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:

Habitual Purchasers

Consumers who buy the same brands or products repeatedly out of habit rather than through active decision-making based on price, quality, or other factors.

Extended Problem-Solving

A consumer decision-making process used for high involvement purchases, requiring considerable time and effort in evaluating alternatives.

Reference Group

One or more persons whom an individual uses as a basis for comparison regarding beliefs, feelings, and behaviors.

Indirect Influence

The subtle, non-direct impact that an entity or action may have on people's decisions, behaviors, or outcomes without explicit instruction or direct intervention.