Following the Accounting Concept of a Business Combination,a Business Combination

question 22

Multiple Choice

Following the accounting concept of a business combination,a business combination occurs when a company acquires an equity interest in another entity and has

• A)at least 20% ownership in the entity.
• B)more than 50% ownership in the entity.
• C)100% ownership in the entity.
• D)control over the entity,irrespective of the percentage owned.

---

Definitions:

Perfect Competition

A market structure characterized by many sellers and buyers, homogeneous products, and the absence of barriers to entry or exit.

Excess Capacity

A situation in which a firm produces less than the maximum output due to lack of demand or strategic choice, leading to underutilized resources.

Average Total Cost

The total cost of production (fixed plus variable costs) divided by the number of units produced, representing the cost per unit.

Monopolistically Competitive

A market structure where many firms sell products that are similar but not identical, allowing for competition based on quality, price, and brand.