Husch Ltd Acquired 35% of the Common Shares of Megia Ltd

question 3

Multiple Choice

Husch Ltd. acquired 35% of the common shares of Megia Ltd. on June 30, 20X1. Husch uses the equity method to record its investment. On June 30, 20X8, Husch acquired another 40% of Megia's common shares. At June 30, 20X8, how should the original 35% ownership be treated?

• A)The original valuation of the 35% is added to the valuation of the 40%.
• B)The original 35% investment is deemed to have been disposed of and reacquired at the fair value at June 30, 20X8, and added to the new acquisition.
• C)The carrying value of the original 35% at June 30, 20X8, is added to the new acquisition.
• D)The original 35% is irrelevant to the new acquisition and should be ignored.

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Definitions:

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A chemical compound commonly known for its presence in beverages and its psychoactive effects.

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The consumption of beverages containing ethanol, which can range from moderate drinking to alcohol abuse or dependence.

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Physical or mental effects that occur after stopping or reducing intake of a substance that was used regularly.

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A type of involuntary, rhythmic muscle contraction characterized by large, fast movements that are visible and can affect any part of the body.