Which One of the Following Is a Characteristic of a Business

question 76

Multiple Choice

Which one of the following is a characteristic of a business combination that is accounted for as an acquisition?

• A) Fair value only for items received by the acquirer can enter into the determination of the acquirer's accounting valuation of the acquired company.
• B) Fair value only for the consideration transferred by the acquirer can enter into the determination of the acquirer's accounting valuation of the acquired company.
• C) Fair value for the consideration transferred by the acquirer as well as the fair value of items received by the acquirer can enter into the determination of the acquirer's accounting valuation of the acquired company.
• D) Fair value for only consideration transferred and identifiable assets received by the acquirer can enter into the determination of the acquirer's accounting valuation of the acquired company.
• E) Only fair value of identifiable assets received enters into the determination of the acquirer's accounting valuation of the acquired company.

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Definitions:

Bad Debts Recovered

Money that was previously written off as unrecoverable but has since been collected.

Income Statement

A financial document summarizing the revenues, costs, and expenses incurred during a specified period, typically a fiscal quarter or year.

Income Statement Approach

A method for estimating bad debts expense that focuses on income statement relationships, often involving a percentage of sales or accounts receivable.

Balance Sheet Approach

A method in accounting that focuses on valuing all assets and liabilities listed on the balance sheet at their current market values to provide a snapshot of a company's financial condition at a specific point in time.