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.

---

Definitions:

Unity

The state or quality of being united or joined as a whole, especially in a purpose, goal, or effort.

Organizational Culture

The shared values, beliefs, norms, and practices that shape the social and psychological environment of a business organization.

Friendly Behavior

Actions that are kind, pleasant, and supportive towards others.

Managerial Actions

Decisions or behaviors taken by managers in the course of leading and managing an organization or team.