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Basic Question 14 of 20
On March 31, Jumbo purchases 100% of Larz for $7,500,000 cash and 2,200,000 shares of Jumbo voting common stock (par value of $1). Jumbo's stock had a market value on March 31 of $40. Jumbo got 12,000,000 shares of Larz's voting common stock (par value $4) having a market value of $50 per share. Jumbo incurs $5,000,000 in direct combination costs and $3,500,000 in stock issuance costs. What is Jumbo's COST for this acquisition?
B. $99,000,000.
C. $104,000,000.
A. $95,500,000.
B. $99,000,000.
C. $104,000,000.
User Contributed Comments 6
| User | Comment |
|---|---|
| ljamieson | what is the point of mentioning par values of shares? |
| CFAnext | well you will be given lots of information you don't need in the exam. |
| MonkeySee | To confuse you.... |
| vi2009 | Cost of acquisition = sum of cash and equivalents paid + fv of other purchase consideration + direct cost of biz combination. |
| Shanax | To confuse you!!! |
| birdperson | ADD it up, ladies and gentlemen! |
I am happy to say that I passed! Your study notes certainly helped prepare me for what was the most difficult exam I had ever taken.
Andrea Schildbach
Learning Outcome Statements
describe the classification, measurement, and disclosure under International Financial Reporting Standards (IFRS) for 1) investments in financial assets, 2) investments in associates, 3) joint ventures, 4) business combinations, and 5) special purpose and variable interest entities;
distinguish between IFRS and US GAAP in their classification, measurement, and disclosure of investments in financial assets, investments in associates, joint ventures, business combinations, and special purpose and variable interest entities;
analyze how different methods used to account for intercorporate investments affect financial statements and ratios.
CFA® 2025 Level II Curriculum, Volume 2, Module 10.