Assuming That a Acquired a Controlling Interest in B Through

question 13

Multiple Choice

Assuming that A acquired a controlling interest in B through numerous small acquisitions, what would be appropriate accounting with respect to these acquisitions?

• A) An acquisition differential must be computed following each purchase.
• B) The equity method must be adopted retroactively once 20% ownership is obtained.
• C) The purchases should all be grouped together and treated as a single block purchase.
• D) The cost method should be used until a controlling interest is acquired.

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Definitions:

Limited Information

A condition in decision-making processes where all necessary data or details are not available to the decision-maker.

Bounded Rationality

A concept suggesting that the cognitive limitations of the mind, and the finite amount of time available, limit human decision-making capabilities.

Limited Information

A situation where decision-makers do not have access to all the data or facts needed to make an informed decision.

Satisficing

A decision-making strategy that aims for a satisfactory or adequate result, rather than the optimal solution, due to constraints like time or information.