Stock option backdating restatements

stock option backdating restatements-54
identify a normal rate of return for similar firms. A potential offering price for a company is computed by adding the estimated goodwill to the a.

identify a normal rate of return for similar firms. A potential offering price for a company is computed by adding the estimated goodwill to the a. book value of the company’s net identifiable assets.

minecraft autoupdating client cracked - Stock option backdating restatements

addition to combined income to arrive at consolidated net income. expense deducted from combined income to arrive at consolidated net income. deduction from current assets in the balance sheet. When following the economic unit concept in the preparation of consolidated financial statements, the basis for valuing the noncontrolling interest in net assets is the a. When a business acquisition is financed using debt, the interest payments are tax deductible and create a. The defense tactic that involves purchasing shares held by the would-be acquiring company at a price substantially in excess of their fair value is called a. Simon Company’s stockholders’ equity on that date consisted of: Common stock 0,000 Other contributed capital 400,000 Retained earnings 330,000 Required: Compute the total noncontrolling interest to be reported in the consolidated balance sheet assuming the: (1) parent company concept. 1-4 The following balances were taken from the records of S Company: Common stock (1/1/11 and 12/31/11) 0,000 Retained earnings 1/1/11 0,000 Net income for 2011 180,000 Dividends declared in 2011 (40,000) Retained earnings, 12/31/11 300,000 Total stockholders’ equity on 12/31/11

addition to combined income to arrive at consolidated net income. expense deducted from combined income to arrive at consolidated net income. deduction from current assets in the balance sheet. When following the economic unit concept in the preparation of consolidated financial statements, the basis for valuing the noncontrolling interest in net assets is the a.

When a business acquisition is financed using debt, the interest payments are tax deductible and create a.

The defense tactic that involves purchasing shares held by the would-be acquiring company at a price substantially in excess of their fair value is called a.

Simon Company’s stockholders’ equity on that date consisted of: Common stock $800,000 Other contributed capital 400,000 Retained earnings 330,000 Required: Compute the total noncontrolling interest to be reported in the consolidated balance sheet assuming the: (1) parent company concept. 1-4 The following balances were taken from the records of S Company: Common stock (1/1/11 and 12/31/11) $720,000 Retained earnings 1/1/11 $160,000 Net income for 2011 180,000 Dividends declared in 2011 (40,000) Retained earnings, 12/31/11 300,000 Total stockholders’ equity on 12/31/11 $1,020,000 P Company purchased 75% of S Company’s common stock on January 1, 2011 for $900,000.

The view that the noncontrolling interest in income reflects the noncontrolling stockholders’ allocated share of consolidated income is consistent with the a. 1-3 Pope Company acquired an 80% interest in the common stock of Simon Company for $1,540,000 on July 1, 2011.

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addition to combined income to arrive at consolidated net income. expense deducted from combined income to arrive at consolidated net income. deduction from current assets in the balance sheet. When following the economic unit concept in the preparation of consolidated financial statements, the basis for valuing the noncontrolling interest in net assets is the a. When a business acquisition is financed using debt, the interest payments are tax deductible and create a. The defense tactic that involves purchasing shares held by the would-be acquiring company at a price substantially in excess of their fair value is called a. Simon Company’s stockholders’ equity on that date consisted of: Common stock $800,000 Other contributed capital 400,000 Retained earnings 330,000 Required: Compute the total noncontrolling interest to be reported in the consolidated balance sheet assuming the: (1) parent company concept. 1-4 The following balances were taken from the records of S Company: Common stock (1/1/11 and 12/31/11) $720,000 Retained earnings 1/1/11 $160,000 Net income for 2011 180,000 Dividends declared in 2011 (40,000) Retained earnings, 12/31/11 300,000 Total stockholders’ equity on 12/31/11 $1,020,000 P Company purchased 75% of S Company’s common stock on January 1, 2011 for $900,000. The view that the noncontrolling interest in income reflects the noncontrolling stockholders’ allocated share of consolidated income is consistent with the a. 1-3 Pope Company acquired an 80% interest in the common stock of Simon Company for $1,540,000 on July 1, 2011. (3) Excess earnings are expected to last indefinitely, but Pierce demands a higher rate of return of 20% because of the risk involved. Determine the amount of goodwill to be recorded on the books if Pierce pays $1,300,000 cash and assumes Hager’s liabilities. Briefly explain the differences between the concepts. Distinguish between internal and external expansion of a firm. List four advantages of a business combination as compared to internal expansion. What is the primary legal constraint on business combinations? (2) Pierce is willing to pay for excess earnings for an expected life of 4 years, which should be capitalized at the industry normal rate of return. Compute noncontrolling interest in consolidated income for 2011. Compute noncontrolling interest in net assets on December 31, 2011. Estimating the value of goodwill to be included in an offering price can be done under several alternative methods. Identify the steps used in this approach to estimate goodwill. The two alternative views of consolidated financial statements are the parent company concept and the economic entity concept. Business combinations may be classified into three types based upon the relationships among the combining entities (e.g., combinations with suppliers, customers, competitors, etc.). Based on these assumptions, calculate a reasonable offering price for Barkley, Inc. Book Values Market Values Current Assets $ 450,000 $ 450,000 Property, Plant & Equipment (net) 1,140,000 1,300,000 Total Assets $1,590,000 $1,750,000 Total Liabilities $700,000 $700,000 Common Stock, $10 par value 280,000 Retained Earnings 610,000 Total Liabilities and Equities $1,590,000 Pierce Company expects that Hager will earn approximately $290,000 per year in net income over the next five years. When stock is exchanged for stock in a business combination, how is the stock exchange ratio generally expressed? Define some defensive measures used by target firms to avoid a takeover. It was widely rumored that Tyco executives aggressively managed the performance of the companies that they acquired by suggesting that before the acquisition, they should accelerate the payment of liabilities, delay recording the collections of revenue, and increase the estimated amounts in reserve accounts. What effect does each of the three items have on the reported net income of the acquired company before the acquisition and on the reported net income of the combined company in the first year of the acquisition and future years? What effect does each of the three items have on the cash from operations of the acquired company before the acquisition and on the cash from operations of the combined company in the first year of the acquisition and future years? If you are the manager of the acquired company, how do you respond to these suggestions? Assume that all three items can be managed within the rules provided by GAAP but would be regarded by many as pushing the limits of GAAP. Describe your position as: (A) an accountant for the target company and (B) as an accountant for Tyco. Indicate how much of the price consists of goodwill. Assume that Perkins feels that it must earn a 15% return on its investment, but that average excess earnings are to be capitalized for five years only. Explain the potential advantages of a stock acquisition over an asset acquisition. Explain the difference between an accretive and a dilutive acquisition. Describe the difference between the economic entity concept and the parent company concept approaches to the reporting of subsidiary assets and liabilities in the consolidated financial statements on the date of the acquisition. Contrast the consolidated effects of the parent company concept and the economic entity con-cept in terms of: (a)The treatment of noncontrolling interests. (c)The valuation of subsidiary net assets in the consolidated financial statements. What practical or conceptual problems do you see in this approach to valuation? Is the economic entity or the parent concept more consistent with the principles addressed in the FASB’s conceptual framework? Business Ethics Questions from the Textbook From 1999 to 2001, Tyco’s revenue grew approximately24% and it acquired over 700 companies. either the acquisition or the pooling of interests methods. neither the acquisition nor the pooling of interests methods. Under the acquisition method, if the fair values of identifiable net assets exceed the value implied by the purchase Pratt of the acquired company, the excess should be a. The objectives of FASB 141R (Business Combinations) and FASB 160 (Non Controlling Interests in Consolidated Financial Statements) are as follows: a. to facilitate the convergence project of the FASB and the International Accounting Standards Board.

,020,000 P Company purchased 75% of S Company’s common stock on January 1, 2011 for 0,000. The view that the noncontrolling interest in income reflects the noncontrolling stockholders’ allocated share of consolidated income is consistent with the a. 1-3 Pope Company acquired an 80% interest in the common stock of Simon Company for

addition to combined income to arrive at consolidated net income. expense deducted from combined income to arrive at consolidated net income. deduction from current assets in the balance sheet. When following the economic unit concept in the preparation of consolidated financial statements, the basis for valuing the noncontrolling interest in net assets is the a.

When a business acquisition is financed using debt, the interest payments are tax deductible and create a.

The defense tactic that involves purchasing shares held by the would-be acquiring company at a price substantially in excess of their fair value is called a.

Simon Company’s stockholders’ equity on that date consisted of: Common stock $800,000 Other contributed capital 400,000 Retained earnings 330,000 Required: Compute the total noncontrolling interest to be reported in the consolidated balance sheet assuming the: (1) parent company concept. 1-4 The following balances were taken from the records of S Company: Common stock (1/1/11 and 12/31/11) $720,000 Retained earnings 1/1/11 $160,000 Net income for 2011 180,000 Dividends declared in 2011 (40,000) Retained earnings, 12/31/11 300,000 Total stockholders’ equity on 12/31/11 $1,020,000 P Company purchased 75% of S Company’s common stock on January 1, 2011 for $900,000.

The view that the noncontrolling interest in income reflects the noncontrolling stockholders’ allocated share of consolidated income is consistent with the a. 1-3 Pope Company acquired an 80% interest in the common stock of Simon Company for $1,540,000 on July 1, 2011.

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addition to combined income to arrive at consolidated net income. expense deducted from combined income to arrive at consolidated net income. deduction from current assets in the balance sheet. When following the economic unit concept in the preparation of consolidated financial statements, the basis for valuing the noncontrolling interest in net assets is the a. When a business acquisition is financed using debt, the interest payments are tax deductible and create a. The defense tactic that involves purchasing shares held by the would-be acquiring company at a price substantially in excess of their fair value is called a. Simon Company’s stockholders’ equity on that date consisted of: Common stock $800,000 Other contributed capital 400,000 Retained earnings 330,000 Required: Compute the total noncontrolling interest to be reported in the consolidated balance sheet assuming the: (1) parent company concept. 1-4 The following balances were taken from the records of S Company: Common stock (1/1/11 and 12/31/11) $720,000 Retained earnings 1/1/11 $160,000 Net income for 2011 180,000 Dividends declared in 2011 (40,000) Retained earnings, 12/31/11 300,000 Total stockholders’ equity on 12/31/11 $1,020,000 P Company purchased 75% of S Company’s common stock on January 1, 2011 for $900,000. The view that the noncontrolling interest in income reflects the noncontrolling stockholders’ allocated share of consolidated income is consistent with the a. 1-3 Pope Company acquired an 80% interest in the common stock of Simon Company for $1,540,000 on July 1, 2011. (3) Excess earnings are expected to last indefinitely, but Pierce demands a higher rate of return of 20% because of the risk involved. Determine the amount of goodwill to be recorded on the books if Pierce pays $1,300,000 cash and assumes Hager’s liabilities. Briefly explain the differences between the concepts. Distinguish between internal and external expansion of a firm. List four advantages of a business combination as compared to internal expansion. What is the primary legal constraint on business combinations? (2) Pierce is willing to pay for excess earnings for an expected life of 4 years, which should be capitalized at the industry normal rate of return. Compute noncontrolling interest in consolidated income for 2011. Compute noncontrolling interest in net assets on December 31, 2011. Estimating the value of goodwill to be included in an offering price can be done under several alternative methods. Identify the steps used in this approach to estimate goodwill. The two alternative views of consolidated financial statements are the parent company concept and the economic entity concept. Business combinations may be classified into three types based upon the relationships among the combining entities (e.g., combinations with suppliers, customers, competitors, etc.). Based on these assumptions, calculate a reasonable offering price for Barkley, Inc. Book Values Market Values Current Assets $ 450,000 $ 450,000 Property, Plant & Equipment (net) 1,140,000 1,300,000 Total Assets $1,590,000 $1,750,000 Total Liabilities $700,000 $700,000 Common Stock, $10 par value 280,000 Retained Earnings 610,000 Total Liabilities and Equities $1,590,000 Pierce Company expects that Hager will earn approximately $290,000 per year in net income over the next five years. When stock is exchanged for stock in a business combination, how is the stock exchange ratio generally expressed? Define some defensive measures used by target firms to avoid a takeover. It was widely rumored that Tyco executives aggressively managed the performance of the companies that they acquired by suggesting that before the acquisition, they should accelerate the payment of liabilities, delay recording the collections of revenue, and increase the estimated amounts in reserve accounts. What effect does each of the three items have on the reported net income of the acquired company before the acquisition and on the reported net income of the combined company in the first year of the acquisition and future years? What effect does each of the three items have on the cash from operations of the acquired company before the acquisition and on the cash from operations of the combined company in the first year of the acquisition and future years? If you are the manager of the acquired company, how do you respond to these suggestions? Assume that all three items can be managed within the rules provided by GAAP but would be regarded by many as pushing the limits of GAAP. Describe your position as: (A) an accountant for the target company and (B) as an accountant for Tyco. Indicate how much of the price consists of goodwill. Assume that Perkins feels that it must earn a 15% return on its investment, but that average excess earnings are to be capitalized for five years only. Explain the potential advantages of a stock acquisition over an asset acquisition. Explain the difference between an accretive and a dilutive acquisition. Describe the difference between the economic entity concept and the parent company concept approaches to the reporting of subsidiary assets and liabilities in the consolidated financial statements on the date of the acquisition. Contrast the consolidated effects of the parent company concept and the economic entity con-cept in terms of: (a)The treatment of noncontrolling interests. (c)The valuation of subsidiary net assets in the consolidated financial statements. What practical or conceptual problems do you see in this approach to valuation? Is the economic entity or the parent concept more consistent with the principles addressed in the FASB’s conceptual framework? Business Ethics Questions from the Textbook From 1999 to 2001, Tyco’s revenue grew approximately24% and it acquired over 700 companies. either the acquisition or the pooling of interests methods. neither the acquisition nor the pooling of interests methods. Under the acquisition method, if the fair values of identifiable net assets exceed the value implied by the purchase Pratt of the acquired company, the excess should be a. The objectives of FASB 141R (Business Combinations) and FASB 160 (Non Controlling Interests in Consolidated Financial Statements) are as follows: a. to facilitate the convergence project of the FASB and the International Accounting Standards Board.

,540,000 on July 1, 2011. (3) Excess earnings are expected to last indefinitely, but Pierce demands a higher rate of return of 20% because of the risk involved. Determine the amount of goodwill to be recorded on the books if Pierce pays

addition to combined income to arrive at consolidated net income. expense deducted from combined income to arrive at consolidated net income. deduction from current assets in the balance sheet. When following the economic unit concept in the preparation of consolidated financial statements, the basis for valuing the noncontrolling interest in net assets is the a.

When a business acquisition is financed using debt, the interest payments are tax deductible and create a.

The defense tactic that involves purchasing shares held by the would-be acquiring company at a price substantially in excess of their fair value is called a.

Simon Company’s stockholders’ equity on that date consisted of: Common stock $800,000 Other contributed capital 400,000 Retained earnings 330,000 Required: Compute the total noncontrolling interest to be reported in the consolidated balance sheet assuming the: (1) parent company concept. 1-4 The following balances were taken from the records of S Company: Common stock (1/1/11 and 12/31/11) $720,000 Retained earnings 1/1/11 $160,000 Net income for 2011 180,000 Dividends declared in 2011 (40,000) Retained earnings, 12/31/11 300,000 Total stockholders’ equity on 12/31/11 $1,020,000 P Company purchased 75% of S Company’s common stock on January 1, 2011 for $900,000.

The view that the noncontrolling interest in income reflects the noncontrolling stockholders’ allocated share of consolidated income is consistent with the a. 1-3 Pope Company acquired an 80% interest in the common stock of Simon Company for $1,540,000 on July 1, 2011.

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addition to combined income to arrive at consolidated net income. expense deducted from combined income to arrive at consolidated net income. deduction from current assets in the balance sheet. When following the economic unit concept in the preparation of consolidated financial statements, the basis for valuing the noncontrolling interest in net assets is the a. When a business acquisition is financed using debt, the interest payments are tax deductible and create a. The defense tactic that involves purchasing shares held by the would-be acquiring company at a price substantially in excess of their fair value is called a. Simon Company’s stockholders’ equity on that date consisted of: Common stock $800,000 Other contributed capital 400,000 Retained earnings 330,000 Required: Compute the total noncontrolling interest to be reported in the consolidated balance sheet assuming the: (1) parent company concept. 1-4 The following balances were taken from the records of S Company: Common stock (1/1/11 and 12/31/11) $720,000 Retained earnings 1/1/11 $160,000 Net income for 2011 180,000 Dividends declared in 2011 (40,000) Retained earnings, 12/31/11 300,000 Total stockholders’ equity on 12/31/11 $1,020,000 P Company purchased 75% of S Company’s common stock on January 1, 2011 for $900,000. The view that the noncontrolling interest in income reflects the noncontrolling stockholders’ allocated share of consolidated income is consistent with the a. 1-3 Pope Company acquired an 80% interest in the common stock of Simon Company for $1,540,000 on July 1, 2011. (3) Excess earnings are expected to last indefinitely, but Pierce demands a higher rate of return of 20% because of the risk involved. Determine the amount of goodwill to be recorded on the books if Pierce pays $1,300,000 cash and assumes Hager’s liabilities. Briefly explain the differences between the concepts. Distinguish between internal and external expansion of a firm. List four advantages of a business combination as compared to internal expansion. What is the primary legal constraint on business combinations? (2) Pierce is willing to pay for excess earnings for an expected life of 4 years, which should be capitalized at the industry normal rate of return. Compute noncontrolling interest in consolidated income for 2011. Compute noncontrolling interest in net assets on December 31, 2011. Estimating the value of goodwill to be included in an offering price can be done under several alternative methods. Identify the steps used in this approach to estimate goodwill. The two alternative views of consolidated financial statements are the parent company concept and the economic entity concept. Business combinations may be classified into three types based upon the relationships among the combining entities (e.g., combinations with suppliers, customers, competitors, etc.). Based on these assumptions, calculate a reasonable offering price for Barkley, Inc. Book Values Market Values Current Assets $ 450,000 $ 450,000 Property, Plant & Equipment (net) 1,140,000 1,300,000 Total Assets $1,590,000 $1,750,000 Total Liabilities $700,000 $700,000 Common Stock, $10 par value 280,000 Retained Earnings 610,000 Total Liabilities and Equities $1,590,000 Pierce Company expects that Hager will earn approximately $290,000 per year in net income over the next five years. When stock is exchanged for stock in a business combination, how is the stock exchange ratio generally expressed? Define some defensive measures used by target firms to avoid a takeover. It was widely rumored that Tyco executives aggressively managed the performance of the companies that they acquired by suggesting that before the acquisition, they should accelerate the payment of liabilities, delay recording the collections of revenue, and increase the estimated amounts in reserve accounts. What effect does each of the three items have on the reported net income of the acquired company before the acquisition and on the reported net income of the combined company in the first year of the acquisition and future years? What effect does each of the three items have on the cash from operations of the acquired company before the acquisition and on the cash from operations of the combined company in the first year of the acquisition and future years? If you are the manager of the acquired company, how do you respond to these suggestions? Assume that all three items can be managed within the rules provided by GAAP but would be regarded by many as pushing the limits of GAAP. Describe your position as: (A) an accountant for the target company and (B) as an accountant for Tyco. Indicate how much of the price consists of goodwill. Assume that Perkins feels that it must earn a 15% return on its investment, but that average excess earnings are to be capitalized for five years only. Explain the potential advantages of a stock acquisition over an asset acquisition. Explain the difference between an accretive and a dilutive acquisition. Describe the difference between the economic entity concept and the parent company concept approaches to the reporting of subsidiary assets and liabilities in the consolidated financial statements on the date of the acquisition. Contrast the consolidated effects of the parent company concept and the economic entity con-cept in terms of: (a)The treatment of noncontrolling interests. (c)The valuation of subsidiary net assets in the consolidated financial statements. What practical or conceptual problems do you see in this approach to valuation? Is the economic entity or the parent concept more consistent with the principles addressed in the FASB’s conceptual framework? Business Ethics Questions from the Textbook From 1999 to 2001, Tyco’s revenue grew approximately24% and it acquired over 700 companies. either the acquisition or the pooling of interests methods. neither the acquisition nor the pooling of interests methods. Under the acquisition method, if the fair values of identifiable net assets exceed the value implied by the purchase Pratt of the acquired company, the excess should be a. The objectives of FASB 141R (Business Combinations) and FASB 160 (Non Controlling Interests in Consolidated Financial Statements) are as follows: a. to facilitate the convergence project of the FASB and the International Accounting Standards Board.

,300,000 cash and assumes Hager’s liabilities. Briefly explain the differences between the concepts. Distinguish between internal and external expansion of a firm. List four advantages of a business combination as compared to internal expansion. What is the primary legal constraint on business combinations? (2) Pierce is willing to pay for excess earnings for an expected life of 4 years, which should be capitalized at the industry normal rate of return. Compute noncontrolling interest in consolidated income for 2011. Compute noncontrolling interest in net assets on December 31, 2011. Estimating the value of goodwill to be included in an offering price can be done under several alternative methods. Identify the steps used in this approach to estimate goodwill. The two alternative views of consolidated financial statements are the parent company concept and the economic entity concept. Business combinations may be classified into three types based upon the relationships among the combining entities (e.g., combinations with suppliers, customers, competitors, etc.). Based on these assumptions, calculate a reasonable offering price for Barkley, Inc. Book Values Market Values Current Assets $ 450,000 $ 450,000 Property, Plant & Equipment (net) 1,140,000 1,300,000 Total Assets

addition to combined income to arrive at consolidated net income. expense deducted from combined income to arrive at consolidated net income. deduction from current assets in the balance sheet. When following the economic unit concept in the preparation of consolidated financial statements, the basis for valuing the noncontrolling interest in net assets is the a.

When a business acquisition is financed using debt, the interest payments are tax deductible and create a.

The defense tactic that involves purchasing shares held by the would-be acquiring company at a price substantially in excess of their fair value is called a.

Simon Company’s stockholders’ equity on that date consisted of: Common stock $800,000 Other contributed capital 400,000 Retained earnings 330,000 Required: Compute the total noncontrolling interest to be reported in the consolidated balance sheet assuming the: (1) parent company concept. 1-4 The following balances were taken from the records of S Company: Common stock (1/1/11 and 12/31/11) $720,000 Retained earnings 1/1/11 $160,000 Net income for 2011 180,000 Dividends declared in 2011 (40,000) Retained earnings, 12/31/11 300,000 Total stockholders’ equity on 12/31/11 $1,020,000 P Company purchased 75% of S Company’s common stock on January 1, 2011 for $900,000.

The view that the noncontrolling interest in income reflects the noncontrolling stockholders’ allocated share of consolidated income is consistent with the a. 1-3 Pope Company acquired an 80% interest in the common stock of Simon Company for $1,540,000 on July 1, 2011.

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addition to combined income to arrive at consolidated net income. expense deducted from combined income to arrive at consolidated net income. deduction from current assets in the balance sheet. When following the economic unit concept in the preparation of consolidated financial statements, the basis for valuing the noncontrolling interest in net assets is the a. When a business acquisition is financed using debt, the interest payments are tax deductible and create a. The defense tactic that involves purchasing shares held by the would-be acquiring company at a price substantially in excess of their fair value is called a. Simon Company’s stockholders’ equity on that date consisted of: Common stock $800,000 Other contributed capital 400,000 Retained earnings 330,000 Required: Compute the total noncontrolling interest to be reported in the consolidated balance sheet assuming the: (1) parent company concept. 1-4 The following balances were taken from the records of S Company: Common stock (1/1/11 and 12/31/11) $720,000 Retained earnings 1/1/11 $160,000 Net income for 2011 180,000 Dividends declared in 2011 (40,000) Retained earnings, 12/31/11 300,000 Total stockholders’ equity on 12/31/11 $1,020,000 P Company purchased 75% of S Company’s common stock on January 1, 2011 for $900,000. The view that the noncontrolling interest in income reflects the noncontrolling stockholders’ allocated share of consolidated income is consistent with the a. 1-3 Pope Company acquired an 80% interest in the common stock of Simon Company for $1,540,000 on July 1, 2011. (3) Excess earnings are expected to last indefinitely, but Pierce demands a higher rate of return of 20% because of the risk involved. Determine the amount of goodwill to be recorded on the books if Pierce pays $1,300,000 cash and assumes Hager’s liabilities. Briefly explain the differences between the concepts. Distinguish between internal and external expansion of a firm. List four advantages of a business combination as compared to internal expansion. What is the primary legal constraint on business combinations? (2) Pierce is willing to pay for excess earnings for an expected life of 4 years, which should be capitalized at the industry normal rate of return. Compute noncontrolling interest in consolidated income for 2011. Compute noncontrolling interest in net assets on December 31, 2011. Estimating the value of goodwill to be included in an offering price can be done under several alternative methods. Identify the steps used in this approach to estimate goodwill. The two alternative views of consolidated financial statements are the parent company concept and the economic entity concept. Business combinations may be classified into three types based upon the relationships among the combining entities (e.g., combinations with suppliers, customers, competitors, etc.). Based on these assumptions, calculate a reasonable offering price for Barkley, Inc. Book Values Market Values Current Assets $ 450,000 $ 450,000 Property, Plant & Equipment (net) 1,140,000 1,300,000 Total Assets $1,590,000 $1,750,000 Total Liabilities $700,000 $700,000 Common Stock, $10 par value 280,000 Retained Earnings 610,000 Total Liabilities and Equities $1,590,000 Pierce Company expects that Hager will earn approximately $290,000 per year in net income over the next five years. When stock is exchanged for stock in a business combination, how is the stock exchange ratio generally expressed? Define some defensive measures used by target firms to avoid a takeover. It was widely rumored that Tyco executives aggressively managed the performance of the companies that they acquired by suggesting that before the acquisition, they should accelerate the payment of liabilities, delay recording the collections of revenue, and increase the estimated amounts in reserve accounts. What effect does each of the three items have on the reported net income of the acquired company before the acquisition and on the reported net income of the combined company in the first year of the acquisition and future years? What effect does each of the three items have on the cash from operations of the acquired company before the acquisition and on the cash from operations of the combined company in the first year of the acquisition and future years? If you are the manager of the acquired company, how do you respond to these suggestions? Assume that all three items can be managed within the rules provided by GAAP but would be regarded by many as pushing the limits of GAAP. Describe your position as: (A) an accountant for the target company and (B) as an accountant for Tyco. Indicate how much of the price consists of goodwill. Assume that Perkins feels that it must earn a 15% return on its investment, but that average excess earnings are to be capitalized for five years only. Explain the potential advantages of a stock acquisition over an asset acquisition. Explain the difference between an accretive and a dilutive acquisition. Describe the difference between the economic entity concept and the parent company concept approaches to the reporting of subsidiary assets and liabilities in the consolidated financial statements on the date of the acquisition. Contrast the consolidated effects of the parent company concept and the economic entity con-cept in terms of: (a)The treatment of noncontrolling interests. (c)The valuation of subsidiary net assets in the consolidated financial statements. What practical or conceptual problems do you see in this approach to valuation? Is the economic entity or the parent concept more consistent with the principles addressed in the FASB’s conceptual framework? Business Ethics Questions from the Textbook From 1999 to 2001, Tyco’s revenue grew approximately24% and it acquired over 700 companies. either the acquisition or the pooling of interests methods. neither the acquisition nor the pooling of interests methods. Under the acquisition method, if the fair values of identifiable net assets exceed the value implied by the purchase Pratt of the acquired company, the excess should be a. The objectives of FASB 141R (Business Combinations) and FASB 160 (Non Controlling Interests in Consolidated Financial Statements) are as follows: a. to facilitate the convergence project of the FASB and the International Accounting Standards Board.

,590,000

addition to combined income to arrive at consolidated net income. expense deducted from combined income to arrive at consolidated net income. deduction from current assets in the balance sheet. When following the economic unit concept in the preparation of consolidated financial statements, the basis for valuing the noncontrolling interest in net assets is the a.

When a business acquisition is financed using debt, the interest payments are tax deductible and create a.

The defense tactic that involves purchasing shares held by the would-be acquiring company at a price substantially in excess of their fair value is called a.

Simon Company’s stockholders’ equity on that date consisted of: Common stock $800,000 Other contributed capital 400,000 Retained earnings 330,000 Required: Compute the total noncontrolling interest to be reported in the consolidated balance sheet assuming the: (1) parent company concept. 1-4 The following balances were taken from the records of S Company: Common stock (1/1/11 and 12/31/11) $720,000 Retained earnings 1/1/11 $160,000 Net income for 2011 180,000 Dividends declared in 2011 (40,000) Retained earnings, 12/31/11 300,000 Total stockholders’ equity on 12/31/11 $1,020,000 P Company purchased 75% of S Company’s common stock on January 1, 2011 for $900,000.

The view that the noncontrolling interest in income reflects the noncontrolling stockholders’ allocated share of consolidated income is consistent with the a. 1-3 Pope Company acquired an 80% interest in the common stock of Simon Company for $1,540,000 on July 1, 2011.

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addition to combined income to arrive at consolidated net income. expense deducted from combined income to arrive at consolidated net income. deduction from current assets in the balance sheet. When following the economic unit concept in the preparation of consolidated financial statements, the basis for valuing the noncontrolling interest in net assets is the a. When a business acquisition is financed using debt, the interest payments are tax deductible and create a. The defense tactic that involves purchasing shares held by the would-be acquiring company at a price substantially in excess of their fair value is called a. Simon Company’s stockholders’ equity on that date consisted of: Common stock $800,000 Other contributed capital 400,000 Retained earnings 330,000 Required: Compute the total noncontrolling interest to be reported in the consolidated balance sheet assuming the: (1) parent company concept. 1-4 The following balances were taken from the records of S Company: Common stock (1/1/11 and 12/31/11) $720,000 Retained earnings 1/1/11 $160,000 Net income for 2011 180,000 Dividends declared in 2011 (40,000) Retained earnings, 12/31/11 300,000 Total stockholders’ equity on 12/31/11 $1,020,000 P Company purchased 75% of S Company’s common stock on January 1, 2011 for $900,000. The view that the noncontrolling interest in income reflects the noncontrolling stockholders’ allocated share of consolidated income is consistent with the a. 1-3 Pope Company acquired an 80% interest in the common stock of Simon Company for $1,540,000 on July 1, 2011. (3) Excess earnings are expected to last indefinitely, but Pierce demands a higher rate of return of 20% because of the risk involved. Determine the amount of goodwill to be recorded on the books if Pierce pays $1,300,000 cash and assumes Hager’s liabilities. Briefly explain the differences between the concepts. Distinguish between internal and external expansion of a firm. List four advantages of a business combination as compared to internal expansion. What is the primary legal constraint on business combinations? (2) Pierce is willing to pay for excess earnings for an expected life of 4 years, which should be capitalized at the industry normal rate of return. Compute noncontrolling interest in consolidated income for 2011. Compute noncontrolling interest in net assets on December 31, 2011. Estimating the value of goodwill to be included in an offering price can be done under several alternative methods. Identify the steps used in this approach to estimate goodwill. The two alternative views of consolidated financial statements are the parent company concept and the economic entity concept. Business combinations may be classified into three types based upon the relationships among the combining entities (e.g., combinations with suppliers, customers, competitors, etc.). Based on these assumptions, calculate a reasonable offering price for Barkley, Inc. Book Values Market Values Current Assets $ 450,000 $ 450,000 Property, Plant & Equipment (net) 1,140,000 1,300,000 Total Assets $1,590,000 $1,750,000 Total Liabilities $700,000 $700,000 Common Stock, $10 par value 280,000 Retained Earnings 610,000 Total Liabilities and Equities $1,590,000 Pierce Company expects that Hager will earn approximately $290,000 per year in net income over the next five years. When stock is exchanged for stock in a business combination, how is the stock exchange ratio generally expressed? Define some defensive measures used by target firms to avoid a takeover. It was widely rumored that Tyco executives aggressively managed the performance of the companies that they acquired by suggesting that before the acquisition, they should accelerate the payment of liabilities, delay recording the collections of revenue, and increase the estimated amounts in reserve accounts. What effect does each of the three items have on the reported net income of the acquired company before the acquisition and on the reported net income of the combined company in the first year of the acquisition and future years? What effect does each of the three items have on the cash from operations of the acquired company before the acquisition and on the cash from operations of the combined company in the first year of the acquisition and future years? If you are the manager of the acquired company, how do you respond to these suggestions? Assume that all three items can be managed within the rules provided by GAAP but would be regarded by many as pushing the limits of GAAP. Describe your position as: (A) an accountant for the target company and (B) as an accountant for Tyco. Indicate how much of the price consists of goodwill. Assume that Perkins feels that it must earn a 15% return on its investment, but that average excess earnings are to be capitalized for five years only. Explain the potential advantages of a stock acquisition over an asset acquisition. Explain the difference between an accretive and a dilutive acquisition. Describe the difference between the economic entity concept and the parent company concept approaches to the reporting of subsidiary assets and liabilities in the consolidated financial statements on the date of the acquisition. Contrast the consolidated effects of the parent company concept and the economic entity con-cept in terms of: (a)The treatment of noncontrolling interests. (c)The valuation of subsidiary net assets in the consolidated financial statements. What practical or conceptual problems do you see in this approach to valuation? Is the economic entity or the parent concept more consistent with the principles addressed in the FASB’s conceptual framework? Business Ethics Questions from the Textbook From 1999 to 2001, Tyco’s revenue grew approximately24% and it acquired over 700 companies. either the acquisition or the pooling of interests methods. neither the acquisition nor the pooling of interests methods. Under the acquisition method, if the fair values of identifiable net assets exceed the value implied by the purchase Pratt of the acquired company, the excess should be a. The objectives of FASB 141R (Business Combinations) and FASB 160 (Non Controlling Interests in Consolidated Financial Statements) are as follows: a. to facilitate the convergence project of the FASB and the International Accounting Standards Board.

,750,000 Total Liabilities 0,000 0,000 Common Stock, par value 280,000 Retained Earnings 610,000 Total Liabilities and Equities

addition to combined income to arrive at consolidated net income. expense deducted from combined income to arrive at consolidated net income. deduction from current assets in the balance sheet. When following the economic unit concept in the preparation of consolidated financial statements, the basis for valuing the noncontrolling interest in net assets is the a.

When a business acquisition is financed using debt, the interest payments are tax deductible and create a.

The defense tactic that involves purchasing shares held by the would-be acquiring company at a price substantially in excess of their fair value is called a.

Simon Company’s stockholders’ equity on that date consisted of: Common stock $800,000 Other contributed capital 400,000 Retained earnings 330,000 Required: Compute the total noncontrolling interest to be reported in the consolidated balance sheet assuming the: (1) parent company concept. 1-4 The following balances were taken from the records of S Company: Common stock (1/1/11 and 12/31/11) $720,000 Retained earnings 1/1/11 $160,000 Net income for 2011 180,000 Dividends declared in 2011 (40,000) Retained earnings, 12/31/11 300,000 Total stockholders’ equity on 12/31/11 $1,020,000 P Company purchased 75% of S Company’s common stock on January 1, 2011 for $900,000.

The view that the noncontrolling interest in income reflects the noncontrolling stockholders’ allocated share of consolidated income is consistent with the a. 1-3 Pope Company acquired an 80% interest in the common stock of Simon Company for $1,540,000 on July 1, 2011.

||

addition to combined income to arrive at consolidated net income. expense deducted from combined income to arrive at consolidated net income. deduction from current assets in the balance sheet. When following the economic unit concept in the preparation of consolidated financial statements, the basis for valuing the noncontrolling interest in net assets is the a. When a business acquisition is financed using debt, the interest payments are tax deductible and create a. The defense tactic that involves purchasing shares held by the would-be acquiring company at a price substantially in excess of their fair value is called a. Simon Company’s stockholders’ equity on that date consisted of: Common stock $800,000 Other contributed capital 400,000 Retained earnings 330,000 Required: Compute the total noncontrolling interest to be reported in the consolidated balance sheet assuming the: (1) parent company concept. 1-4 The following balances were taken from the records of S Company: Common stock (1/1/11 and 12/31/11) $720,000 Retained earnings 1/1/11 $160,000 Net income for 2011 180,000 Dividends declared in 2011 (40,000) Retained earnings, 12/31/11 300,000 Total stockholders’ equity on 12/31/11 $1,020,000 P Company purchased 75% of S Company’s common stock on January 1, 2011 for $900,000. The view that the noncontrolling interest in income reflects the noncontrolling stockholders’ allocated share of consolidated income is consistent with the a. 1-3 Pope Company acquired an 80% interest in the common stock of Simon Company for $1,540,000 on July 1, 2011. (3) Excess earnings are expected to last indefinitely, but Pierce demands a higher rate of return of 20% because of the risk involved. Determine the amount of goodwill to be recorded on the books if Pierce pays $1,300,000 cash and assumes Hager’s liabilities. Briefly explain the differences between the concepts. Distinguish between internal and external expansion of a firm. List four advantages of a business combination as compared to internal expansion. What is the primary legal constraint on business combinations? (2) Pierce is willing to pay for excess earnings for an expected life of 4 years, which should be capitalized at the industry normal rate of return. Compute noncontrolling interest in consolidated income for 2011. Compute noncontrolling interest in net assets on December 31, 2011. Estimating the value of goodwill to be included in an offering price can be done under several alternative methods. Identify the steps used in this approach to estimate goodwill. The two alternative views of consolidated financial statements are the parent company concept and the economic entity concept. Business combinations may be classified into three types based upon the relationships among the combining entities (e.g., combinations with suppliers, customers, competitors, etc.). Based on these assumptions, calculate a reasonable offering price for Barkley, Inc. Book Values Market Values Current Assets $ 450,000 $ 450,000 Property, Plant & Equipment (net) 1,140,000 1,300,000 Total Assets $1,590,000 $1,750,000 Total Liabilities $700,000 $700,000 Common Stock, $10 par value 280,000 Retained Earnings 610,000 Total Liabilities and Equities $1,590,000 Pierce Company expects that Hager will earn approximately $290,000 per year in net income over the next five years. When stock is exchanged for stock in a business combination, how is the stock exchange ratio generally expressed? Define some defensive measures used by target firms to avoid a takeover. It was widely rumored that Tyco executives aggressively managed the performance of the companies that they acquired by suggesting that before the acquisition, they should accelerate the payment of liabilities, delay recording the collections of revenue, and increase the estimated amounts in reserve accounts. What effect does each of the three items have on the reported net income of the acquired company before the acquisition and on the reported net income of the combined company in the first year of the acquisition and future years? What effect does each of the three items have on the cash from operations of the acquired company before the acquisition and on the cash from operations of the combined company in the first year of the acquisition and future years? If you are the manager of the acquired company, how do you respond to these suggestions? Assume that all three items can be managed within the rules provided by GAAP but would be regarded by many as pushing the limits of GAAP. Describe your position as: (A) an accountant for the target company and (B) as an accountant for Tyco. Indicate how much of the price consists of goodwill. Assume that Perkins feels that it must earn a 15% return on its investment, but that average excess earnings are to be capitalized for five years only. Explain the potential advantages of a stock acquisition over an asset acquisition. Explain the difference between an accretive and a dilutive acquisition. Describe the difference between the economic entity concept and the parent company concept approaches to the reporting of subsidiary assets and liabilities in the consolidated financial statements on the date of the acquisition. Contrast the consolidated effects of the parent company concept and the economic entity con-cept in terms of: (a)The treatment of noncontrolling interests. (c)The valuation of subsidiary net assets in the consolidated financial statements. What practical or conceptual problems do you see in this approach to valuation? Is the economic entity or the parent concept more consistent with the principles addressed in the FASB’s conceptual framework? Business Ethics Questions from the Textbook From 1999 to 2001, Tyco’s revenue grew approximately24% and it acquired over 700 companies. either the acquisition or the pooling of interests methods. neither the acquisition nor the pooling of interests methods. Under the acquisition method, if the fair values of identifiable net assets exceed the value implied by the purchase Pratt of the acquired company, the excess should be a. The objectives of FASB 141R (Business Combinations) and FASB 160 (Non Controlling Interests in Consolidated Financial Statements) are as follows: a. to facilitate the convergence project of the FASB and the International Accounting Standards Board.

,590,000 Pierce Company expects that Hager will earn approximately 0,000 per year in net income over the next five years. When stock is exchanged for stock in a business combination, how is the stock exchange ratio generally expressed? Define some defensive measures used by target firms to avoid a takeover. It was widely rumored that Tyco executives aggressively managed the performance of the companies that they acquired by suggesting that before the acquisition, they should accelerate the payment of liabilities, delay recording the collections of revenue, and increase the estimated amounts in reserve accounts. What effect does each of the three items have on the reported net income of the acquired company before the acquisition and on the reported net income of the combined company in the first year of the acquisition and future years? What effect does each of the three items have on the cash from operations of the acquired company before the acquisition and on the cash from operations of the combined company in the first year of the acquisition and future years? If you are the manager of the acquired company, how do you respond to these suggestions? Assume that all three items can be managed within the rules provided by GAAP but would be regarded by many as pushing the limits of GAAP. Describe your position as: (A) an accountant for the target company and (B) as an accountant for Tyco. Indicate how much of the price consists of goodwill. Assume that Perkins feels that it must earn a 15% return on its investment, but that average excess earnings are to be capitalized for five years only. Explain the potential advantages of a stock acquisition over an asset acquisition. Explain the difference between an accretive and a dilutive acquisition. Describe the difference between the economic entity concept and the parent company concept approaches to the reporting of subsidiary assets and liabilities in the consolidated financial statements on the date of the acquisition. Contrast the consolidated effects of the parent company concept and the economic entity con-cept in terms of: (a)The treatment of noncontrolling interests. (c)The valuation of subsidiary net assets in the consolidated financial statements. What practical or conceptual problems do you see in this approach to valuation? Is the economic entity or the parent concept more consistent with the principles addressed in the FASB’s conceptual framework? Business Ethics Questions from the Textbook From 1999 to 2001, Tyco’s revenue grew approximately24% and it acquired over 700 companies. either the acquisition or the pooling of interests methods. neither the acquisition nor the pooling of interests methods. Under the acquisition method, if the fair values of identifiable net assets exceed the value implied by the purchase Pratt of the acquired company, the excess should be a. The objectives of FASB 141R (Business Combinations) and FASB 160 (Non Controlling Interests in Consolidated Financial Statements) are as follows: a. to facilitate the convergence project of the FASB and the International Accounting Standards Board.

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