Acquisition Flashcards
Which Fees you deduct from APIC when you issue the stock
Registration and Issuance Fee
Do you deduct Legal and consulting fee for acquisition from APIC
No. You deduct only Registration and Issuance Fee from APIC
In a business combination, do you report issuing debt securities as current-year expenses, not subject to amortization?
Debt Securities create liabilities.
In a business combination, do you report Registering debt securities as current-year expenses, not subject to amortization?
Debt securities registration costs are capitalized and amortize.
In a business combination, do you report Legal Fees as current-year expenses, not subject to amortization?
Yes current-year expenses, not subject to amortization.
Legal fees and due diligence costs are expensed on the period incurred.
In a business combination, do you report Due diligence costs as current-year expenses, not subject to amortization?
Yes current-year expenses, not subject to amortization.
Legal fees and due diligence costs are expensed on the period incurred.
West Acquired 60% of East Co. outstanding common stock. West Plan to relocate East’s company headquarters. Should this relocation cost be included in the acquisition cost?
The acquisition cost does not include any measure of the relocation costs. Such costs are accounted for separately from the acquisition according to the requirement for exit and disposal costs in FASB ASC 420.
How Investment for acquisition is measured at?
Investment for acquisition is measured at FAIR VALUE.
In an acquisition, What are the general guidelines to value the inventories acquired as Finished goods?
Finished goods to be valued at:
SP - COD - Profit allowance
In an acquisition, What are the general guidelines to value the inventories acquired as raw materials?
Raw Material Inventory is valued at replacement cost.
In an acquisition, What are general guidelines to value the inventories acquired as Work in progress?
The fair value of work in process should be based on the estimated selling price of finished goods less the costs to complete and dispose of and reasonable profit allowance
SP - CTC -COD -Profit
Ravont contributed 20 million out of 25 million total investment for a technology that Ravont leased back for 12,000/m Ravont has just 20% voting share. What method of accounting it must use?
Consolidation VIE
Ravont owns 35% of a company. Rest of the company is owned by a family and they make up the Board of directors. What method of accounting it must use?
Fair Value Method
Ravont owns 18% of a company. In November it acquired another 20%. Now Ravont has a majority of Board members and now the largest shareholder of the company. What method of accounting it must use?
Equity Method
Ravont owns 51% of a company. The remainder of the stock is held by one, unrelated individual and according to the by-laws of the company, Ravont is required to consult with that shareholder on major decisions of the company. What method of accounting it must use?
Consolidation
