Q1. Company A is about to merge with Company B. Relative to the pre-merger financial statements of Company A what would be the most likely impact on the following items if the pooling of interests method was used to record the merger of Company A and B? Total Assets Revenues Profit Margin
A) Increases Increase Increases B) Unchanged Increase Increases C) Increases Increases Indeterminate
Q2. Which of the following statements regarding the statement of cash flow impacts of an acquisition is least accurate? A) When the acquisition is accounted for using the purchase method, the cost of the acquisition is mostly an investing cash outflow offset by a financing inflow. B) When the acquisition is financed with debt, the only impact is a cash flow financing inflow. C) When using the pooling method, no cash flow arises as a result of the transaction itself.
Q3. Relative to the pre-acquisition financial statements, what would be the most likely impact on the following items of financing the acquisition with new debt? Leverage
Total Assets
Current ratio
A) Large increase Increase Insufficient information B) Small increase Increase Increase C) Large increase Unchanged Falls
Q4. Assume Company P acquires Company T for $100 million. The fair market value of Company T’s net tangible assets is $75 million. The only differences in fair market value of the assets and liabilities is in property, plant, and equipment (PP&E), which has a book value of $20 million and a fair market value of $25 million. No other intangible assets are identified. The PP&E has a remaining useful life of ten years. Company P has a company policy of amortizing all intangible assets over 20 years. The acquisition takes place on October 1, 2006, and is accounted for using the purchase method according to U.S. GAAP. Company P has a 31st December fiscal year end. The combined amount of incremental amortization of intangible assets and depreciation of PP&E attributable to the write-up of assets under the purchase method that should be taken by Company P in 2006 is closest to: A) $125,000. B) $500,000. C) $375,000.
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发表于 2009-1-7 15:57
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