It Is Important to Distinguish Between Pre-Acquisition and Post-Acquisition Equity

question 42

Multiple Choice

It is important to distinguish between pre-acquisition and post-acquisition equity of a subsidiary to allow:

• A) post-acquisition equity to be eliminated on consolidation.
• B) goodwill or gain on bargain purchase to be calculated.
• C) avoidance of double counting of pre-acquisition equity.
• D) none of the above.

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Definitions:

Chemical Changes

Reactions that result in the transformation of substances into one or more different substances, involving the making and breaking of chemical bonds.

Top-down Processing

A cognitive process that uses context and pre-existing knowledge to understand information.

Constriction

The act or process of drawing together or becoming narrower; it can apply to physical objects, bodily processes, or even psychological states.

Accommodation

In psychology, the process of adjusting existing cognitive structures in response to new experiences; in vision, the process by which the eye's lens changes shape to focus near or far objects on the retina.