When Performing the Fair Value Adjustment Process, Which of the Following

question 38

Multiple Choice

When performing the fair value adjustment process, which of the following is true?

• A)The deferred income tax is reversed on the same basis as the fair value adjustment is written off
• B)The deferred income tax recognized during the acquisition analysis always remains the same.
• C)The fair value adjustments are initially recorded on the statement of financial position and are never written off
• D)The fair value adjustments are initially recorded on the statement of financial position and are always written off through comprehensive income over a period of 5 years.

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Definitions:

Net Income

The total profit of a company after all expenses, including taxes and costs, have been deducted from total revenue.

Equity Method

The equity method is an accounting technique used to assess the investments in other companies, where the investment is recorded at original cost and adjusted according to the investor’s share of the investee's profit or loss.

Intra-entity Inventory

Transactions involving the exchange of goods between divisions within the same company, often for consolidation or reallocation purposes.