According to GAAP, Which of the Following Is True with Respect

question 27

Multiple Choice

According to GAAP, which of the following is true with respect to the pooling of interest method of accounting for business combinations?

• A) It was the only method used prior to 2002.
• B) It must be used for all new acquisitions.
• C) GAAP allowed its use prior to 2002.
• D) It, or the acquisition method, may be used at the acquirer's discretion.
• E) GAAP requires it to be used instead of the acquisition method for business combinations for which $50 billion or more in consideration is transferred.

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Definitions:

Service Hours

The total hours spent by an organization or employee providing services to clients or working on service-related tasks.

Economic Value

The value of an asset deriving from its ability to generate income or its potential use in producing goods and services.

Useful Life

The estimated duration a fixed asset is expected to be economically useful to the owner, determining its depreciation rate.

Operating Costs

Expenses associated with the day-to-day functions of a business, excluding cost of goods sold but including costs like rent, utilities, and payroll.