A Business Combination Is Accounted for Properly as an Acquisition

question 31

Multiple Choice

A business combination is accounted for properly as an acquisition. Which of the following expenses related to effecting the business combination should enter into the determination of net income of the combined corporation for the period in which the expenses are incurred?

• A) Security issue cost, yes; overhead allocated merger, yes
• B) Security issue cost, yes; overhead allocated merger, no
• C) Security issue cost, no; overhead allocated merger, yes
• D) Security issue cost, no; overhead allocated merger, no

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Definitions:

Decision Making

The cognitive process of selecting a course of action among multiple alternatives.

Intuitively

Refers to understanding or knowing something without conscious reasoning, based on gut feeling or instinct.

Decision Making Process

A methodical approach involving identification of a problem, gathering information, and selecting among alternative solutions or actions.

Convergent Thinking

A problem-solving approach involving bringing multiple pieces of information together to find a single, correct solution.