Which of the following is/are true about accounting for business combinations when stock is issued by the acquirer (P) to acquire the stock of the acquiree (S)? I. Costs related to arranging the business combination are added (capitalized) to the Investment in 'S' account. li. Stock issue costs are added (capitalized) to the Investment in 'S' account. III. Costs related to arranging the business combination are expensed. IV. Stock issue costs are treated as a reduction in the issue price (i.e., a reduction in APIC).

Which of the following is/are true about accounting for business combinations when stock is issued by the acquirer (P) to acquire the stock of the acquiree (S)? I. Costs related to arranging the business combination are added (capitalized) to the Investment in 'S' account. li. Stock issue costs are added (capitalized) to the Investment in 'S' account. III. Costs related to arranging the business combination are expensed. IV. Stock issue costs are treated as a reduction in the issue price (i.e., a reduction in APIC).

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter10: Stockholder's Equity

Section: Chapter Questions

Problem 22MCQ: Comprehensive income: includes transactions that affect stockholders equity with the exception of...

See similar textbooks

Similar questions

Which of the following costs of a business combination can be deducted from the value assigned to paid-in capital in excess of par? a. Direct and indirect acquisition costs. b. Direct acquisition costs. c. Direct acquisition costs and stock issue costs if stock is issued as consideration. d. Stock issue costs if stock is issued as consideration.
6. What is the effect on the financial statement elements if an SME receives goods or services in an equity-settled share-based payment transaction? a. Increase in assets and increase in income b. Increase in assets and increase in liability c. Increase in assets and increase in equity d. No effect on any of the financial statement elements
1. Shares issued in connection with business combination are recorded at: A discount A premium Fair value Par value 2. Indirect costs related to acquisition of another entity is treated as An expense An investment account Share capital Share premium 3. The cost of registering equity securities in a business combination should be capitalized debited to share premium expensed
When using the equity method of accounting, when is revenue recorded on the books of the investor company?a. When the fair value of the affiliate stock increases.b. When a dividend is received from the affiliate.c. When the affiliate company reports net income.d. Both b and c above.
.What account should be debited when stock issuance costs are associated with the initial issuance of stock at incorporation? Group of answer choices a. Organization Expense b. Additional Paid-in Capital c. Organization Costs d. Common stock
When an investor uses the cost method to account for investments in subsidiary, cash dividends received by the investor from the investee should normally be recorded as: A. Ignored. B. Dividend income. C. An addition to the investor’s share of the investee’s profit. D. A deduction from the investment account E. A deduction from the investor’s share of the investee’s profit.
For fi nancial assets classifi ed as available for sale, how are unrealized gains and losses refl ected in shareholders’ equity? B . Th ey fl ow through retained earnings.
Which of the following is the correct Basic Accounting Equation Oa ASSET + LIABILITIES= STOCK HOLDER'S EQUITY O b. ASSET= LIABILITIES + STOCK HOLDER'S EQUITY C LIABILITIES =ASSETS + STOCK HOLDER'S EQUITY Od ASSETS =LIABILITIES
The costs of legal, promotional, and accounting services necessary to effect the sale of shares are referred to as share issue costs. How are these costs recorded? Compare this approach to the way debt issue costs are recorded.
Which is a correct statement below? A. Equity is the residual interest in the liabilities of the entity after deducting all of its assets.B. Subscriptions receivable shall preferably be reflected as a deduction from the related subscribed share capital.C. Share premium is also known as capital stock.D. A deficit is a credit balance in retained earnings.
The cost method of accounting for stock Group of answer choices recognizes dividends as income requires the investment to be decreased by the reported net income of the investee is only appropriate as part of a consolidation requires the investment to be increased by the reported net income of the investee
Comprehensive income: includes transactions that affect stockholders equity with the exception of those transactions that involve owners. is considered an appropriation of retained earnings. includes all transactions that are under managements control. is the result of all events and transactions reported on the income statement.