Which of the Following Is Generally False When a Consolidation

question 66

Multiple Choice

Which of the following is generally false when a consolidation occurs?

• A)The consolidated entity obtains the original corporations' assets.
• B)The consolidated entity takes on the rights of the original companies.
• C)The new corporation has independent legal status.
• D)The consolidated entity assumes the debts of the original corporations.
• E)The original corporations continue to exist legally.

---

Definitions:

Hedging

A strategy used in financial management to offset potential losses or gains that may be incurred by a companion investment, thereby reducing the risk of adverse price movements.

IFRS

International Financial Reporting Standards, a set of global accounting guidelines providing a common language for business affairs so that company accounts are understandable and comparable across international boundaries.

Gross Method

An accounting approach for recording purchases or sales of inventory where discounts are not taken into account until they are actually realized.

Forward Contract

An individualized contract between two counterparts to acquire or dispose of an asset at a fixed price on a specified future date.