Which One of the Following Is a Characteristic of a Business

question 22

Multiple Choice

Which one of the following is a characteristic of a business combination that should be accounted for as a purchase?

• A)The combination must involve the exchange of equity securities only.
• B)The transaction clearly establishes an acquisition price for the company being acquired.
• C)The two companies may be about the same size,and it is difficult to determine the acquired company and the acquiring company.
• D)The transaction may be considered to be the uniting of the ownership interests of the companies involved.
• E)The acquired subsidiary must be smaller in size than the acquiring parent.

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Definitions:

Traceable Costs

Traceable costs are specific expenses that can be directly linked to a particular cost object, such as a product, department, or project.

Period Costs

Expenses that are not directly tied to product production and are expensed in the accounting period in which they are incurred.

Held For Sale

A classification for assets on the balance sheet intended to be sold within a short period, usually one year.

Discontinued Operations

Components of a business that have been sold or otherwise disposed of, and which are reported separately in the financial statements to give a clear view of ongoing operations.