Part 1: Choose the correct answer for the following questions.

1. The primary motive for a business combination is:
a) Increasing market share
b) Reducing competition
c) Achieving economies of scale
d) All of the above

2. Which of the following is not a common type of business combination?
a) Merger
b) Acquisition
c) Consolidation
d) Divestiture

3. The legal form of a business combination is determined by:
a) The purchase price
b) The method of payment
c) The relative size of the combining entities
d) The business strategy of the combined entity

4. A transaction is considered a business combination when:
a) One entity obtains control over another entity
b) Two entities merge their operations
c) One entity purchases the net assets of another entity
d) All of the above

5. In the acquisition method of accounting, the acquirer recognizes:
a) The fair value of the consideration transferred
b) The fair value of the identifiable assets acquired and liabilities assumed
c) Any goodwill or gain on a bargain purchase
d) All of the above

6. Which of the following is not a common method of arranging a business combination?
a) Merger
b) Acquisition
c) Joint venture
d) Divestiture

7. The acquisition method of accounting is required for:
a) All business combinations
b) Mergers and consolidations
c) Acquisitions of a business
d) None of the above

8. Goodwill is recognized in a business combination when:
a) The consideration transferred exceeds the fair value of the identifiable net assets
b) The fair value of the identifiable net assets exceeds the consideration transferred
c) The transaction is a bargain purchase
d) Both a and b

9. In the acquisition method, the acquirer measures the consideration transferred at:
a) Book value
b) Fair value
c) Historical cost
d) Market value

10. The acquisition method of accounting requires the acquirer to recognize:
a) The fair value of the consideration transferred
b) The fair value of the identifiable assets acquired and liabilities assumed
c) Any goodwill or gain on a bargain purchase
d) All of the above

11. Which of the following is not a common motive for a business combination?
a) Diversification
b) Achieving economies of scale
c) Reducing competition