Mega Corporation Acquired 65% of the Voting Shares of Forko

question 34

Multiple Choice

Mega Corporation acquired 65% of the voting shares of Forko Ltd.Mega consolidated its accounts by restating assets and liabilities of the subsidiary at fair value on the date the shares were acquired.Which of the following methods for accounting for the business combination is being used by Mega Corporation?

• A)Purchase method
• B)Fair value method
• C)Pooling method
• D)Current replacement cost method

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Definitions:

Gross Profit

A company's revenue minus the cost of goods sold, which measures how much a company earns after deducting the costs associated with producing its products or services.

FIFO

"First In, First Out," an inventory valuation method where the first items placed in inventory are the first sold.

Gross Profit

The difference between sales revenue and the cost of goods sold, representing the basic profit from buying and selling goods or services.

LIFO Method

Last In, First Out method; an inventory valuation method where the last items placed in inventory are the first ones to be used or sold.