What Is the Primary Difference Between: (I) Accounting for a Business

question 50

Multiple Choice

What is the primary difference between: (i) accounting for a business combination when the subsidiary is dissolved; and (ii) accounting for a business combination when the subsidiary retains its incorporation?

• A) If the subsidiary is dissolved, it will not be operated as a separate division.
• B) If the subsidiary is dissolved, assets and liabilities are consolidated at their book values.
• C) If the subsidiary retains its incorporation, there will be no goodwill associated with the acquisition.
• D) If the subsidiary retains its incorporation, assets and liabilities are consolidated at their book values.
• E) If the subsidiary retains its incorporation, the consolidation is not formally recorded in the accounting records of the acquiring company.

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Definitions:

U.S. Dollar

The official currency of the United States, used as a standard monetary unit for many international transactions.

Foreign Currencies

Currencies used in international trade and investment, outside of the domestic or home country's currency.

Post Hoc

A logical fallacy where one assumes that because one event followed another, the first event caused the second.

Unemployment Rate

The percentage of the labor force that is jobless and actively seeking employment, a key indicator of economic health.