Which of the Following Statements Regarding Pre-Acquisition Adjustments Is FALSE

question 55

Multiple Choice

Which of the following statements regarding pre-acquisition adjustments is FALSE?

• A)The adjustments involve the investment account Investment in Subsidiary as shown in the financial statements of the parent.
• B)The adjustments involve the equity of the subsidiary at the acquisition date (i.e. the pre-acquisition equity).
• C)A deferred tax liability is recognized to increase the goodwill carrying amount.
• D)The pre-acquisition adjustment is necessary to avoid overstating the equity and net assets of the group.

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