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 revalued to fair value to reflect the substance of the transaction which, in essence is, a new company has been formed.
• C) As of January 1st, 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:

Cognitive Representations

Mental models or representations of the world, including beliefs, perceptions, and memories.

Schemata

Cognitive structures that help individuals organize and interpret information based on prior knowledge and experiences.

Prototypes

Representative or ideal examples of a category or class that encapsulate the most characteristic features of that category.

Family Resemblance

Defining property of category membership.