When Preparing the Consolidated Balance Sheet on the Date of Acquisition

question 46

Multiple Choice

When preparing the consolidated balance sheet on the date of acquisition, the parent's investment (in subsidiary company) is:

• A) revalued to fair market value.
• B) replaced with 100% of the assets and liabilities of the subsidiary at fair market value.
• C) replaced with 100% of the assets and liabilities of the subsidiary at book value.
• D)replaced with the parent's pro rata share of the assets and liabilities of the subsidiary at fair market value.

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Definitions:

Long Run

Refers to a period of time sufficient for all factors of production and costs to become adjustable, often used in economic analysis to predict future trends.

Risk-Taking

The act of undertaking actions or making decisions that involve the possibility of facing undesirable outcomes.

Entrepreneurship

The activity of setting up a business or businesses, taking on financial risks in the hope of profit, characterized by innovation, strategy, and risk-taking.

Work Teams

Groups of employees who collaborate closely to achieve shared goals or complete projects.