When an Acquisition Is Made and Accounted for Using the Purchase

question 13

Multiple Choice

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

• A)is the sum of the pre-acquisition retained earnings accounts of the two combining companies.
• B)is the pre-acquisition retained earnings account of the acquiring company only.
• C)is the pre-acquisition retained earnings accounts of the acquiring company plus net income of acquired company in year of acquisition.
• D)is the pre-acquisition retained earnings accounts of the acquiring company less treasury stock of the acquired company.

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Definitions:

High Altitude

Describes locations at a significant height above sea level, affecting various physical, mechanical, and physiological processes.

Boil

The process of heating a liquid to the temperature at which it turns to vapor.

Ideal Refrigerant

is a theoretical concept for a substance used in refrigeration that has optimal thermodynamic and physical properties, such as being non-toxic, environmentally friendly, and highly efficient in heat absorption and release.

Non-Combustible

Materials or substances that are incapable of igniting and burning, used in various safety applications to prevent fire.