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:

Gastrocnemius

A major calf muscle that is pivotal in walking, running, and jumping, connecting the heel to the lower leg.

Temporalis

A muscle located on the side of the skull, involved in chewing and moving the jaw.

Sternocleidomastoid

A major muscle in the neck that extends from the sternum and clavicle to the mastoid process of the temporal bone of the skull, involved in rotating and flexing the neck.

Latissimus Dorsi

A large, flat muscle on the back that stretches to the sides, behind the arm, and is involved in the movement of the shoulders and arms.