Which of the Following Statements Is True Regarding the Acquisition

question 47

Multiple Choice

Which of the following statements is true regarding the acquisition method of accounting for a business combination?

• A) Net assets of the acquired company are reported at their fair values.
• B) Net assets of the acquired company are reported at their book values.
• C) Any goodwill associated with the acquisition is reported as a development cost.
• D) The acquisition can only be effected by a mutual exchange of voting common stock.
• E) Indirect costs of the combination reduce additional paid-in capital.

---

Definitions:

Delta

A method of connecting three electrical components in a triangular configuration, allowing for the completion of a circuit without a neutral path.

Open Delta

A connection method for three-phase transformers where only two transformers are used, providing a way to supply three-phase power with reduced capacity.

Output Power

The amount of power (in watts) delivered by a system to its load, representative of the system's output performance.

Three-Phase Bank

Single-phase transformers connected in such a way as to operate on a three-phase system.