One Company Acquires Another Company in a Combination Accounted for Under

question 34

Multiple Choice

One company acquires another company in a combination accounted for under the acquisition method. The acquiring company decides to apply the initial value method in accounting for the combination. What is one reason the acquiring company might have made this decision?

• A) It is the only method allowed by the SEC.
• B) It is relatively easy to apply.
• C) It is the only internal reporting method allowed by generally accepted accounting principles.
• D) Operating results on the parent's financial records reflect consolidated totals.
• E) When the initial value method is used, no worksheet entries are required in the consolidation process.

Understand and apply the formula for calculating the relationship of net income to net sales.

Calculate the inventory turnover rate.

Compute the rate of return on investment (ROI).

Calculate the acid test ratio.

---

Definitions:

Helper T Cells

A type of T cell that plays a crucial role in the immune system by assisting other cells in recognizing and fighting off infections.

Antibody-mediated Response

The antibody-mediated response is an immune response where B cells produce specific antibodies targeting and neutralizing pathogens, a key aspect of the body's adaptive immunity.

The Antigen

A substance that, when introduced into the body, triggers an immune response by prompting the production of antibodies.

B-cell

A type of white blood cell crucial to the immune system, responsible for producing antibodies.