One Company Is Considering Entering into a Business Combination with Another

question 2

Multiple Choice

One company is considering entering into a business combination with another. The potential acquirer wishes to acquire the subsidiary's assets and liabilities but wishes to prepare Consolidated Financial Statements using the fair market values of its own assets and liabilities as well of those of its potential subsidiary. Can this be accomplished? (Assume that each of the methods is allowable)

• A) Yes, this is permissible under the Acquisition Method.
• B) Yes, this is permissible under the Purchase Method under certain circumstances.
• C) Yes, this is permissible under the New Entity Method is used.
• D)No, this would not be possible under any circumstances.

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Definitions:

Judgment Sampling

A non-probability sampling method where the researcher selects units to be sampled based on their knowledge and professional judgment.

Subjective Method

A method based on personal judgment and opinion rather than on external data or objective measurement.

Sampling

This involves selecting a subset of individuals from a population to estimate characteristics of the whole population.

Sampling Distribution

The probability distribution of a given statistic based on a random sample, used to make inferences about a population.