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Defensive maneuvers can be internal to the Control over acquiree assets is attained in a
potential acquiree (management or business combination. Indirect control is
stockholders) or may involve activities attained in which type of exchange? Stock
external to the acquiree. Which of the for stock
following is not an internal defensive Which of the following forms of business
maneuver? Pacman defense combination is not subject to laws specific
to business combinations? Asset for asset
Able Ltd. Offers to buy shares from the acquisition
existing shareholders of Wei Co. at a premium
Which of the following is not a true
price the current management and board of
statement with regard to a statutory
directors of Wei have let the Wei
merger? The name of the new entity is not
shareholders know that they do not approve
the same as either of the entities
of this. This is an example of a hostile
takeover. Which of the following is not true with
regard to the statutory consolidation form
Control over an acquiree can be attained
of business combination The net assets of
through which Either acquisition of the
the combining entities must be acquired
acquiree assets or stock
with assets of the new corporation
In an acquisition of assets the acquirer must
Following the completion of a business
give up Cash/Other assets/Liabilities
combination in the form of a statutory
In an acquisition where there is an exchange consolidation, what is the balance in the
of assets for assets how does the ownership new corporation's Retained Earnings
structure of the acquiree change? net assets account? The acquirer Retained Earnings
change? There is no change in the acquiree account balance
ownership structure
Which of the following is not true with
In an acquisition where there is an exchange regard to a business combination
of assets for assets, how does the ownership accomplished in the form of a stock
structure the acquirer change? There is no acquisition? a. Two companies remain in
change in the acquirer ownership structure existence after the combination b. Aparent-
In an acquisition where there is an exchange subsidiary relationship is said to exist c.
of stock (acquirer) for assets (acquiree), how Consolidated financial statements are
does the value of the acquiree net assets normally required All of the above statements
change? The net assets may increase, are true
decrease or remain the same In an Which of the following contingencies may
acquisition where there is an exchange of change the cost of an acquisition? Future
stock (acquirer) for assets (acquiree), how acquiree earnings
To qualify as a reorganization (for tax for long-term debt of the acquired
purposes), a business combination must meet Company S Both, Fair Value
which of the following criteria? a. Acquiree
Goodwill represents the excess cost of an
stockholders continue an indirect ownership
acquisition over the sum of the fair values
interest in the acquiree b. The acquirer must assigned to tangible and identifiable
continue the acquiree business or employ a intangible assets acquired less liabilities
significant portion of the acquiree net assets assumed.
in an ongoing business c. The combination
must be for a valid business purpose: All of When an acquisition of another company
the above criteria are required for a occurs, IASB recommends disclosing all of
combination to qualify as a reorganization the following EXCEPT: results of operations
for the current period if both companies
Which of the following is not a business had remained separate.
combination Joint venture
Separately identified intangible assets are
Under PFRS 3, Business Combinations,
accounted for by amortizing: based upon a
which method must be used to account for
pattern that reflects the benefits conveyed
business
by the asset
combinations Acquisition method
Acquisition costs such as the fees of
After an exchange of shares in a business accountants and lawyers that were
combination, each group of shareholders necessary to negotiate and consummate the
held 50% of the voting rights. Which of the purchase are expensed in the period of the
following factors should be considered in purchase.
determining the acquirer? Composition of the
Which of the following income factors
board of directors
should not be factored into an estimation
An acquired entity has a long-term of goodwill? Extraordinary items
operating lease for an office building used
for central management. The terms of the
lease are very favorable relative to current
market rates. However, the lease prohibits
subleasing or any other transfer of rights.
In the financial statements, the acquiring
firm should report the value assigned to
the lease as An intangible asset under the
contractual–legal criterion
Under PFRS 3, when is a gain recognized in
consolidating financial information? When any
bargain purchase is created
Company B acquired the net assets of
Company S in exchange for cash. The
acquisition price exceeds the fair value of
the net assets acquired. How should
Company B determine the amounts to be
reported for the plant and equipment, and