In a 1976 Discussion Memorandum, the FASB Defined the Pooling-Of-Interest

question 62

Multiple Choice

In a 1976 discussion memorandum, the FASB defined the pooling-of-interest method of accounting for business combinations as a method which:

• A) Results in the assets and liabilities of the subsidiary being valued at market value at the time of acquisition, and the parent's assets and liabilities being valued at book value.
• B) Results in the assets and liabilities of the parent being valued at market value at the time of acquisition, and the subsidiary's assets and liabilities being valued at book value.
• C) Results in all entities' assets and liabilities being revalued to market values at the time the combination originates.
• D) Uses the book values of the combining companies.

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Definitions:

Risk-free Return

The return on an investment with no risk of financial loss, typically associated with government bonds or other highly trustworthy securities.

Standard Deviation

A statistic that measures the dispersion of a dataset relative to its mean, used in finance as a measure of the volatility of an investment.

Defined Contribution Plan

A type of retirement plan in which the amount of the employer's annual contribution is specified.

Risk-free Return

The theoretical return on an investment with no risk of financial loss, often represented by the yield on government bonds.