1. When purchasing a company occurs, FASB recommends disclosing all of the following EXCEPT:
a. Goodwill related to each reporting segment.
b. Contingent payment agreements, options, or commitments included in the purchase agreement, including accounting methods to be followed.
c. Results of operations for the current period if both companies had remained separate.
d. Amount of in-process R&D purchased and written-off during the period.
2. Separately identified intangible assests are accounted for by amortizing:
a. Exclusively by using impairment testing.
b. Based upon a pattern that reflects the benefits conveyed by the asset.
c. Over the useful economic life less residual value using only the straight-line method.
d. Amortizing over a period not to exceed a maximum of 40 years.
3. Acme Co. is preparing a pro-forma set of financial statements oafter an acquisition of Coyote Co. The purchase price is less than the fair value of the assets acquired. However, the purchase price is greater than net book value of the acquired company.
a. Acme’s goodwill will decrease over time.
b. Acme’s amortization of intangible assets will increase over time
c. Depreciation expense will be greater than Coyote Company’s expense.
d. Coyote’s loss on the sale of the assets will create a net loss carryforward.
4. Balter Inc. acquired Jersey Company on January 1, 20x5. When the purchase occurred Jersey Company had the following information related to fixed assets:
Land $80,000
Building 200,000
Accumulated depreciation (100,000)
Equipment 100,000
Accumulated depreciation 50,000
The Building has a 10-years remaining useful life and the equipment has a 5-year remaining useful life. The fair values of the assets on that date were:
Land $100,000
Building 130,000
Equipment 75,000
What is the 20x5 depreciation expense Balter will record related to purchasing Jersey Company?
a. $8,000
b. $15,000
c. $28,000
d. $30,000

5. Couples Corporation purchases Players Corporation. The Fair value of the net assets of Players is $750,000 and the fair value or priority account (including a deduction for depreciation) is $600,000. Which of the following purchase prices would require using allocation procedures?
a. 500,000
b. 600,000
c. 700,000
d. 800,000
6. ACME Co. paid $110,000 for the net assets of Comb Corp. At the time of the acquisition the following information was available related to Comb’s balance sheet:
Book Value Fair Value
Current Assets $50,000 $50,000
Building 80,000 100,000
Equipment 40,000 50,000
Liabilities 30,000 30,000
What is the amount recorded by ACME for the Building?
a. 40,000
b. 60,000
c. 80,000
d. 100,000

7. Which of the following business combination expenses would NOT qualify as a direct acquisition expense for a purchase?
a. Fees for purchase audit
b. Outside legal fees
c. Stock issuance fees
d. All are direct acquisition expenses

8. Orbit Inc. purchased Planet Co. in 20x3. At that time an existing patent was not recorded as a separately identified intangible asset. At the end of fiscal year 20x5, the patent is valued at $15,000, and goodwill has a book value of $100,000. How should intangible assets be reported at the beginning of fiscal year 20x6?
I. Goodwill $100,000 Patent $0
II. Goodwill $115,000 Patent $0
III. Goodwill $100,000 Patent $15,000
IV. Goodwill $85,000 Patent $15,000
a. I
b. II
c. III
d. IV

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