All of the Following Are Weaknesses of a Precedent Transactions

question 9

Multiple Choice

All of the following are weaknesses of a precedent transactions analysis EXCEPT:

• A)Multiples may be skewed, depending on the economic environment
• B)Precedent transactions by definition have occurred in the past, and may not be reflective of the current environment
• C)A precedent transactions analysis makes too many assumptions about future performance
• D)Information may be insufficient to determine transaction multiples for many comparable acquisitions.

Prepare and analyze consolidated financial statements immediately following an acquisition.

Compute and record fair value adjustments for acquired assets and liabilities.

Identify and account for contingent consideration in a business combination.

Determine the effects of business combinations on consolidated cash, receivables, inventory, equipment, buildings, long-term liabilities, and retained earnings.

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