, not fair market value, is used in combining the two companies. 3.Under the purchase method of accounting for a merger or acquisition, if the fair market value of the tangible assets is less than the purchase price, the excess purchase price is: A) attributed to goodwill, which is depreciated over the estimated remaining life. B) proportionately allocated across all tangible assets as an adjustment to their cost basis. C) attributed to separately identifiable tangible and intangible assets, which the tangible assets are depreciated over their estimated remaining life. D) proportionately allocated across all tangible assets, which is depreciated over their estimated remaining life. The correct answer was C) The excess purchase price will be allocated to separately identifiable tangible and intangible assets. The tangible assets are depreciated accordingly. Any excess remaining value is attributed to goodwill which may also be created but is not amortized under either U.S. or international standards. 4.Concerning the accounting for mergers and acquisitions, which of the following statements is most accurate? The pooling method is no longer allowed under: A) either U.S. GAAP or IAS rules; ROA and ROE measures are generally more favorable under the purchase method relative to the pooling method. B) either U.S. GAAP or IAS rules; ROA and ROE measures are generally less favorable under the purchase method relative to the pooling method. C) U.S. GAAP rules, but is still allowed under IAS rules; ROA and ROE measures are generally less favorable under the purchase method relative to the pooling method. D) U.S. GAAP rules, but is still allowed under IAS rules; ROA and ROE measures are generally more favorable under the purchase method relative to the pooling method. The correct answer was B) The pooling method is no longer allowed under either U.S. GAAP or IAS rules; ROA and ROE measures are generally less favorable under the purchase method relative to the pooling method. The relative favorability of ROA, ROE, and profitability measures assumes a general case wherein the fair value of the assets acquired exceeds their book value, and that both companies are profitable. 5.Which of the following statements concerning the selection of accounting methods is most accurate? A) An acquisition that is accounted for a cost transaction will ordinarily result in lower profit margins for the combined firm than would have been the case under pooling. B) An intercorporate investment that results in ownership of more than 50 percent must be accounted for under the equity method. C) An acquisition that is accounted for as a purchase will ordinarily result in lower profit margins for the combined firm than would have been the case under pooling. D) A passive intercorporate investment with no significant influence that results in ownership of less than 20 percent must be accounted for under the equity method. The correct answer was C) Relative to pooling of interests, purchase accounting will ordinarily result in lower profit margins, ROA, and ROE for the combined firm. This assumes that the purchase cost was greater than the book value of the acquired firm, and that both companies are profitable. 6.The factors that determine the required accounting methods for intercorporate investments under both U.S. GAAP and IAS rules are: A) purchase cost compared with book value of the interest purchased. B) percentage of ownership and/or degree of influence. C) percentage of ownership and intent for the securities purchased. D) degree of influence and whether the acquiring firm has the intent and ability to hold the securities to maturity. The correct answer was B) The factors that determine the required accounting method for intercorporate investments are percentage of ownership and/or degree of influence over the investee firm. The principal accounting methods are cost, equity, and consolidation under both U.S. GAAP and IAS rules. 7.What are the principal accounting methods that have been used for mergers and acquisitions? A) Purchase and pooling of interests. B) Cost, equity, and consolidation. C) Cost and pooling of interests. D) Purchase, equity, and consolidation. The correct answer was A) The principal accounting methods that have been used for mergers and acquisitions are purchase and pooling of interests. The pooling of interests method is no longer allowed under either U.S. GAAP or IAS rules, but transactions that were conducted prior to the change have not been restated. Therefore, pooling transactions are still in evidence in the financial statements of many firms.
[此贴子已经被作者于2008-4-12 18:29:06编辑过] | 
发表于 2008-4-12 18:26
|