In regards to a business combination

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Reference no: EM13751869

1. IN regards to a business combination, in which all the assets and all the liabilities (asset acquisition of a company are obtained, in "Investment - xxx" account is not debited in the initial journal entry, by the acquirer to record the business combination. Is the previous statement true or false?

2. From a perspective of the acquirer, under an asset acquisition, the "Investment - xxx" account is eliminated against the stockholder's equity section of the acquiree. Is the previous statement true or false?

3. On Jan 1, 2014, the Jacks Corporation issued 10,000 shares of its $10 par common stock, with a market price of $25 a share, for all of the Bons Corporation common stock. The stockholder's equity of the Bons Corporation immediately before the combination was:

Common Stock 70000

Additional Paid-in Capital 85000

Retained Earnings 95000


Based on the above information which of the following applies to this business combination

A) The business combination involve a bargain purchase

B) The business combination involve goodwill

C) The business combination involve neither a bargain purchase nor goodwill


D) Not enough information was provided to determine

Reference no: EM13751869

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