What Is the Primary Difference Between: (I) Accounting for a Business

question 50

Multiple Choice

What is the primary difference between: (i) accounting for a business combination when the subsidiary is dissolved; and (ii) accounting for a business combination when the subsidiary retains its incorporation?

• A) If the subsidiary is dissolved, it will not be operated as a separate division.
• B) If the subsidiary is dissolved, assets and liabilities are consolidated at their book values.
• C) If the subsidiary retains its incorporation, there will be no goodwill associated with the acquisition.
• D) If the subsidiary retains its incorporation, assets and liabilities are consolidated at their book values.
• E) If the subsidiary retains its incorporation, the consolidation is not formally recorded in the accounting records of the acquiring company.

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Definitions:

Manufacturing Departments

Specific areas within a manufacturing facility where different stages of the production process are carried out.

Job A496

A specific, identifiable work task or project within an organization, denoted by its unique job number for tracking and costing purposes.

Total Job Cost

The complete cost of a particular job, project, or order, including all direct and indirect costs such as materials, labor, and overhead.

Predetermined Overhead Rate

A predetermined overhead rate is calculated by dividing estimated manufacturing overhead costs by an allocation base, used to assign overhead costs to products.