Mega Corporation Acquired 65% of the Voting Shares of Forko

question 8

Multiple Choice

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

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

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Definitions:

Periodic Inventory Method

An inventory accounting system where updates to the inventory accounts are made on a periodic basis, typically at the end of an accounting period.

Financial Statement(s)

Reports that summarize the financial performance and position of a business or entity.

Cost of Goods Sold

Direct expenses involved in the fabrication of goods a company markets, including costs for materials and labor.

Freight-In

The cost associated with transporting goods into a warehouse or business, typically included in the cost of goods sold (COGS).