Choose the best answer for each of the following questions.

1			Business combinations often have been challenged under Section 7 of the Clayton Act by:
			A)	The U.S. Department of Justice, Antitrust Division
			B)	The U.S. Federal Trade Commission
			C)	Attorneys general of several states
			D)	Both a and b
2			The amount of cash or debt securities, or the number of shares of common stock, to be issued in a business combination generally is decided by:
			A)	Determination of current fair value of the combinee's tangible and intangible assets (including goodwill) less liabilities
			B)	Capitalization of expected average earnings of the combinee at a desired rate of return
			C)	Either a or b or both a and b
			D)	Neither a nor b
3			Out-of-pocket costs of a business combination were as follows:   CPA audit fees for SEC registration statement $10,000   Legal fees:           For the business combination 4,000         For SEC registration statement 7,000   Finder's fee 20,000   Printer's charges for printing securities and SEC registration statement 2,500   SEC registration fee       500         Total out-of-pocket costs of business       combination $44,000 The amount to be debited to the Paid-in Capital in Excess of Par ledger account in the business combination is:
			A)	$0
			B)	$20,000
			C)	$24,000
			D)	$44,000
			E)	Some other amount
4			Seaton Corporation and Marque Company combined in a statutory merger, with Seaton as the combinor. Seaton issued 10,000 shares of its $5 par common stock ($20 current fair value a share) for all 1,000 outstanding shares of Marque's $2 par common stock. Out-of-pocket costs of the business combination may be disregarded. On the date of the combination, the stockholders' equity of Marque was as follows:   Common stock, $2 par $  2,000   Additional paid-in capital 60,000   Retained earnings (deficit) (10,000)   Total stockholders' equity $52,000 The total amount to be credited to Seaton's Common Stock and Paid-in Capital in Excess of Par ledger accounts is:
			A)	$50,000
			B)	$52,000
			C)	$62,000
			D)	Some other amount
5			On March 31, 2002, Meade Company merged into Steele Corporation. Out-of-pocket costs of the business combination totaled $30,000. The separate income statements of the two companies for the fiscal year ended March 31, 2002, prior to any journal entries necessary to record the business combination on that date, showed the following net income: Steele, $500,000; Meade, $100,000. Steele's postmerger income statement for the year ended March 31, 2002, shows net income in the amount of:
			A)	$470,000
			B)	$500,000
			C)	$570,000
			D)	Some other amount
6			Stevens Corporation issued cumulative preferred stock with a current fair value of $500,000 for all outstanding common stock of Mullin Company in a statutory merger business combination. Out-of-pocket costs of the combination included $40,000 directly attributable to the merger and $30,000 attributable to the registration of the preferred stock with the SEC. The carrying amount of Mullin's identifiable net assets on the date of the combination was $460,000. As a result of the combination, Stevens records an increase in total assets of:
			A)	$460,000
			B)	$470,000
			C)	$540,000
			D)	$570,000
			E)	Some other amount
7			The bargain-purchase excess in a business combination is:
			A)	Recognized as revenue of the combined enterprise
			B)	Added to stockholders' equity of the combined enterprise
			C)	Offset against (positive) goodwill of the combined enterprise
			D)	Accounted for in some other manner
8			The cost of the combinee in a business combination involving issuance of bonds payable by the combinor does not include:
			A)	Bond issue costs
			B)	Contingent consideration determinable on the consummation date of the combination
			C)	Present value of the bonds payable issued in the combination
			D)	Finder's fee
			E)	Any of the foregoing
9			When the combinor and the combine no longer exist after the combination ion it is called:
			A)	Statutory Merger
			B)	Purchase of net assets
			C)	Consolidation
			D)	Other
10			Which is not a valid takeover defense
			A)	Green mail
			B)	Shark repellent
			C)	Poison pill
			D)	Equity method
11			Business combinations provide a method for achieving rapid growth in assets and sales.
			A)	True
			B)	False
12			In a statutory merger, a new corporation is formed to issue its common stock for the common stock of two or more existing corporations, which then are liquidated.
			A)	True
			B)	False
13			Constituent Companies is the accounting entity that results from a business combination.
			A)	True
			B)	False
14			Board of Directors of all constituent companies amicably determine the terms of the business combination.
			A)	True
			B)	False
15			In a Hostile Takeovers Target combinee typically resists the proposed business combination.
			A)	True
			B)	False