Mega Corporation Acquired 65% of the Voting Shares of Forko

question 33

Multiple Choice

Mega Corporation acquired 65% of the voting shares of Forko Ltd for €10 billion and used the purchase method of accounting for the merger. Mega Corporation's interest in Forko Ltd had a restated value of €950 million. How should Mega account for the difference?

• A)as Gain from Acquisition on the current period income statement
• B)as Goodwill on the consolidated balance sheet
• C)as a Loss from Merger on the current period income statement
• D)as Additional Paid-in Capital on the consolidated balance sheet

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Definitions:

Without Collusion

Operating or competing in a market where firms or participants act independently and do not engage in agreements to control prices or market shares.

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The initial phase in which a business or organization promotes its product or service to the target market through various media channels.

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The goal of operating in a way that achieves the highest possible profit from business activities.

Tit-For-Tat Strategy

A game theory strategy that involves mirroring your opponent’s previous action, often used to foster cooperation or retaliate in competitive settings.