Free test bank for advanced accounting 11th edition

Free Test Bank for Advanced Accounting 11th Editionby Fischer Multiple Choice Questions Company B acquired the net assets of Company S in exchange for cash.. The acquisition price excee

Free Test Bank for Advanced Accounting 11th Edition

by Fischer

Multiple Choice Questions

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 for long-term debt

of the acquired Company S? Plant and Equipment Long-Term Debt

1 Fair value S's carrying amount

2 Fair value Fair value

3 S's carrying amount Fair value

4 S's carrying amount S's carrying amount

Which of the following income factors should not be considered inexpected future income when estimating the value of goodwill?

1 sales for the period

2 income tax expense

3 extraordinary items

4 cost of goods sold

Some advantages of obtaining control by acquiring a controlling interest in stock include all but:

1 Negotiations are made directly with the acquiree’s management.

2 The legal liability of each corporation is limited to its own assets.

3 The cost may be lower since only a controlling interest in the assets, not the total assets, is acquired.

4 Tax advantages may result from preservation of the legal entities.

Cozzi Company is being purchased and has the following balancesheet as of the purchase date: Current assets $200,000 Liabilities

$ 90,000; Fixed assets 180,000 Equity 290,000; Total $380,000 Total $380,000; The price paid for Cozzi's net assets is $500,000.The fixed assets have a fair value of $220,000, and the liabilities have a fair value of $110,000; The amount of goodwill to be

recorded in the purchase is:

1 greenmail

2 statutory merger

3 poison pill

4 leveraged buyout

Orbit Inc purchased Planet Co on January 1, 20X3 At that time

an existing patent having a 5-year estimated life was assigned a provisional value of $10,000 and goodwill was assigned a value

of $100,000 By the end of fiscal year 20X3, better information was available that indicated the fair value of the patent was

$20,000 How should intangible assets be reported at the

beginning of fiscal year 20X4?

1 Goodwill $100,000 Patent $10,000

2 Goodwill $90,000 Patent $16,000

3 Goodwill $84,000 Patent $16,000

4 Goodwill $90,000 Patent $20,000

Orbit Inc purchased Planet Co on January 1, 20X3 At that time

an existing patent having a 5-year life was not recorded as a separately identified intangible asset At the end of fiscal year 20X4, it is determined the patent is valued at $20,000, and

goodwill has a book value of $100,000 How should intangible assets be reported at the beginning of fiscal year 20X5?

An economic advantage of a business combination includes

1 Utilizing duplicative assets.

2 Creating separate management teams.

3 Shared fixed costs.

4 Horizontally combining levels within the marketing chain.

In performing the impairment test for goodwill, the company had the following 20X6 and 20X7 information available 20X6 20X7 Fair value of the reporting unit $350,000 $400,000; Net book value (including $50,000 goodwill) $360,000 $380,000 Assume that the carrying value of the identifiable assets are a reasonable approximation of their fair values Based upon this information

what are the 20X6 and 20X7 adjustment to goodwill, if any? 20X6

Jones company acquired Jackson Company for $2,000,000 cash

At that time, the fair value of recorded assets and liabilities was

$1,500,000 and $250,000, respectively Jackson also had

unrecorded copyrights valued at $150,000 and its direct costs related to the acquisition were $50,000 What was the amount of the goodwill related to the acquisition?

Polk issues common stock to acquire all the assets of the Sam Company on January 1, 20X5 There is a contingent share

agreement, which states that if the income of the Sam Division exceeds a certain level during 20X5 and 20X6, additional shares will be issued on January 1, 20X7 The impact of issuing the additional shares is to

1 increase the price assigned to fixed assets.

2 have no effect on asset values, but to reassign the amounts assigned to equity accounts.

3 reduce retained earnings.

4 record additional goodwill.

A tax advantage of business combination can occur when the existing owner of a company sells out and receives:

1 cash to defer the taxable gain as a "tax-free reorganization."

2 stock to defer the taxable gain as a "tax-free reorganization."

3 cash to create a taxable gain.

4 stock to create a taxable gain.

ACME Co paid $110,000 for the net assets of Comb Corp At thetime 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 of gain or loss on disposal of business should Comb Corp

A contingent liability of an acquiree

1 refers to future consideration due that is part of the acquisition agreement.

2 is recorded when it is probable that future events will confirm its existence.

3 may be recorded beyond the measurement period under certain

circumstances.

4 should be recorded even if the amount cannot be reasonably estimated.

A large nation-wide bank’s acquisition of a major investment

advisory firm would be an example of a:

1 market extension merger.

1 The company should recognize a goodwill impairment loss of $20,000.

2 Goodwill is not impaired.

3 The company should recognize a goodwill impairment loss of $40,000.

4 The company should recognize a goodwill impairment loss of $60,000.

Jones company acquired Jackson Company for $2,000,000 cash

At that time, the fair value of recorded assets and liabilities was

$1,500,000 and $250,000, respectively If Jackson meets

specified sales targets, Jones is required to pay an additional

$200,000 in cash per the acquisition agreement Jones estimates the probability of this to be 50% The direct costs related to the

acquisition were $50,000 What was the amount of the goodwill related to the acquisition?

1 Direct and indirect acquisition costs.

2 Direct acquisition costs.

3 Direct acquisition costs and stock issue costs if stock is issued as

consideration.

4 Stock issue costs if stock is issued as consideration.

Acquisition costs such as the fees of accountants and lawyers that were necessary to negotiate and consummate the purchase are

1 recorded as a deferred asset and amortized over a period not to exceed 15 years

2 expensed if immaterial but capitalized and amortized if over 2% of the acquisition price

3 expensed in the period of the purchase

4 included as part of the price paid for the company purchased

Jones company acquired Jackson Company for $2,000,000 cash

At that time, the fair value of recorded assets and liabilities was

$1,500,000 and $250,000, respectively Jackson also had

in-process research and development projects valued at $150,000 and its pension plan’s projected benefit obligation exceeded the

plan assets by $50,000 What was the amount of the goodwill related to the acquisition?

2 $50,000

4 $650,000

Goodwill results when:

1 a controlling interest is acquired.

2 the price of the acquisition exceeds the sum of the fair values of the net identifiable assets acquired.

3 the fair value of net assets acquired exceeds the acquisition price.

4 the price of the acquisition exceeds the book value of an acquired

company.

ACME Co paid $110,000 for the net assets of Comb Corp At thetime 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 of goodwill or gain related to the acquisition?

1 amounts recorded for each major class of assets and liabilities.

2 information concerning contingent consideration including a description of the arrangements and the range of outcomes.

3 results of operations for the current period if both companies had remained separate.

4 A qualitative description of factors that make up the goodwill recognized.

A building materials company’s acquisition of a television station would be an example of a:

1 market extension merger.

1 owns all of the subsidiary's stock.

2 has acquired a majority of the subsidiary's common stock.

3 has paid cash for a majority of the subsidiary's stock.

4 has transferred common stock for a majority of the subsidiary's outstanding bonds and debentures.

ACME Co paid $110,000 for the net assets of Comb Corp At thetime 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?

2 $20,000

3 $80,000

4 $100,000

When determining the fair values of assets acquired in an

acquisition, the highest level of measurement per GAAP is

1 adjusted market value based on prices of similar assets.

2 unadjusted market values in an actively traded market.

3 based on discounted cash flows.

4 the entity’s best estimate of an exit or sale value.

Total Points: 0 correct out of 2

46 Test Bank for Fraud Examination 4th Edition

by Albrecht

Multiple Choice Questions

Which of the following is the most common type of occupational fraud?

1 Financial statement fraud

2 Mail fraud

3 Investment fraud

4 Employee embezzlement

Which of the following statements is true?

1 Fraud usually results from unintentional errors.

2 Fraud is more violent and traumatic than robbery.

3 Fraud always involves deception, confidence and trickery.

4 Losses from fraud are less than losses from robbery.

Which of the following is NOT one of the major types of fraud classification schemes?

1 an employee uses company assets to run his/her private business.

2 employees establish dummy companies and have their employers pay for goods that are not actually delivered.

3 an employee receives a kickback from a vendor.

4 an employee steals company cash, inventory, tools, or other assets.

Which of the following is NOT a primary reason for increased sizeand number of frauds?

1 The advent of computers

2 Complex accounting systems

3 Increased centralization of businesses

3 Both criminal cases and civil cases require a fraud perpetrator to go to jail.

4 Only one claim at a time in civil cases however in criminal cases, various claims may be joined in one action.

The elements of fraud include all of the following EXCEPT:

1 a material point is misrepresented.

2 the misrepresentation is intentional.

3 the misrepresentation is known to the victim.

4 the victim must sustain damages.

Government agencies such as the FBI, FDIC, IRS, or various health agencies publish fraud statistics from time to time Which

of the following observations concerning such statistics is true?

1 Generally, their statistics are complete.

2 Such information is rarely used.

3 They provide only those statistics related to their jurisdiction.

4 They usually provide a total picture in the areas for which they have

responsibility.

Fraud in companies such as WorldCom, Enron, Waste

Management, Sunbeam, Rite-Aid, Phar-Mor, Parmalat, and

ZZZZBest are examples of:

3 Preponderance of the evidence

4 Confession from the perpetrator

Generally applicants for CFE certification should have a minimum

of a bachelor’s degree or equivalent from an institution of higher learning Alternatively if applicants do not have a bachelor’s

degree, they may substitute months of fraud-related professional experience for each year of academic study

1 24

2 18

3 15

4 12

5 9

The burden of proof in a criminal case must:

1 be beyond a reasonable doubt.

2 be the preponderance of knowledge and power.

3 be preponderance of evidence.

4 lie with the defendant.

A company is a victim of a $414 million fraud At that time its profitmargin is 10% How much additional revenue should the

company generate in order to recover the effect on net income?

3 It always involves two or more employees.

4 It costs the employing organization assets, revenues, or reserves.

Scammers often use their victim’s ethnic identity to gain their trustand then steal their life savings This is an example of:

1 vendor fraud.

3 bribes may be deducted as legitimate business expenses.

4 failure to report income from fraud may be grounds for being charged with tax evasion.

Which of the following frauds is usually the most expensive?

1 Vendor fraud

2 Customer fraud

3 Occupational fraud

4 Financial statement fraud

Management fraud is often referred to as:

3 Greed

4 Compulsion

Which of the following is NOT a characteristic of management fraud?

1 Top management deception.

2 Manipulation of financial statements.

3 Kickbacks or bribes.

4 Pressure to earn year-end bonuses.

The word "con," which means to deceive, comes from the word:

1 Contract.

2 Conserve.

3 Confuse.

4 Confidence.

One way that criminal law differs from civil law is that it:

1 provides remedies for violations of private rights.

2 must yield a unanimous verdict.

3 can have a jury of fewer than 12 persons.

4 allows for various claims in one action.

Fraud has a direct dollar for dollar impact on a company's:

2 Net income.

3 Profit margin.

4 Stock price.

A company was the victim of several frauds that totaled

approximately $10 million in one year With a profit margin of 10 percent, and assuming that the company’s product sold for

$1,000 per unit, how many additional units must the company sell

to compensate for the fraud losses?

1 Working for the criminal investigation division of the IRS.

2 Serving as an expert witness.

3 Maintaining the security of public records.

4 Defending an organization being sued in a civil case.

Perpetrators of some fraud schemes often target conspiracy

theorists, promising access to the “secret” investments used by the Rothschilds or Saudi royalty and offer triple-digit returns Suchschemes are best described as:

1 Affinity frauds.

2 Ponzi schemes.

3 Franchise frauds.

4 Prime bank schemes.

The ACFE includes three major categories of occupational fraud EXCEPT:

1 asset misappropriations.

2 corruption.

$200 million During the year, the economy has:

Which of the following is a common example of vendor fraud?

1 Fraud perpetrated through collusion between buyers and vendors.

2 Fraud perpetrated by buyers acting alone.

3 The perpetrator physically removes the inventory from the business premises.

4 A fraud perpetrated through an unintentional mistake.

Civil claims begin when one party files a complaint against

another, usually for the purpose of:

1 penalty.

2 imprisonment.

3 proving the other party wrong.

4 financial restitution.

In fraud prosecution cases, matter consists of the

underlying data and all corroborating information available

1 evidential

2 remedial

3 supplement

4 elementary

How is the confidence element established in a Ponzi scheme?

1 By investing in prime bonds.

2 By issuing notarized certificates.

3 By paying returns to initial investors.

4 By returning money to all investors.

The Anti-Kickback Act of 1986 intends to prevent:

1 bribery, by punishing perpetrators with up to 15 years in prison.

2 any scheme to defraud federally insured financial institutions.

3 the giving or receiving of any thing of value by a subcontractor to a prime contractor.

4 individuals from using insider information to purchase or sell a company's securities.