Review Concepts on Quiz

Question 1

differential

Answer 1

difference between the fair value and the book value in an acquisition

Question 2

acquisition method

Answer 2

when the assets are valued and goodwill if any is determined, any gain on the purchase if the cost was less than the fair value is recognized

Question 3

acquisition of stock

Answer 3

any costs related to the acquisition are expenses and any stock costs are capitalized meaning that they are taken out of the value of the stock from APIC

Question 4

contingent consideration

Answer 4

if goodwill is recognized but we find the asset is worth more later within a year. then we write up the asset and bring down goodwill because the asset was worth more

Question 5

impairment

Answer 5

impairment loss
asset
we don’t take it out of good will if it was an impairment unless we found that the value was different on the acquisition date

Question 6

fair value method

Answer 6

where they are not required to consolidate and they revalue the investments fair value and adjust it accordingly booking an unrecognized gain on the investment
JE
Inv in company
Unrealized gain on barclay stock