At the Time of a Business Acquisition

question 2

Multiple Choice

At the time of a business acquisition,

• A)identifiable assets and liabilities are allocated the portion of the translation or remeasurement adjustment that existed on the date of acquisition.
• B)a foreign entity's assets and liabilities are translated into U.S.dollars using the current exchange rate in effect on that date.
• C)the difference between investment fair value and translated net assets acquired is treated as a remeasurement gain or loss on the income statement.
• D)the difference between investment fair value and translated net assets acquired is recorded as a cumulative translation adjustment on the balance sheet.

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Definitions:

Payment

The act of transferring money or other valuable items in exchange for goods, services, or to fulfill a contractual obligation.

Compounded Semi-annually

Refers to the process where the interest earned on an investment is calculated and added to the principal amount every six months.

GIC

A Guaranteed Investment Certificate, particular to the Canadian market, ensures investors a promised rate of return within a set duration.

Semi-annual Interest

Interest that is calculated and paid twice a year on an investment or loan.