Which of the Following Statements Is True About Pooling of Interests

question 22

Multiple Choice

Which of the following statements is true about pooling of interests method of accounting for business combinations?

• A)The pooling of interests method is no longer acceptable under IFRS.
• B)Goodwill arises only when the pooling of interests method is used for business combinations.
• C)Pooling of interests is used for international consolidations but never for domestic consolidations.
• D)The purchase method is used only when less than 100% of an entity's voting shares are acquired.

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Definitions:

Income Statement Account

An account found on the income statement that records business transactions affecting the company's revenue, expenses, gains, and losses.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or within the normal operating cycle of the business, whichever is longer.

Balance Sheet

A financial statement that displays a company's assets, liabilities, and shareholders' equity at a specific point in time, providing a basis for computing rates of return and evaluating its capital structure.

Assets

Economic resources owned or controlled by a business or an individual, expected to provide future benefits.