Which of the Following Statements Is Correct

question 18

Multiple Choice

Which of the following statements is correct?

• A) Under the purchase method, the company's net assets are recorded at the price paid for these assets on the date of acquisition.
• B) Under the acquisition method, the company's net assets are recorded at the price paid for these assets on the date of acquisition.
• C) As of January 1st, 2011, the Purchase method must be used to account for business combinations where an acquirer can be identified.
• D) The acquisition method is consistent with the historical cost principle while the purchase method is not.

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Definitions:

Ordering Costs

Expenses incurred in placing and receiving orders from suppliers, including costs related to the processing and handling of orders.

Carrying Costs

The total cost of holding inventory, including storage, insurance, taxes, and opportunity costs, among others.

Annual Ordering

Refers to the total cost and process associated with placing orders for goods or materials over the course of a year.

Gadgets

Small mechanical or electronic devices or tools, especially those that are ingenious or novel.