1. Which of the following situations best describes a business combination to be accounted for as a statutory merger? *
Both companies in a combination continue to operate as separate, but related, legal entities
Only one of the combining companies survives, and the other loses its separate identity
Two companies combine to form a new third company, and the original two companies are dissolved
One company transfers assets to another company it has created
None of the above
2. Which of the following observations refers to the term differential? *
Excess of consideration exchanged over fair value of net identifiable assets.
Excess of fair value over book value of net identifiable assets.
Excess of consideration exchanged over book value of net identifiable assets.
Excess of fair value over historical cost of net identifiable assets.
None of the above
3. Rivendell Corporation and Foster Company merged as of January 1, 2019. To effect the merger, Rivendell paid finder's fees of $40,000, legal fees of $13,000, audit fees related to the stock issuance of $10,000, stock registration fees of $5,000, and stock listing application fees of $4,000. Based on the preceding information, under the acquisition method: *
$72,000 of stock issue costs are treated as goodwill
$19,000 of stock issue costs are expensed
$72,000 of stock issue costs are expensed
$19,000 of stock issue costs are treated as a reduction in the additional paid-in capital
None of the above
