课堂练习题(第十四章)

Exercise（Chapter 14）1.Is the amortization of goodwill permitted according to?U.S. GAPP International Accounting Standards (IAS)A. Yes YesB. Yes NoC. No YesD. No No2.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 methodC. 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 utilized3. Under which accounting method, purchase or pooling, is net profit margin and return on equity likely to be lower?Net profit margin Return on equityA. Purchase PurchaseB. Purchase PoolingC. Pooling PurchaseD. Pooling Pooling4. Which of the following statements about the pooling and purchase methods is most accurate?A. In the purchase method, the statements is structured so that all the liabilities and assets ofboth companies are combined together while the consolidated equity equals the parent’s equity.B. In the pooling method, the balance sheet and income statements are added together afteradjusting the target firm’s statements to reflect the fair values of the acquired firm.C. In the purchase method, prior period statements are restated to reflect the results of theacquired operating activities...D. In the purchase method, the balance sheet and income statements of the acquirer is restatedwhile financial statements of the target remains unchanged.5. On December 31, 2001 Company P issues 25 shares worth 750 to acquire Company T with the book value of equity at 500, the market value of which is 600. Before the acquisition, the book value of Company P’s equity is 1500. what values of equity and goodwill will be reported on the consolidated balance sheet?Equity GoodwillA. 2000 250B. 2250 150C. 2100 150D. 2000 1506. Same conditions as in question 5. what is the consolidated equity under the pooling method?A. 2000millionsB. 2250 millionsC. 2100 millionsD. 1350millions7. On December 31, 2001, Company P acquires Company T with a premium. Among the all assets and liabilities acquired, there is a bond with a book value of 20 but valued 28 at current market rate and an equipment with a book value of 250 and fair value of 350. Assuming that bond premium and the equipment are all amortized using the straight-line method in 4 years, what is the adjustments on the consolidated income statement under purchase method?A. no effectB. amortization of bond premium increases expense by 2 while the equipment amortization increases expense by 25C. amortization of bond premium decreases expense by 2 while the equipment amortization increases expense by 25D. amortization of bond premium decreases expense by 2 while the equipment amortization decreases expense by 258. 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.参考答案1. C2. BOperating results are restated under the pooling of interests methods but not the purchase method.3. AThe purchase method recognizes both assets fair value, which is always higher than their caring amount or book value and fair value of the target’s equity. As a result, fair-value- based amortization and depreciation is higher than historical-cost-based, which results in lower profit.4. AAnswer B is for purchase method. Answer C is for the pooling method. Answer D should be reversed, that is the acquirer remains unchanged while the target needs restatements.5. BGoodwill reported on the consolidated balance sheet is the excess of the purchase price over the fair value of the target’s net assets or equity and equals 150(=750-600). The equity of the target does not enter the consolidated balance sheet and the consolidated equity is the sum of the parent’s original equity plus the market value of newly issued shares, which is 2250(=1500+750).6. AUnder the pooling method, the consolidated equity is the sum of the book value of the target’ equity and the acquirer’ equity, which is 2000 millions(= 1500+500).7. CAmortization of bond premium decreases expense while equipment amortization based on fair value increases expense.8. CThe 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.。