ACC 562 EDU Great Stories /acc562edu.com ACC 562 EDU Great Stories /acc562edu.com | Page 18

63. Simco's shaving products division was acquired over ten years
ago in a purchase transaction by BlizzardCraft. The related
goodwill was amortized until 2002 and $4.5 million remained on the
books thereafter. In 2008, Simco's production machinery was
assessed for impairment as a long-lived asset because of
obsolescence issues. What relationship will the auditors most likely
make between the facts stated above? (Points: 4)
BlizzardCraft erroneously treated the acquisition of Simco as a
purchase transaction when it should have been a pooling of
interests.
Simco should not have amortized goodwill previous to 2002.
Simco's goodwill should have been written off when purchased
by BlizzardCraft in a one-time transaction.
The goodwill related to Simco may have been impaired during
2008.
64. All of the following represent a related entity to an organization
except (Points: 4)
the president's son.
an affiliate with common ownership.
customers.
primary owners.
65. All of the following represent equity issuance requiring
prominent accounting, presentation and disclosure treatment,
except (Points: 4)
stock with beneficial conversion features.
Warrants issued to a consultant for services performed.
Preferred stock that is cumulative and par value is $0.50 per
share.