A Parent Company Acquired 100% of the Outstanding Common Stock

question 6

Multiple Choice

A parent company acquired 100% of the outstanding common stock of another corporation.The parent is going to use push-down accounting.The fair market value of each of the acquired corporation's assets is lower than its respective book value.The fair market value of each of the acquired corporation's liabilities is higher than its respective book value.The acquired corporation has a deficit in the Retained Earnings account.Which one of the following statements is correct?

• A)The push-down capital account will have a credit balance after this transaction is posted.
• B)The push-down capital account will have a debit balance after this transaction is posted.
• C)The push-down capital account will have either a debit or a credit balance depending upon whether the asset adjustments exceed the liability adjustments,or vice versa.
• D)Subsidiary Retained Earnings will have a deficit balance after this transaction is posted.

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Definitions:

Throughput Time

The amount of time it takes for a product to go through the production process, from start to finish, including both processing and waiting time.

Delivery Cycle Time

The total time taken from receiving a customer order to the delivery of the product or service to the customer.

Fill Orders

The process of completing a customer's purchase request by preparing and dispatching the requested products.

External Failure Cost

Expenses incurred when a product fails to meet quality standards after being delivered to the customer, including returns, repairs, and lost sales.