In a 1976 Discussion Memorandum, the FASB Defined the New

question 48

Multiple Choice

In a 1976 discussion memorandum, the FASB defined the new entity approach to accounting for business combinations as a method which:

• A)results in the assets and liabilities of the subsidiary being valued at market value at the time of acquisition, and the parent's assets and liabilities being valued at book value.
• B)results in the assets and liabilities of the parent being valued at market value at the time of acquisition, and the subsidiary's assets and liabilities being valued at book value.
• C)results in all entities' assets and liabilities being revalued to market values at the time the combination originates.
• D)uses the book values of the combining companies.

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