When an Acquisition Is Made and Accounted for Using the Purchase

question 7

Multiple Choice

When an acquisition is made and accounted for using the purchase method, the post-acquisition common stock account:

• A)is the sum of the pre-acquisition common stock accounts of the two combining companies.
• B)is the pre-acquisition common stock account of the acquired company only.
• C)is the pre-acquisition common stock account of the acquiring company plus the par value of new stock issued to affect the acquisition.
• D)is the pre-acquisition common stock account of the acquiring company plus the fair value of new stock issued to affect the acquisition.

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Definitions:

Claiming Value

The process of maximizing one's own benefit in a negotiation or transaction.

Creating Value

The process of enhancing or increasing the value proposition of a deal or an outcome for all parties involved in a negotiation.

Conflict

A disagreement or contention between two or more parties, possibly due to differing interests, values, or goals.

Best Alternative

The most advantageous option available to a party in negotiations if the current talks fail.