Which of the Following Statements Does Not Properly Describe the Accounting

question 26

Multiple Choice

Which of the following statements does not properly describe the accounting for business combinations?

• A)Under the purchase method,the subsidiary's assets and liabilities are not valued at their full fair values on the consolidated balance sheet when minority interests are present.
• B)Under the acquisition method,the subsidiary's assets and liabilities are valued at their full fair values on the consolidated balance sheet when minority interests are present.
• C)The parent company has the option of choosing either the purchase method or the acquisition method to account for the business combination.
• D)The noncontrolling interest is reported as a component of stockholders' equity when using the acquisition methoD.

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Definitions:

Par Value

The face value of a bond or stock as stated by the issuing company, which may or may not reflect the security's market value.

Stock Split

A corporate action to increase the number of outstanding shares while reducing the price per share, keeping the overall market capitalization the same.

Par Value

The face value of a bond or stock as specified by its issuer, which does not necessarily correspond to its market value.

Stock Dividend

A dividend payment made in the form of additional shares rather than a cash payout, increasing the number of shares held by each shareholder.