Which of the Following Methods of Accounting for a Business

question 6

Multiple Choice

Which of the following methods of accounting for a business combination assumes that the parent company purchases the subsidiary and must account for the acquisition as it would for the acquisition of any asset?

• A)Pooling of interests
• B)The purchase method
• C)The new entity approach
• D)Proportionate consolidation

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Definitions:

Barrier to Entry

Factors that make it difficult for new firms to enter an industry, including high startup costs, stringent regulations, and established brand loyalty.

Homogeneous Product

A good or service that is considered identical or uniform across different sellers, making it difficult to distinguish based on attributes other than price.

Gasoline

A volatile, flammable liquid derived from petroleum, primarily used as fuel in internal combustion engines.

Copper

A reddish-brown metal that is highly conductive to electricity and heat, extensively used in electrical wiring and plumbing.