Which of the Following Statements Is True Regarding the Acquisition

question 117

Multiple Choice

Which of the following statements is true regarding the acquisition method of accounting for a business combination?

• A) The combination must involve the exchange of equity securities only.
• B) The transaction establishes an acquisition fair value basis for the company being acquired.
• C) The two companies may be about the same size, and it is difficult to determine the acquired company and the acquiring company.
• D) The transaction may be considered to be the uniting of the ownership interests of the companies involved.
• E) The acquired subsidiary must be smaller in size than the acquiring parent.

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