In a Transaction Accounted for Using the Acquisition Method Where

question 91

Multiple Choice

In a transaction accounted for using the acquisition method where consideration transferred exceeds book value of the acquired company, which statement is true for the acquiring company with regard to its investment?

• A) Net assets of the acquired company are revalued to their fair values and any excess of consideration transferred over fair value of net assets acquired is allocated to goodwill.
• B) Net assets of the acquired company are maintained at book value and any excess of consideration transferred over book value of net assets acquired is allocated to goodwill.
• C) Acquired assets are revalued to their fair values. Acquired liabilities are maintained at book values. Any excess is allocated to goodwill.
• D) Acquired long-term assets are revalued to their fair values. Any excess is allocated to goodwill.

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Definitions:

Tasks They Perform

Relates to the specific duties and responsibilities assigned to an individual or team in a work environment.

Wide Span Of Control

A managerial approach where a single manager or leader oversees a large number of subordinates or units, leading to a less hierarchical organizational structure.

Higher Employee Morale

A state of enthusiasm and dedication that employees feel towards their work and workplace, often leading to increased productivity and job satisfaction.

Managers Overloaded

A situation where managers have more work responsibilities or tasks than they can effectively handle.