Sya Ltd Acquired All the Assets and Liabilities of Littman Ltd

question 31

Multiple Choice

Sya Ltd. acquired all the assets and liabilities of Littman Ltd. by issuing common shares to Littman. After this transaction, Littman owned 30% of Sya's outstanding shares. Which of the following statements is true?

• A)Littman Ltd. ceases to exist.
• B)Littman must record its receipt of Sya shares using the equity method.
• C)Sya must prepare single-entity and consolidated financial statements.
• D)Sya should not treat this transaction as an intercorporate investment.

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Definitions:

Long-Run Equilibrium

A state in which supply and demand are balanced, and all firms in the industry are earning normal profits in the long term.

Short-Run Equilibria

A market condition where supply and demand are balanced, but only temporarily as external factors can soon alter this balance.

Demand Increases

A situation where the quantity of a good or service that consumers are willing and able to purchase at a given price rises.

Competitive Market

A market structure characterized by a large number of buyers and sellers, where no single entity has the power to significantly influence market prices.