Which of the Following Statements Is Correct

question 20

Multiple Choice

Which of the following statements is correct?

• A) Under the New Entity Method, both of the company's net assets are recorded at their fair market values for these assets on the date of acquisition.
• B) Under the Acquisition Method, the acquirer company's net assets are recorded at the price paid for the assets on the date of acquisition.
• C) As of January 1^st, 2011, the New Entity 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 New Entity Method is not.

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Definitions:

Cordell Hull

An American politician who served as the longest-serving U.S. Secretary of State, playing a key role in establishing the United Nations and laying the groundwork for international trade agreements.

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The practice of a government spending more money than it receives in revenue, often to stimulate economic growth.

1937−1939 Recession

A period of economic downturn in the United States which occurred within the Great Depression era, characterized by a significant decline in industrial production and employment rates.

United Mine Workers

A labor union representing coal miners in the United States, focused on improving workers' safety and wages.