ACCT 526 ADVANCED FINANCIAL ACCOUNTING
FINAL EXAM 2026 | University of Louisiana at
Lafayette | Master of Accountancy | Updated Verified
Answers | Pass Guaranteed - A+ Graded
Section 1: Consolidations & Business Combinations (ASC 805)
(Questions 1-15)
Question 1 On January 1, 2026, P Company acquired 90% of S Company for
$900,000 cash. At acquisition date, S Company's identifiable net assets had a book
value of $700,000 and a fair value of $800,000. The non-controlling interest is
measured at fair value of $95,000. What amount of goodwill should P Company
recognize in its consolidated balance sheet at acquisition date?
A. $100,000
B. $195,000
C. $200,000
D. $295,000
Correct Answer: B
B. $195,000 [CORRECT]
Rationale: Goodwill = Consideration transferred ($900,000) + NCI at fair value
($95,000) - Fair value of net identifiable assets acquired ($800,000) = $195,000.
Option A incorrectly uses book value of net assets. Option C ignores the NCI fair
value. Option D uses book value and ignores NCI.
Question 2 Which of the following is NOT a required step under the acquisition
method of accounting for business combinations per ASC 805?
A. Identify the acquirer
B. Determine the acquisition date
C. Recognize and measure any gain from bargain purchase in other comprehensive
,income
D. Recognize and measure the identifiable assets acquired, liabilities assumed, and
any non-controlling interest
Correct Answer: C
C. Recognize and measure any gain from bargain purchase in other comprehensive
income [CORRECT]
Rationale: A gain from bargain purchase is recognized in earnings (net income), not
OCI, after reassessing the fair values of identifiable net assets. Options A, B, and D are
all required steps under ASC 805.
Question 3 On June 30, 2026, Alpha Corp. acquired 100% of Beta Inc. for $5,000,000.
Beta's identifiable net assets had a fair value of $5,400,000. Alpha reassessed the
identification and measurement of all assets and liabilities and confirmed the
valuations. How should Alpha account for this transaction?
A. Recognize goodwill of $400,000
B. Recognize a gain from bargain purchase of $400,000 in earnings
C. Reduce the carrying amount of identifiable assets by $400,000
D. Recognize the $400,000 as a deferred credit amortized over 20 years
Correct Answer: B
B. Recognize a gain from bargain purchase of $400,000 in earnings [CORRECT]
Rationale: When consideration transferred is less than fair value of net identifiable
assets and reassessment confirms valuations, the excess is recognized as a gain from
bargain purchase in earnings. Option A reverses the calculation. Options C and D
describe obsolete or incorrect accounting treatments.
Question 4 Push-down accounting is required in which of the following situations
under SEC guidance?
A. When a subsidiary is substantially wholly-owned (approximately 95% or more) and
there are no significant outstanding public debt or preferred stock
,B. When a parent acquires 51% of a subsidiary
C. When a subsidiary has publicly traded common stock regardless of ownership
percentage
D. Only when the subsidiary files a Form 10-K with the SEC
Correct Answer: A
A. When a subsidiary is substantially wholly-owned (approximately 95% or more) and
there are no significant outstanding public debt or preferred stock [CORRECT]
Rationale: SEC guidance requires push-down accounting when ownership is
substantially complete (≈95%+) with no significant public securities outstanding.
Options B, C, and D describe incorrect thresholds or conditions for mandatory push-
down accounting.
Question 5 P Company acquired 80% of S Company on January 1, 2026. S
Company's net income for 2026 was $200,000 and it declared dividends of $50,000. P
Company uses the initial value method to account for its investment. What is the
non-controlling interest's share of S Company's 2026 net income?
A. $40,000
B. $50,000
C. $160,000
D. $200,000
Correct Answer: A
A. $40,000 [CORRECT]
Rationale: NCI share of net income = 20% × $200,000 = $40,000. The parent's
accounting method does not affect the NCI's share of subsidiary income. Option B is
20% of dividends. Option C is 80% of net income. Option D is 100% of net income.
Question 6 In a business combination, the acquirer measures non-controlling
interest at fair value (full goodwill method). The consideration transferred is $800,000
for 80% ownership. The fair value of the 20% NCI is $200,000. The fair value of net
identifiable assets is $900,000. What is the amount of goodwill recognized?
, A. $100,000
B. $120,000
C. $180,000
D. $200,000
Correct Answer: A
A. $100,000 [CORRECT]
Rationale: Goodwill = Consideration transferred ($800,000) + NCI at fair value
($200,000) - FV of net identifiable assets ($900,000) = $100,000. Option B uses the
partial goodwill method incorrectly. Option C uses book value. Option D is the NCI
fair value itself.
Question 7 Which of the following costs related to a business combination should be
expensed as incurred under ASC 805?
A. Direct combination costs such as legal fees, accounting fees, and consulting fees
B. Costs to issue debt securities
C. Costs to issue equity securities
D. Registration fees for equity securities
Correct Answer: A
A. Direct combination costs such as legal fees, accounting fees, and consulting fees
[CORRECT]
Rationale: Under ASC 805, direct combination costs (transaction costs) are expensed
as incurred. Options B and C are capitalized as part of debt/equity issuance costs.
Option D is also treated as a reduction of equity proceeds.
Question 8 On January 1, 2026, Parent Co. acquired 75% of Subsidiary Co. for
$600,000. Subsidiary's identifiable net assets had a book value of $500,000 and fair
value of $700,000. The NCI is measured at its proportionate share of the fair value of
net identifiable assets. What amount of goodwill should be recognized?
FINAL EXAM 2026 | University of Louisiana at
Lafayette | Master of Accountancy | Updated Verified
Answers | Pass Guaranteed - A+ Graded
Section 1: Consolidations & Business Combinations (ASC 805)
(Questions 1-15)
Question 1 On January 1, 2026, P Company acquired 90% of S Company for
$900,000 cash. At acquisition date, S Company's identifiable net assets had a book
value of $700,000 and a fair value of $800,000. The non-controlling interest is
measured at fair value of $95,000. What amount of goodwill should P Company
recognize in its consolidated balance sheet at acquisition date?
A. $100,000
B. $195,000
C. $200,000
D. $295,000
Correct Answer: B
B. $195,000 [CORRECT]
Rationale: Goodwill = Consideration transferred ($900,000) + NCI at fair value
($95,000) - Fair value of net identifiable assets acquired ($800,000) = $195,000.
Option A incorrectly uses book value of net assets. Option C ignores the NCI fair
value. Option D uses book value and ignores NCI.
Question 2 Which of the following is NOT a required step under the acquisition
method of accounting for business combinations per ASC 805?
A. Identify the acquirer
B. Determine the acquisition date
C. Recognize and measure any gain from bargain purchase in other comprehensive
,income
D. Recognize and measure the identifiable assets acquired, liabilities assumed, and
any non-controlling interest
Correct Answer: C
C. Recognize and measure any gain from bargain purchase in other comprehensive
income [CORRECT]
Rationale: A gain from bargain purchase is recognized in earnings (net income), not
OCI, after reassessing the fair values of identifiable net assets. Options A, B, and D are
all required steps under ASC 805.
Question 3 On June 30, 2026, Alpha Corp. acquired 100% of Beta Inc. for $5,000,000.
Beta's identifiable net assets had a fair value of $5,400,000. Alpha reassessed the
identification and measurement of all assets and liabilities and confirmed the
valuations. How should Alpha account for this transaction?
A. Recognize goodwill of $400,000
B. Recognize a gain from bargain purchase of $400,000 in earnings
C. Reduce the carrying amount of identifiable assets by $400,000
D. Recognize the $400,000 as a deferred credit amortized over 20 years
Correct Answer: B
B. Recognize a gain from bargain purchase of $400,000 in earnings [CORRECT]
Rationale: When consideration transferred is less than fair value of net identifiable
assets and reassessment confirms valuations, the excess is recognized as a gain from
bargain purchase in earnings. Option A reverses the calculation. Options C and D
describe obsolete or incorrect accounting treatments.
Question 4 Push-down accounting is required in which of the following situations
under SEC guidance?
A. When a subsidiary is substantially wholly-owned (approximately 95% or more) and
there are no significant outstanding public debt or preferred stock
,B. When a parent acquires 51% of a subsidiary
C. When a subsidiary has publicly traded common stock regardless of ownership
percentage
D. Only when the subsidiary files a Form 10-K with the SEC
Correct Answer: A
A. When a subsidiary is substantially wholly-owned (approximately 95% or more) and
there are no significant outstanding public debt or preferred stock [CORRECT]
Rationale: SEC guidance requires push-down accounting when ownership is
substantially complete (≈95%+) with no significant public securities outstanding.
Options B, C, and D describe incorrect thresholds or conditions for mandatory push-
down accounting.
Question 5 P Company acquired 80% of S Company on January 1, 2026. S
Company's net income for 2026 was $200,000 and it declared dividends of $50,000. P
Company uses the initial value method to account for its investment. What is the
non-controlling interest's share of S Company's 2026 net income?
A. $40,000
B. $50,000
C. $160,000
D. $200,000
Correct Answer: A
A. $40,000 [CORRECT]
Rationale: NCI share of net income = 20% × $200,000 = $40,000. The parent's
accounting method does not affect the NCI's share of subsidiary income. Option B is
20% of dividends. Option C is 80% of net income. Option D is 100% of net income.
Question 6 In a business combination, the acquirer measures non-controlling
interest at fair value (full goodwill method). The consideration transferred is $800,000
for 80% ownership. The fair value of the 20% NCI is $200,000. The fair value of net
identifiable assets is $900,000. What is the amount of goodwill recognized?
, A. $100,000
B. $120,000
C. $180,000
D. $200,000
Correct Answer: A
A. $100,000 [CORRECT]
Rationale: Goodwill = Consideration transferred ($800,000) + NCI at fair value
($200,000) - FV of net identifiable assets ($900,000) = $100,000. Option B uses the
partial goodwill method incorrectly. Option C uses book value. Option D is the NCI
fair value itself.
Question 7 Which of the following costs related to a business combination should be
expensed as incurred under ASC 805?
A. Direct combination costs such as legal fees, accounting fees, and consulting fees
B. Costs to issue debt securities
C. Costs to issue equity securities
D. Registration fees for equity securities
Correct Answer: A
A. Direct combination costs such as legal fees, accounting fees, and consulting fees
[CORRECT]
Rationale: Under ASC 805, direct combination costs (transaction costs) are expensed
as incurred. Options B and C are capitalized as part of debt/equity issuance costs.
Option D is also treated as a reduction of equity proceeds.
Question 8 On January 1, 2026, Parent Co. acquired 75% of Subsidiary Co. for
$600,000. Subsidiary's identifiable net assets had a book value of $500,000 and fair
value of $700,000. The NCI is measured at its proportionate share of the fair value of
net identifiable assets. What amount of goodwill should be recognized?
