A Business Combination Is Accounted for Properly as an Acquisition

question 31

Multiple Choice

A business combination is accounted for properly as an acquisition. Which of the following expenses related to effecting the business combination should enter into the determination of net income of the combined corporation for the period in which the expenses are incurred?

• A) Security issue cost, yes; overhead allocated merger, yes
• B) Security issue cost, yes; overhead allocated merger, no
• C) Security issue cost, no; overhead allocated merger, yes
• D) Security issue cost, no; overhead allocated merger, no

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Definitions:

Compasses

Instruments used for navigation and orientation that show direction relative to the geographic cardinal directions.

Muffins

A small, baked item that is typically sweet, made from batter or dough.

Cookies

Small pieces of data stored on a user's computer by a web browser, mainly used to track and remember information about the user's activities and preferences.

Exchange

The act of trading goods, services, or currencies between parties, either directly or through a medium of exchange like money.