Advanced Accounting Assignment

timer Asked: Apr 12th, 2015

Question description

1.  Bullen Inc. acquired 100% of the voting common stock of Vicker Inc. on January 1, 20X1. The book value and fair value of Vicker's accounts on that date (prior to creating the combination) follow, along with the book value of Bullen's accounts: Bullen Book Value Vicker Book Value Vicker Fair Value Retained Earnings 1/1/X1 $250,000 $240,000 Cash and Receivables 170,000 70,000 $70,000 Inventory 230,000 170,000 210,000 Land 280,000 220,000 240,000 Buildings (net) 480,000 240,000 270,000 Equipment (net 120,000 90,000 90,000 Liabilities 650,000 430,000 420,000 Common stock 360,000 80,000 Aditional paid-in capital 20,000 40,000 Assume that Bullen paid a total of $480,000 in cash for all of the shares of Vicker. In addition, Bullen paid $35,000 for secretarial and management time allocated to the acquisition transaction. What will be the balance in consolidated goodwill? A. $0. B. $20,000. C. $35,000. D. $55,000. E. $65,000.

2.  How are stock issuance costs and direct combination costs treated in a business combination which is accounted for as an acquisition when the subsidiary will retain its incorporation?

a.  Stock issuance costs are a part of the acquisition costs, and the direct combination costs are expensed

b.  Direct combination costs are a part of the acquisition costs, and the stock issuance costs are a reduction to additional paid-in capital.

c.  Direct combination costs are expended and stock issuance costs are a reduction to additional paid-in capital

d.  Both are treated as part of the acquisition consideration transferred

e.  Both treated as a reduction to additional paid in capital

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