Ch. 27 - Business Combinations - After Acquisition

Question 1

Amortization of fair value differentials

1. Inventory
2. Depreciable capital assets
3. land
4. intangible assets not amortized
5. long-term debt

Answer 1

1. Inventory > Cost of sales
2. Depreciable capital assets > depreciation
3. Land > gain or loss on sale of land
4. intangible assets not amortized > gain or loss on sale of asset
5. long-term debt > interest expense

Question 2

Intercompany Transactions classified as either

Answer 2

1. Downstream

2. Upstream

Question 3

Intercompany transactions - Downstream

Answer 3

1. eliminate 100% of the transaction

Question 4

Intercompany transactions - Upstream

Answer 4

1. eliminate % of parent ownership