Q18. What are the principal accounting methods that have been used for mergers and acquisitions?

A)   Purchase, equity, and consolidation.

B)   Purchase and pooling of interests.

C)   Cost, equity, and consolidation.

Q19. The factors that determine the required accounting methods for intercorporate investments under both U.S. GAAP and IAS

     rules are:

A)   degree of influence and whether the acquiring firm has the intent and ability to hold the securities to maturity.

B)   percentage of ownership and/or degree of influence.

C)   purchase cost compared with book value of the interest purchased.

Q20. Which of the following statements concerning the selection of accounting methods is most accurate?

A)   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.

B)   A passive intercorporate investment with no significant influence that results in ownership of less than 20% must be accounted for under the equity method.

C)   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.

Q21. Concerning the accounting for mergers and acquisitions, which of the following statements is most accurate? The pooling

     method is no longer allowed under:

A)   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.

B)   either U.S. GAAP or IAS rules; return on assets (ROA) and return on equity (ROE) measures are generally less favorable under the purchase method relative to the pooling method.

C)   either U.S. GAAP or IAS rules; ROA and ROE measures are generally more favorable under the purchase method relative to the pooling method.

答案和详解如下：

Q18. What are the principal accounting methods that have been used for mergers and acquisitions?

A)   Purchase, equity, and consolidation.

B)   Purchase and pooling of interests.

C)   Cost, equity, and consolidation.

Correct answer is B)

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.

Q19. The factors that determine the required accounting methods for intercorporate investments under both U.S. GAAP and IAS

     rules are:

A)   degree of influence and whether the acquiring firm has the intent and ability to hold the securities to maturity.

B)   percentage of ownership and/or degree of influence.

C)   purchase cost compared with book value of the interest purchased.

Correct answer is 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.

Q20. Which of the following statements concerning the selection of accounting methods is most accurate?

A)   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.

B)   A passive intercorporate investment with no significant influence that results in ownership of less than 20% must be accounted for under the equity method.

C)   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.

Correct answer is A)

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.

Q21. Concerning the accounting for mergers and acquisitions, which of the following statements is most accurate? The pooling

     method is no longer allowed under:

A)   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.

B)   either U.S. GAAP or IAS rules; return on assets (ROA) and return on equity (ROE) measures are generally less favorable under the purchase method relative to the pooling method.

C)   either U.S. GAAP or IAS rules; ROA and ROE measures are generally more favorable under the purchase method relative to the pooling method.

Correct answer is 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.

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