During the Consolidation Process, It May Be Necessary to Make

question 13

Multiple Choice

During the consolidation process, it may be necessary to make which of the following adjustments to the individual statements?

• A) pre-acquisition entries only.
• B) business combination valuation entries and pre-acquisition entries in the consolidation worksheet.
• C) business combination valuation entries only.
• D) business combination valuation entries and pre-acquisition entries in the individual journals of the parent and the subsidiaries.

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Definitions:

Financial Information System

A system that collects and processes financial data to produce reports useful for decision-making purposes.

Fair Market Value

An estimate of the price at which an asset would change hands between a willing buyer and seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts.

Cost

The amount of money or resources expended in order to obtain an item or service.

Monetary Unit Assumption

An accounting principle that assumes transactions and events can be represented in monetary units or currency.