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:

Independent Events

Two or more events in which the occurrence of one event does not affect the probability of the other events.

Independent Events

Two or more events where the occurrence of one event does not affect the probability of the other events happening.

Probability

A measure of the likelihood that an event will occur, quantified as a number between 0 and 1.

Union

In mathematics, particularly in set theory, it is the set containing all elements from all sets being considered.