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:

Historical Rates

Exchange rates used for the conversion of items on the financial statements that have remained unchanged from past to present.

Foreign Subsidiary

A company owned or controlled by another company, the parent company, that is based in a different country than the subsidiary.

Functional Currency

The functional currency is the main currency used by a business or economic entity, reflecting the primary economic environment in which it operates.

Opening Inventory

The value of the goods available for sale at the beginning of an accounting period.