Which of the Following Statements About Post-Acquisition Earnings Is(are)incorrect

question 53

Multiple Choice

Which of the following statements about post-acquisition earnings is(are) incorrect?

• A) They form part of earnings of the economic entity.
• B) They are the earnings produced subsequent to the acquisition date by members of the group.
• C) They are eliminated against the parent's earnings, in a similar fashion to pre-acquisition earnings.
• D) They form part of earnings of the economic entity and they are eliminated against the parent's earnings, in a similar fashion to pre-acquisition earnings.
• E) None of the given answers; they are all correct.

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Definitions:

Treasury Stock Approach

A method in finance that accounts for repurchased shares of a company's own stock as treasury stock, reducing the total equity in the balance sheet.

Attributed Ownership

The assignment of ownership interest in a company or property, often for the purpose of determining control or tax responsibilities.

Intra-Entity Gain

A gain recognized when transactions occur within segments of the same company, not usually recognized for external reporting purposes until realized with an external party.

Annual Amortization Expense

The portion of the cost of an intangible asset that is expensed through an organization's income statement each year over the asset's useful life.