Dupuis Ltd

question 12

Multiple Choice

Dupuis Ltd.acquired Waul Ltd.through a business combination using the direct method.How should Waul record this on its books?

• A)Waul should debit an "Investment in Dupuis" account and credit its share capital account.
• B)Waul should debit an "Investment in Dupuis" account and remove all its asset and liability accounts.
• C)Waul should close all its balance sheet accounts.
• D)No entry should be made.

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Definitions:

Mixing Machines

Equipment used in manufacturing and baking industries to blend or mix ingredients into a homogeneous substance.

Variable Cost

Costs that vary directly with the level of production output, such as materials and labor, in contrast with fixed costs, which remain constant regardless of output.

Unit Product Costs

The total cost (including materials, labor, and overhead) to produce one unit of a product.

Predetermined Overhead Rate

An established rate used to assign overhead costs to products or job orders, calculated in advance based on anticipated costs and activities.