Fun with Florals Corporation Acquired All the Voting Shares of Crafts

question 13

Multiple Choice

Fun with Florals Corporation acquired all the voting shares of Crafts to Go Corporation under the purchase method. Which of the following statements about the consolidated statements is true?

• A) The assets and liabilities of Crafts to Go Corporation would be not revalued and disclosed at their market values on the date of acquisition.
• B) Fun with Florals will use the equity method of accounting for this investment.
• C) Fun with Florals will report Crafts to Go Corporation's revenues and expenses on a consolidated statement of earnings.
• D) Fun with Florals will use the market value method of accounting for this investment.

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Definitions:

Lower Labor

A reduction in the amount of labor used or required in a process or production.

Internal Rate

Often refers to the internal rate of return (IRR), which is the discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero.

Operating Costs

Expenses associated with the day-to-day functioning of a business, such as rent, utilities, and payroll, excluding costs related to production.

Annual Cost

The total expenses associated with maintaining or operating something over the course of a year.